LET there be no mistake large commercial law firms are very angry about what has happened at the Solicitors Indemnity Fund (SIF). And they have good reason. The figures show that under SIF large firms (which tend to have good claims records) have consistently been subsidising smaller firms (which are more likely to have bad records). Now they face the prospect of having to bail out the profession by stumping up for much of the £450m shortfall in the fund.
There is, of course, an easy solution for the big hitters abandon SIF and get insurance on the open market. They already have experience of securing top-up private insurance and are confident such a move would work out cheaper for them. Of course, whether smaller firms would prove an attractive proposition for private insurers is another thing entirely.
The Appleby working group set up to solve the problem has come up with a solution which is worth exploring a radically revamped compulsory mutual fund designed to be far kinder to the firms with better claims records.
The Law Society is hoping that the proposal meets enough of the larger firms' concerns to keep them on board. However, there are already disturbing signs that it will attempt to steamroller them into accepting the working group's preferred solution. For it has made little attempt to publicise the fact that two of the eight solicitor members on the group who, incidentally, are from Hammond Suddards and Freshfields believe that the 'multiple fund' scheme is inherently flawed.
The two have produced a well-argued report calling for more investigation into the 'approved insurer' open market option. Although their views were referred to in the Appleby Report, their report was not included in it. It should have been. chancery Lane ignores big firms' views at its peril. These are dangerous times for the Law Society.