Solicitors urge end to compulsory insurance


MAKING PROFESSIONAL indemnity insurance voluntary rather than compulsory and allowing solicitors to incorporate as limited companies were among proposals put to a special meeting of solicitors last night held to discuss the current difficulties in the profession.

In a letter to members earlier this month, Law Society president John Shaw said: "A combination of the industry's losses in investment markets and a very substantial increase in the number and size of negligence claims relating to property transactions, including failures to comply with undertakings following the collapse of the overvalued property market, has produced unsustainable losses for all insurers in the Irish market."

It is expected that, as a result, premiums could treble, with sole practitioners facing bills of €20,000, compared with about €7,000 last year.

Professional indemnity insurance is compulsory in order for a solicitor to obtain a practising certificate from the Law Society.

However, one solicitor who attended last night's meeting, Susan Martin, said it should be voluntary, and pointed out that such insurance is voluntary in Illinois in the United States. A register of those who are insured is kept there, information that is available to clients.

"We need to look at the reasons for the situation we are in and address them," she told The Irish Times. "A minority of practitioners took the view that they could use insurance to cut corners. Their own assets were protected and their clients' assets were protected because they were insured. The property bubble gave more opportunities.

"The people paying the increased premiums are not the ones who cut corners, a lot of whom are now out of business. The ones who didn't cut corners are left carrying the can.

"If you give practitioners the choice of whether they want to carry professional indemnity insurance it would destroy the market for those taking short-cuts because the insurers could choose who they take on." Sonia MacEntee, who has just set up a sole practitioners group within the Law Society, suggested that solicitors be allowed incorporate. This would require amendment to the Solicitors Act, and it would involve registering as companies, with all that entails.

"And should we continue to hold clients' monies?" she asked. "Accountants don't. If we didn't, it would blow a hole in insurance costs."

"There is a huge compliance burden," Ms Martin said. "That comes at a cost. But I want to tell young lawyers - don't give up. We can overcome this if we collaborate. If we don't stand up and be heard we'll be swept away."

She pointed out that the existence of sole solicitor practitioners was in the public interest. It meant more competition, and sole practitioners were those who took a chance on cases that pushed the boundaries of the law.