THE SOLICITORS' Indemnity Fund (SIF) looked doomed last week after the influential City of London Law Society (CLLS) joined the November Group of commercial firms in demanding it be scrapped.
In its official response to the Law Society's four-month consultation on SIF, the CLLS, which boasts 2,500 members, says allowing firms to insure on the open market “would be far better than a continuation, however upgraded, of the wholly discredited SIF”.
The call is endorsed by the November Group, representing 17 of the 50 largest firms, which, in its submission to the Law Society, says “SIF has clearly failed”.
The submission includes figures from brokers Nelson Hurst & Marsh showing more than 70 per cent of firms could buy cheaper insurance on the open market. The group has repeated an earlier threat to challenge the Law Society in the courts if it tries to retain a mutual fund.
It will be up to the society to decide whether to keep SIF when it debates the issue in September, but council members will find it difficult to ignore the CLLS as SIF could not function without the City's support. The dozen firms with a turnover of over £50m per year make up about 5 per cent of the total SIF bill.
The society had hoped the CLLS would be more moderate than the November Group, but if anything it has adopted a more hard-line approach.
Unlike the November Group, it rejects the idea of setting up a special fund to help uninsurable firms.
Tony Sacker, CLLS chairman, said it was in the “public interest” for firms which could not get insurance on the open market to go to the wall.
Christopher Hales, chairman of the November Group, said the Nelson Hurst & Marsh figures indicated that the Law Society had overestimated the cost of insurance on the open market.
SIF director Elizabeth Mullins countered: “You cannot get away from the fact that a mutual scheme, which charges no profit, must be cheaper than a system which does.”