On the 30th September 2021 the Solicitors Indemnity Fund will officially be abolished. The fund was originally planned to be discontinued in September 2020 but was delayed for a year. This abolition will have a huge impact on retired solicitors and closed firms in the future. Here is a summary of the fund and what the expected changes will determine:
Solicitors indemnity fund abolished: What is the solicitors indemnity fund?
After the previous system of professional indemnity insurance was voted to change, it was replaced by the market-based model of the Solicitors Indemnity Fund. Compulsory professional indemnity cover is under statue for solicitors to protect against claims resulting from their actions.
Currently the SIF, run by solicitors indemnity fund limited (SIFL), provides cover to firms once their mandatory six-year run off period has elapsed. When law firms close, run-off cover has to be purchased in order to protect solicitors if a claim arises due to negligence.
Therefore, the SIF protects retired solicitors and closed law firms from claims that were made in the past that could return and cause them issues.
What will the impact of the abolition be?
Many retired solicitors are now concerned about potential exposure to historical negligence claims after September 2021, when The Solicitors Indemnity Fund is due to close. This indemnity fund was used to protect retiring solicitors and their estates from historical claims which may arise due to negligence.
No alternative cover has been made available, and the Solicitor’s Regulation Authority is not planning on doing anything to protect retired solicitors from the risks.
Stephen Boyce, the President of the Law Society of England and Wales, stated the following: ‘As things currently stand, after the closure of SIF, if a firm ceased trading without a successor practice and its run-off cover has expired, and the former principals haven’t made alternative arrangements, then any new claims will be uninsured.