More than £2.5m is expected to be paid out by the Solicitors Regulation Authority (SRA) from its compensation fund in order to cover the cost of cost of negligence claims against uninsured law firms, it has been revealed.
The SRA recently announced that, following the closure of the assigned risks pool (ARP) in September last year, any claims against uninsured firms might fall on its fund – including claims for firms ineligible to join the ARP during its final year of operation.
So far only one claim of £750 has had to be paid out from the account but the regulator are prepared for more and have incorporated more than half a million pounds into the compensation fund over the last two years to meet the expected impact of uninsured firms.
In its application to the Legal Services Board (LSB) for approval to changes in contributions for the fund, the SRA said the “number and value” of claims against uninsured firms had already begun to rise.
In its decision notice approving the changes, which will see the individual contribution cut fund from £56 to £32 and the firm contribution cut from £836 to £548, the LSB said the SRA had explained that it was expecting an increase in claims.
In its report it said: “Having considered the number of open cases, and the original and revised amounts claimed for these cases, the LSB is satisfied that the SRA has assured itself that the level is appropriate.”
As part of its calculations, the SRA said it expected that intervention costs to fall from £12.3m in the current practising year to £7.93m next year.
The SRA also expected archiving costs for 2014/2015 to fall as they start destroying files, but that would depend partly on applications to the court.