A SPECIAL general meeting of the Law Society will take place this evening to discuss a guarantee given by the society to the Solicitors’ Mutual Defence Fund for a loan of €8.4 million.
The meeting was called by the council of the Law Society following the receipt of a petition with over 100 signatures from members unhappy with the decision to guarantee the loan.
Members learned of the loan guarantee in a letter from the society’s president, Gerry Doherty, on December 15th last. In it he explained that the need for the loan arose from the fact that the fund, which provides professional indemnity insurance to solicitors, lost 97 per cent of €8.4 million from its reserves which were invested in a bond. The fund has issued proceedings against its brokers, Bloxhams.
The fund met the Law Society in September and said that as a result of the losses it would not be in a position to write indemnity business for the new insurance year beginning December 1st, 2009, unless the society could guarantee repayment of a loan facility from a financial institution for the amount lost.
According to Mr Doherty, if the society did not offer such a guarantee, and the fund was not in a position to offer cover, there might have been complete market failure. Other insurers might not enter the market at all or the cost of insurance, in the absence of the competition provided for over 20 years by the fund, was likely to increase massively.