SRA Closure of the Solicitors Indemnity Fund (SIF)- Article by BLS Council member
Before I start, I declare an interest as a former sole practitioner. I closed my practice in 2010 after 23 enjoyable years, with no successor practice. If I had known, then what was going to happen I would probably have done things differently.
The SRA has decided to close the Solicitors Indemnity Fund (SIF). Well, so what, you might ask? Bear with me and please keep reading - because this has the potential to affect not just solicitors like me, but every one of you, whether you are a partner, sole principal, or an employee, whether past or present.
Last year the SRA, following representations from The Law Society, extended the closure date for SIF by one year. The date for closure is now 30 September 2021. The reason given for the extension at the time was the covid pandemic, and the difficulties in the insurance market, and to give The Law Society time to find a solution such as an alternative insurance product. Nothing has changed since then.
No solution has been found. There is no insurance product available in the market. We are now approaching the cliff edge.
I am aware that many of you won’t have heard of SIF or know very much about it – especially those of you who qualified after 2000, and those of you who have never had to deal with applications for your firm’s professional indemnity insurance. But it is important that all solicitors know what is going on.
For a bit of background see the recent statement by the SRA:
https://www.sra.org.uk/solicitors/resources/indemnity/solicitors-indemnity-fund/
There is also background information on The Law Society website, an extract of which is as follows:
Originally, SIF was the statutory fund that used to provide cover to solicitors in England and Wales.
When the profession voted to move from a statutory fund system to purchasing professional indemnity insurance (PII) on the open market, a portion of SIF was retained to provide ongoing run-off cover for firms that had already closed. Later, its scope was extended to cover other closed firms once their mandatory six-year run-off cover had expired.
After a law firm closes, run-off cover must be purchased to protect solicitors and their clients in the event of any civil claims that arise because of negligence. This mandatory run-off cover is purchased as part of the firm’s professional indemnity insurance (PII) and lasts for six years.
Coverage after this six-year period is called supplementary run-off cover and is currently provided by SIF by way of indemnity, at no additional cost to the former principals of a closed firm. However, for firms that closed on or after 1 September 2000, this cover will end on 30 September 2021.
Unless alternative arrangements are made, the former principals of firms that closed from September 2000 onwards, their estates, and even individual employees, may be personally liable for losses from any claims that are made.
Please also see a recent article in the Gazette:
........Read the rest of the article here