A solicitor must maintain professional indemnity insurance. The insurance must comply with certain minimum terms and conditions. There is a statutory minimum level of insurance cover per claim. A solicitor may obtain additional top-up insurance from another insurer (or the same insurer).
The approved terms of insurance are set down by regulations made by the Law Society. It must indemnify partners and employees. Insurance must be obtained in a private insurance market from regulated insurers.
As in common with professional insurance generally, liability insurance for solicitors is on a claims-made basis. The policy in force when the claim is made or when the circumstances of the claim are notified to the insurer applies. The claim must be made or be notified during the term of the policy. Insurance must cover loss in respect of civil liability arising by a solicitor in his practice as a solicitor covering partners and employees
Generally, claims arising from fraud are excluded by the terms of the policy. There may be recourses against the Law Society compensation fund mentioned below. The personal liability of the solicitor remains.
Assigned Risk Pool
The assigned risks pool exists to provide cover for solicitors who are unable to obtain insurance cover in the market. It has been suspended in certain years due to the effect of the financial crisis. Solicitors within the pool are subject to regular supervision, audit and management.
Insurers must be regulated and must also participate in the assigned risks pool. The terms of the scheme of professional indemnity insurance are regulated by the Law Society. It sets the minimum terms and approves participant insurers. It must keep insurance records open for inspection by persons who wish to inspect. This includes details for each solicitor and the qualified insurer providing cover.
A solicitor who is admitted to the assigned risks approval is subject to vigorous audit. He must have been refused insurance on commercial terms by at least three insurers.
e Law Society will look at the management and administration of the firm. It may appoint an authorised person to attend and inspect documents. Failure to facilitate may lead to discharge from the pool. Temporary cover may be given in the first instance pending application and audit.
Supervision and Cessation
After consideration of the risk management audit, the professional indemnity insurance committee may discharge the solicitor from the pool. In this event, he may have to cease the practice. The committee may direct the solicitor to take such steps as necessary to avoid the risk of civil liability.
A person may be authorised to supervise the solicitor in relation to compliance. Failure to comply may lead to discharge and be professional misconduct.
Where an insured solicitor ceases to practice, he must obtain run-off cover for a year period after practice. This is to cover claims arising in the period after cessation and retirement from practice.
Solicitors Compensation Fund
The Solicitors Compensation Fund may make grants in respect to cover loss arising because of dishonesty on the part of a solicitor. This may arise in particular where cover under professional indemnity insurance is denied on the ground of fraud or equivalent to misconduct. The fund is financed generally by contributions from solicitors.
Where it is proved that a client of a solicitor has sustained a loss in consequence of dishonesty on the part of the solicitor or his employees, then the Society may make a grant to the client out of the funds. The onus is on the applicant to prove he has suffered a loss on the above basis.
The loss must arise out of the conduct of a person as a solicitor. The solicitor himself and certain persons connected are not clients for this purpose. Dishonesty requires a higher degree of fault than negligence. Dishonestly on the part of the solicitor or an employee will suffice.
The cover only applies to those holding a practising certificate and assert that the time loss will sustain. They may be disqualified where the client has contributed to the loss or assisted the misconduct.
Denial of Grant
Where the Law Society is of the opinion
The loss arose due to a solicitor’s negligence and/or breach of contract alone.
- the solicitor did not have a practising certificate in force at the time when the loss was sustained.
- there has been dishonesty or negligence on the part of the claimant or of any person for whom that claimant is responsible which has contributed to the loss in question
- the claimant has assisted (whether by act or omission) in the commission of misconduct by the solicitor. V
- the loss sustained has arisen otherwise than as a result of the dishonest misappropriation or dishonest conversion of money, securities or other property of a claimant entrusted by the claimant, or by any other person for or on behalf of the claimant, to that solicitor or to any clerk or servant of that solicitor.
- having regard to all the circumstances, the loss sustained by the claimant of the solicitor did not arise from or was not directly related to, the provision of services of a legal nature to the client by the solicitor.
- the loss has been made good.
it may refuse a grant.
The decision of the Law Society may be reviewed judicially. However, the Law Society has broad discretion in terms of how it implements the scheme having regard to its resources and the purpose of the fund.
The Law Society has discretion to make a grant to solicitors where one of the partners has caused loss due to dishonesty in the course of practice. In such circumstances, the solicitors will be liable for the actions of the partnership as a whole. There must be no dishonesty or negligence on the part of solicitors receiving compensation and the liability must arise from vicarious liability.
The Law Society has powers of enquiry and may take evidence on oath in the context of considering claims for payments from funds. It may procure relevant documentation.
There is a maximum grant of €700,000. This may be increased by Ministerial regulation.
Where the Law Society makes a grant, it assumes the rights of the person receiving the grant. It may be entitled to take civil action against the solicitor concerned or others in the exercise of these rights.
Rights Against Practice
Where practice gives rise to a claim for compensation from the fund the Law Society may apply to be deemed trustee of funds from the sale. This facilitates the sale as a going concern thereby preserving its goodwill.
The Law Society may make an application for the sale of the practice where it believes the practice may be the subject of claims from the fund. The court may make an order for sale and such consequential orders as are necessary.
The Law Society may advertise for claims affecting the practice in a newspaper if necessary. The High Court generally make directions in relation to the disposition of proceeds. A person may claim entitlement, including the owner of the practice.
The funds may be retained for a period. Advertisements may be issued setting out the persons who have claimed should furnish them in a certain time. As for the period of expiry of notifying claims, Law Society may apply where this direction in relation to the disposal of the practice proceeds. It must furnish details of claims.