Contributions to the Solicitors Indemnity Fund (SIF) are set to rise again after the Law Society Council voted last week to buy reinsurance at a cost of £5m.
The move will increase firms' contributions by 2 per cent from September – on top of any rises due to risk banding – but it will protect the profession if claims are much higher than expected.
It is the first time SIF has used reinsurance since 1991. When it clocked up a shortfall of £450m in 1996, it was slated for not having reinsurance.
With reinsurance, SIF will be covered for claims exceeding £310m up to £360m. SIF has based next year's contribution on predicted claims of £288m, so if claims are higher it will have to find the first £22m – until the reinsurance kicks in.
Many firms' contributions already stand to rocket this year, thanks to the introduction of risk banding, which is designed to make contributions reflect more accurately the type of work firms do.
Bill Heaselgrave told the council that he had been contacted by a large number of firms whose bills were set to rise by 75 per cent this year.