A NEW solicitors’ grouping has been formed to deal with the consequences of the economic crisis for sole practitioners.
Sonia MacEntee contacted colleagues a few months ago, seeking to set up a sole practitioners network in response to the collapse in some areas of their traditional business, combined with a threatened hike in professional indemnity insurance.
The insurance is mandatory, and the minimum sum insured for is set by the Law Society.
It was €2.5 million, but according to the society’s director general, Ken Murphy, it is proposing to reduce it to €1.5 million in an attempt to reduce premiums.
Despite this, premiums are likely to more than double next year, pushed upwards by the pressures of massive investment losses by the insurance companies combined with a huge increase in both the number and size of negligence claims against solicitors.
Many are linked to the collapse in the property market, with claims now emerging that allege failures on the part of solicitors to comply with undertakings.
“My premium was €8,000 last year. I have been told to budget for €20,000 this year,” Ms MacEntee told The Irish Times.
Mr Murphy said that this is happening at a time when small legal firms might be making 40 to 50 per cent less in income than they were two years ago.
Ms MacEntee agrees, saying that a substantial portion of her sole practitioner’s practice was made up of conveyancing for individuals buying homes, typically at €900 per transaction. This business has ground to a halt.
“You’d need a lot of them to pay for the insurance on top of other overheads,” she said.
There is also a problem in that practitioners have to have an insurance “run-off” for seven years, so even if they cease to practice they have to pay the insurance, a problem that does not exist in big firms, as when a partner retires the firm, and its insurance policy continues, Ms MacEntee said. The need for insurance “run-off” means that solicitors are trapped into continuing in practice, whether they can afford to or not, she added.
Ms MacEntee pointed out that sole practitioners and small firms are those who service most people when they have a legal problem, and if they go to the wall, this service would be greatly reduced.
The Law Society is aware of these problems, which will be discussed at an open forum in its headquarters in Blackhall Place on September 28th next.
Ms MacEntee is hoping that a number of sole practitioners turn up to ensure that their voices are heard.