Now lawyers need a 'bailout' as insurance fund closes
The Law Society of Ireland has called a special General Meeting for May 4 to try and organise a 'bailout' for solicitors after its insurance arm, the Solicitor Mutual Defence Fund (SMDF), decided to close with debts running into millions of euro.
So many solicitors are expected to attend that the meeting can't be held at the orginisation's headquarters in Blackhall Place, Dublin.
The Law Society had guaranteed the SMDF for €10m -- but some legal sources believe that the losses could be at least double that amount.
The SMDF provided legal cover for some solicitors -- but a majority of them opted to find their own cover.
But a 'Task Force' established by the Law Society now says it "has serious concerns regarding the sustainability of the freedom of choice system" and advocates that from December 1, 2011, all solicitors should have to participate in what is known as a "master policy."
It says this would be "in the public interest and in the interests of the profession."
The SMDF insured 22 per cent of solicitors, or 473 firms but a private insurance firm has 44 per cent of the market, or 933 firms.
"It would be inappropriate for the market to depend even more heavily on the participation of any one qualified insurer" says the internal report.
The Task Force report maintains that solicitors "freedom of choice" in sourcing insurance is leaving the profession "at the mercy of the market" and that a 'master policy' is the way forward.
"There have been allegations of profiling by insurers to avoid certain types of firms or to price certain types of firms out," it says.
It also says that calculation of insurance premiums for solicitors by private insurance companies "is viewed by some members of the profession as opaque and arbitrary".
The Task Force has also obtained a legal opinion from former AIB Chairman Dermot Gleeson SC which says: "In my view the (Law) Society is fully entitled to make regulations requiring solicitors to participate in the so-called master policy model."
He says he is unaware of any constitutional "or other impediment" from competition law to the exercise of such powers.