Law Society calls egm after bailout
Published 13/02/2010 | 05:00
The Council of the Law Society is to call an extraordinary general meeting of its members after the body bailed out the solicitor's insurance fund to the tune of €8.5m, the Irish Independent has learned.
The meeting of the council has been called as members of the society put pressure on the body to explain its guarantee of loans worth more than €8m after one of the fund's investments was deemed worthless. That failed investment is the subject of a number of High Court actions with the fund suing Bloxham Stockbrokers for alleged negligent advice.
The meeting, which will be held within the next six weeks, is being organised by Dublin-based solicitor Vincent Crowley, of Collins Crowley Solicitors.
Mr Crowley successfully gathered more than 100 signatures, which was required to call the special meeting to discuss the guarantee that was made to the fund which provides solicitors with insurance cover against negligence -- the Solicitor's Mutual Defence Fund (SMDF).
Mr Crowley said: "The first duty of the council is to its members and the public, not to a private company. The SMDF is not a charity or a voluntary body. People are angry about this."
Mr Crowley is also proposing a number of resolutions designed to restrict the council in future. They include the council being barred from giving any guarantees on behalf of the society, exposing it to any risk exceeding €500,000 or buying any freehold or leasehold property without the prior approval of members at a special meeting.
A meeting in November gave the SMDF guarantees for the bank facilities of up to €8.5m to cover the loss on its reserves as a result of the failed investment in the bond.
The High Court was told late last year that news of the losses had come as a "profound shock" to the SMDF, which had invested one-third of its portfolio in the bond. The fund is also claiming in the courts that the investment loss is affecting its ability to compensate its members for losses or damages.
The bond is now only worth up to 3pc of the original purchase price of more than €8m and interest payments have also been suspended, according to the SMDF.
Last year, the fund's reserves slumped to €300,000 from more than €10m in 2007.