Law Society president questions 'sustainability' of compulsory insurance
Reduction in 'cost and hassle' of regulation a priority, Scott-Moncrieff says
Lucy Scott-Moncrieff, president of the Law Society, has taken Chancery Lane into unchartered waters by questioning the "sustainability" of compulsory indemnity insurance and the Compensation Fund.
Her comments came as Des Hudson, chief executive of the society, warned law firms against relying on unrated indemnity insurers. A survey for the society revealed that 22 per cent of sole practices were now using them.
In a blog entitled 'Action Plan for Difficult Times' for the Law Society Gazette website, Scott-Moncrieff said for many high street firms April 2013 "will be experienced as the defining moment in the crisis that has been brewing since the financial meltdown in 2008".
Scott-Moncrieff said the profession would have to "adapt to survive" in a hostile environment and suggested the society could set up a consultancy service to advise firms wanting to adapt or exit, including 'merger-broking'.
She went on: "A reduction in the cost and hassle of regulatory compliance is a priority, given that high street firms are increasingly having to compete against the non-regulated sector which bears none of these burdens.
"We need to consider if now is the right time to look at the sustainability of, for instance, compulsory professional indemnity insurance and the compensation fund."
Scott-Moncrieff also said the society had "a lot to offer" in terms of information, goods and services, but "we have a problem getting our messages across to the profession".
She went on: "Members need to know what it is doing to support them through the storm.
"How does the society clarify its offering to members, and which parts of that offering are included as part of a universal membership package paid for through the practising certificate, and which should require an extra payment?"
Clive Sutton, honorary secretary of the Sole Practitioners Group, said he was not sure what abolition of compulsory insurance would achieve.
"Any prudent solicitor would still want indemnity insurance," Sutton said. "We have to assure our clients that we have it, otherwise they would not come."