Lawyers will bail out defence fund
All Irish solicitors will have to pay €200 a year for the next 10 years as part of a 'bailout' for the insolvent Solicitors Mutual Defence Fund (SMDF).
The proposal will be put to a national meeting of solicitors at a special general meeting on May 4 and the losses of the firm -- which was set up to provide insurance cover for solicitors -- have been put at €16m.
"The Law Society will take steps to ensure that the financial support provided will be capped at €16m so as to avoid creating an open-ended commitment," said a briefing document circulated to solicitors last week.
The document also admits that the Solicitors Mutual Defence Fund suffered after what is described as a "surge" in claims as property deals floundered.
"It suffered serious financial losses due to the extremely high level of claims arising form the collapse of the property market," said the internal report.
It also suffered massive losses from the Bloxham's Saturn Bond, "which wiped out a substantial portion of the SMDF's reserves".
The Law Society has since come to an agreement with the Dublin stockbrokers firm Bloxham's, but the details are confidential.
Although the SMDF received a loan guarantee of €8.4m, this was never drawn down and the bank involved has since withdrawn the bank facility.
The documents show that Irish solicitors insured by the SMDF (22 per cent) are facing claims that could cost between €200m-€250m.
"The SMDF are effectively insolvent as they have insufficient reserves to meet their portion of these claims," the report of the Law Society of Ireland to its members reveals.
Limerick TD Willie O'Dea last night called for an inspector to be appointed to examine the affairs of the SMDF by the Minister for Industry, Trade and Employment. He said he will be putting down a Dail question next week.
"There are some serious questions to be answered -- I believe that it should go into administration and we should find out what happened," he said.