A sole practitioner's bill for his Solicitors Indemnity Fund (SIF) cover has rocketed by an astonishing 1,000 per cent.
The London-based lawyer, who has asked not to be named, received his bill for this year's SIF contributions early last week along with the heads of all 950 firms in the country.
Last year he had to pay £2,500 to SIF for his professional indemnity cover. This year the figure, which for the first time takes into account the risks posed by the type of work done by his firm, is just over £20,000.
He said that because his practice, which has gross fees of £190,000, specialised in commercial property, it was in the highest risk banding bracket under SIF's new formula for calculating contributions.
He added that his previously spotless claims record had been tarnished by claims made recently against his old firm, where he was a salaried partner, relating to cases in 1993 “which had absolutely nothing to do with me”.
SIF estimates that 54 per cent of firms will pay less this year than they would have done under the old rules, with 46 per cent facing a rise. At the extremes, about 20 per cent will see a decrease of between 50 and 100 per cent, while 9 per cent face an increase of more than 100 per cent.
Leslie Dubow, executive officer of the Solicitors Property Group (SPG), which is threatening a judicial review of the risk banding rules, said he had been deluged with calls, including one from a sole practitioner facing a four-fold rise in his SIF bill – more than 20 per cent of his entire gross fees.
Dubow said: “Many can't pay and others won't pay. We will see many solicitors closing down their practices and looking for employment as consultants. This will result in a loss of income for SIF.”
A spokesman for the Law Society said: “It was always going to be the case when we moved towards risk banding that there would be some significant losers, but this doesn't mean we are unsympathetic.”
About 54 per cent will see a decrease in their contribution.
About 34 per cent will see a decrease of up to 50 per cent and about 20 per cent will see a decrease of between 50 and 100 per cent.
About 46 per cent will see an increase in their contributions.
About 25 per cent will see an increase of up to 50 per cent and about 11 per cent will see an increase of between 50 and 100 per cent.
About 9 per cent will see an increase of over 100 per cent
The winners and losers are spread evenly among the different sizes of firms with the exception of:
Firms with gross fees of £50m, none of which will see an increase.
Firms with gross fees of up to £125,000, 65 per cent of which will see a decrease.