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TWO members of the working group set up by the Law Society to solve the crisis at the Solicitors Indemnity Fund (SIF) have attacked the group's proposal to stick with a compulsory mutual fund.
Instead, in their own minority report, Edward Coulson, a partner at Hammond Suddards, and George Ritchie, of Freshfields, have called on Chancery Lane to explore more fully the possibility of allowing law firms to seek insurance on the open market.
The Appleby Group's report, unveiled by its chair John Appleby last week, calls for a major overhaul of the current SIF, by dividing it up into mini-funds covering different areas of law, according to how risky the work is.
The group claims this multiple fund option will make it more responsive to the risk posed by individual firms joining the fund.
But in their unpublished 'minority note', which has been seen by The Lawyer, Coulson and Ritchie say the proposal does not solve SIF's fundamental problems, and has new problems of its own.
Coulson told The Lawyer that because SIF, or its proposed successor, could not assess the individual risks of firms joining it, those firms with good claims records always ended up subsidising those with bad ones.
He said it was vital more research was conducted into the open insurance option, which the November Group of City, national and regional firms has been long pressing for.
He added: 'I see this as a battle between those with a good claims record and those with a bad one who have a vested interest in sticking with a mutual fund so they can benefit from the cross subsidies which occur.'
The November Group had not met to consider the Appleby report when The Lawyer went to press, but one member, Holman Fenwick & Willan's Jonathan Fine said he personally felt the multiple fund proposal was 'too little too late'.
Meanwhile, the Law Society's deputy vice-president, Robert Sayer, has written to fellow council members calling for the consultation document to contain 'a clear straightforward explanation of the likely financial consequences of each of them [the options] upon a small range of typical firms'.
Sayer is in favour of a mutual fund and wants it to be run by an independent company.