Michael Dalton, the sole practitioner backed by 11 City law firms, has been granted a waiver on his £175,000 Solicitors Indemnity Fund (SIF) bill, ending a three-year battle with the Law Society.
In exchange for his waiver, Dalton has discontinued his judicial review application, challenging the validity of SIF as contrary to European law.
The City firms, members of the anti-SIF November Group, provided Dalton with a legal team to fight the case.
But Dalton predicts other solicitors will continue his challenge, even though SIF disbands next September.
“I think someone will step into my shoes. For a lot of practitioners, the price they have to pay between now and September may put them out of business,” he claims.
He also warns that the settlement will spawn new waiver applications, but adds: “Waivers are discretionary and don't set a binding precedent. The settlement may have caused the Law Society a new headache but they can control waivers, they can't control a court case.”
Dalton's total SIF bill came to £175,632.66. He is obliged to pay an undisclosed part of it – thought to be a tiny fraction – under the settlement.
His original application for a waiver in 1996 was rejected by the society twice. It was granted this time round on the grounds of “severe hardship”.
Dalton says: “I wouldn't call it that. It doesn't matter if I can pay or not, it's that I won't pay.”
He claims he would have won his legal challenge, but settled because of a feeling of duty to the profession.
“If I had taken it through and won, it would have caused chaos in the legal profession. The SIF rules would have been voided and no solicitor in England would have been covered by insurance.”
Law Society President, Robert Sayer says: “We're pleased this case has ended to everyone's satisfaction. The Law Society is now sorting out a new system for indemnity which does provide for choice. We hope this change will mean an end to these sorts of problems in the future.”