The Law Society council has approved a hike of up to 50 per cent in the contributions that firms pay to the Solicitors Indemnity Fund to make up the £450m shortfall in the fund.
The increase, which was voted through amid widespread criticism of the fund, will mean an increase in contributions of £4,000, to a total of £12,500, for a sole practitioner with a satisfactory claims record.
A 50-partner firm with gross fees of £60m might expect a fees hike of £300,000, raising its contribution for 1997/8 to £1m.
Before the vote, there were fears that firms could face an increase as high as 80 per cent.
Instead, the council opted for the 50 per cent ceiling on contribution increases, but this figure could change if a new SIF working party can prove that a drop in conveyancing claims in recent years means such a hike is not necessary.
The working party will be headed by the society's deputy vice-president and treasurer Robert Sayer, incoming property and social services committee chair Kenneth Byass, standards and guidance committee chair Sam Wilson and incoming SIF chair Peter Williamson. It will report back to the council in autumn.
Despite moving to meet the shortfall while trying to minimise the impact on firms, the Law Society is coming under pressure to do more.
Its annual general meeting last Thursday supported a resolution by 39 solicitors, led by British Legal Association chair Alex Alagappa, which urged the council to take immediate action to “mitigate the irretrievable damage that otherwise will be done to large numbers of high street solicitors firms if they are required to meet the shortfall”.
And some solicitors at the meeting demanded an independent inquiry to examine how the shortfall had come about. Solicitors Property Group executive officer Leslie Dubow said the shortfall “casts doubts on the competence of the people who run the fund”.
Michael Long, chair of the SIF task force set up to examine the SIF problem, agreed that the system had failed, but warned that the key was self-help.
Long's task force has recommended that the Law Society consider establishing a retirement counselling service to assist lawyers wanting to close their firms.