The Solicitors Indemnity Fund (SIF) is to re-examine whether a massive jump in solicitors' contributions is needed to meet a projected £450m claims shortfall.
The Law Society and the SIF have agreed to look again at whether an expected fall in the value of conveyancing claims could enable the Law Society to spread out contribution levels over a number of years instead of imposing a large one-off increase.
But proposals to increase contribution levels by up to 80 per cent look certain to be approved in principal at a meeting of the Law Society council this Wednesday – and will only be stopped in the autumn if this latest research proves that it is unnecessary.
A working party comprised of society treasurer Robert Sayer, incoming property and social services committee chair Kenneth Byass, standards and guidance committee chair Sam Wilson and incoming SIF chair Peter Williamson will work alongside actuaries to see if a drop in conveyancing claims could affect the level of contributions.
Several council members, led by Sayer, believe that the bulk of the claims against conveyancers occurred in the housing boom of the late 1980s and early 1990s, with most now being settled or resolved
They cite SIF figures that show conveyancing claims have dropped dramatically from 4,856 in a 12-month period in 1988/89 to only 79 in a similar period in 1995/96.
Council of Mortgage Lenders' senior legal advisor Fiona Hoyle said many lenders expected a continuing fall in the number of cases, but she warned of the dangers of any over-optimism.
Hoyle said: “For some lenders there are still a significant number of claims in the pipeline.”
The SIF has stated that it does not expect a reduction in the number of conveyancing claims in the year ahead, but it does think that there will eventually be a drop off.
However, no adjustment to projections has been made on the basis of this expectation.
Sayer said the SIF needed to look at the figures again and try to spread out shortfall payments over a number of years.
He argued that a large one-off payment could send many small firms to the wall.