Conveyancing solicitors face a 100 per cent hike in contributions to the Solicitors Indemnity Fund (SIF) this September, under plans to make the fund operate more commercially.
A consultation paper drafted by the Law Society's standards and guidance committee last week says practices specialising in high-risk work, such as conveyancing and financial services, should pay a substantially higher proportion of gross fees than practices doing low-risk work, such as crime.
The committee concedes that some practices 'would have great difficulty in bearing a sudden increase in contributions'.
To offset this, it proposes that the discount for firms with a good claims record should rise from 30 to 65 per cent.
Leslie Dubow, head of the solicitors property group, said: 'If the proposals are introduced in this way, the effect on firms reliant on conveyancing could be devastating. A number may go out of business.'
Supporters of SIF hope that making the fund operate more like an insurance company in the open market will head off calls for its abolition.
But Paul Clements, of the November Group of City firms which wants SIF abolished, said: 'It's a move in the right direction, but they're still tinkering with the parts rather than overhauling the whole system.'
It has also emerged that although SIF's shortfall has been revised from £454m to £432m, the decision to collect the money over seven years will cost the fund £140m in lost investment income. This effectively makes SIF's liabilities £570m.