Calls came at the Law Society last week for heads to roll in the Solicitor's Indemnity Fund over what former president Martin Mears described as a “mind-boggling blunder.”
At the society's council meeting on 17 October members had to decide not only how best to make up a £12.82 million shortfall resulting from an SIF calculation error but also whether to vote for extra funds after the finance committee admitted under-budgeting by more than £1.58 million.
SIF chair Andrew Kennedy recently announced that an error in calculations had led to an indemnity fund shortfall of just under £13 million.
Although the council agreed to impose a supplementary levy on all practitioners to recoup the sum, the SIF, which admitted holding £400 million in investments, was severely criticised.
In an internal report, seen by The Lawyer, professional standards and developments director John Randall said the SIF mistake followed “hard on the heels” of another blunder by the fund, when a computer error led to too much money being collected.
He said: “Those who are already critical of SIF would seize upon the supplementary levy and allege that it was evidence of incompetence or mismanagement that should lead the Law Society to move to a system of authorised insurers, thus providing a degree of choice.”
During the council debate on the affair one member, Trevor Murray, said: “I believe from the correspondence I've had that there's a real PR problem for the council to address. Members need to see a head roll and some explanation.”
Mears called for the establishment of an independent commission to examine whether the society should use authorised insurers for professional indemnity insurance. He said the SIF had “no idea how much indignation it has caused in the profession”.
Kennedy said he was awaiting a report on how the error occurred before taking disciplinary action.
In a separate report council members heard that the finance committee needed an extra £1.8 million to meet unforeseen costs. Most of this money will go towards the cost of improving the society's Chancery Lane headquarters to comply with a fire certificate – which it had not budgeted for.
Deputy treasurer Robert Sayer said he did not want to see any more projects started without external financial advice.