Birmingham solicitors oppose regulator’s plan to replace SIF

Willetts: SRA should revisit SIF’s viability

The Solicitors Regulation Authority’s (SRA) failure to find an alternative to the Solicitors Indemnity Fund (SIF) over a decade shows that the “only sensible option” is to retain it, Birmingham Law Society (BLS) has argued.

Anything else was likely to prove to a false economy and leave consumers without access to legal advice and, as a result, without access to consumer protection, it argued.

Disagreeing with an SRA discussion paper that said “a new consumer protection arrangement within the SRA” was likely to be more cost-effective than retaining the SIF, BLS argued that “there was no other sensible alternative in the interests of consumer protection”.

Noting that the SRA had been considering the issue since 2012, it said the “scant” detail on the alternative provided more questions than answers.

“Would all claims be directed to the SRA or only those where the solicitor defendant is already bankrupt/without funds to meet the claim or only those where a judgment has been obtained first which is unenforceable as the defendant is impecunious?

“Would the new arrangement protect consumers but not solicitors and their staff? Who will represent the solicitor defendant in resisting the claim? The SRA cannot advocate for both sides and then make a final decision on the claim.”

BLS was concerned how the focus was just on consumers, with little consideration of individual solicitors, “who may be long since retired and without funds”, or staff from these practices “who could also be in the firing line and may be even less likely to have funds to resist and/or meet claims”.

Equally, the SRA suggestion that the new arrangement might not cover the claimant’s costs would appear to result in less protection for consumers “and/or potentially huge exposure for the retired lawyer”.

BLS said the complexity of these cases was such that no law firm would take one on under a conditional fee agreement: “In effect, consumers would be left to represent themselves and, in reality, be left without redress.”

Cost cut both ways: “The current arrangements at SIF provide specialist expertise and knowledge that could not with the greatest respect be replicated by the current SRA in-house staff.

“The SRA would need to recruit experienced staff at higher salaries in order to deal with such claims. In the long term, it seems to us to be more cost-effective to remain with SIF.”

Jayne Willetts, a specialist professional regulation solicitor who chaired the BLS committee that drafted the response, said: “The Birmingham Law Society is… relieved that the SRA has now acknowledged that provision needs to be made for consumer protection as opposed to leaving those former clients without a remedy.

“However, we are not in favour of a new SRA consumer protection arrangement akin to the wholly discretionary SRA Compensation Fund. Legal liability for negligence claims is totally different from reimbursement for monies misappropriated from client account.

“Other reasons for rejecting this idea are that recovery of legal costs would be excluded as would businesses with a turnover of over £2m.

“We have always supported the retention of SIF and have urged the SRA to revisit its viability, swayed as it should be by the fact that SIF has considerable investment income which ensures its financial future.”

In its response, the national Law Society said last week that it had “no objection in principle” to the SIF being replaced as suggested by the SRA.

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