The Gazette 1979

GAZETTE

JULY-AUGUST

1979

In conclusion, it must be said that at a time when the Solicitors' monopoly in conveyancing matters is under critical examination it would seem shortsighted for the profession to allow another area of legal expertise to pass

from its ken, and perhaps into the hands of persons, not all of whom would have had any adequate training for undertaking such important work.

Dublin Solicitors' Bar Association COMPULSORY PROFESSIONAL INDEMNITY INSURANCE IN IRELAND

On 14th March, 1979, Mr. Kenneth Pritchard, Secre- tary of the Law Society of Scotland, spoke to members of the Association on the origins and working of the scheme of compulsory professional indemnity insurance introduced in Scotland in 1976. Introducing Mr. Pritchard, Mr. John Buckley, President of the Association, reminded the audience that they were listening to Mr. Pritchard in the context of the prevailing Irish situation in which only 50% of the Solicitors profession was covered by any form of pro- fessional indemnity insurance and in the likelihood of future legislation which might in due course require all Solicitors to be insured against professional negligence. The Incorporated Law Society has done a great deal to protect the public through its own compensation fund but it remains desirable that the entire profession should be covered by proper insurance. Mr. Pritchard, in describing the Scottish Scheme, was careful to emphasise that while the Scheme seemed eminently suitable in Scotland, it might not necessarily suit Irish circumstances, or even conditions in various other parts of the U.K. During the early 1970's, experience in Scotland showed that, while many firms were covered by pro- fessional indemnity insurance, and had been covered for many years, many firms either were insufficiently covered or were finding it impossible to obtain insurance cover at any price. This, it was felt, was not based on the loss record of Scottish Lawyers, but on the national experience over the whole U.K., and Scottish Lawyers felt they were being penalised unfairly for the short- comings of Lawyers elsewhere. In this context, the Scottish Law Society decided to consider whether it might itself negotiate a scheme where- by all Scottish Solicitors could be covered, motivated in part by the belief that, if compulsory professional indemnity insurance was to be introduced, then it would be preferable that such insurance should be introduced by lawyers themselves, in the most suitable form and on the best possible terms, rather than have some scheme imposed upon the profession which might not, in fact, be the best that could be arranged. As it would be necessary to have special legislation passed to enable the Law Society to introduce its own

compulsory scheme, it was decided initially to negotiate terms with a leading insurance company whereby all Scottish Solicitors who sought it could be guaranteed cover, but at premiums negotiated individually with each firm or sole practitioner. This "voluntary" scheme was introduced in 1974, at premiums which seemed accept- able, but in 1976 the insurers notified the profession that all premiums would be increased by 400%! After much argument, a reduced increase of only 350% was negotiated with the Company concerned. During the negotiations on this premium increase, it was established that during the period of the "voluntary" scheme, the insurers had collected £300,000 in premiums and had paid out only £21,000 in claims. Not withstanding these figures, the Company insisted that it must establish a very considerable insurance fund to underwrite the scheme and this was its justification for the large increase in premiums. At this stage (1976) the Scottish Law Society's parallel endeavours are successful in procuring the passing of the Solicitor's (Scotland) Act, 1976, which included radical provisions enabling the Council of the Law Society to introduce compulsory insurance and to make all or any enabling Rules, as and when necessary. Almost simultaneously Mr. Harold Wilson, the then Prime Minister, established a Royal Commission to investigate the Solicitors' profession in Scotland. The Royal Commission has not yet reported, but it may well attack Solicitors' monopolies and may also recommend compulsory insurance. The Scottish Law Society decided to move while it had a free hand and, in accordance with the provisions of the Act, it sought advice from three independent firms of Insurance Brokers and from the profession itself. The alternative concepts permitted by the Act were:- (i) A Mutual Fund; (ii) Individual "approved" insurances, negotiated individually, but within requirements to be laid down by the Law Society; (iii) A Master Policy for the profession as a whole, to which all would contribute. It was ultimately decided, and with a remarkable similarity of advice from all three Brokers, that the third

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