I always start my reports by looking at the previous one to see where we were. Reading the previous report, as far as I can see we were living in a parallel universe talking confidently about our conference in Malaga in June 2020, which would now have taken place more than a month ago.
Curiously the one item in the previous report, that was prescient to the present situation was the prospect that the Annual General Meeting would have been dealt with by some form of Skype connection for those who wanted to be involved from the UK and had not been able to go to Malaga. I was a bit worried about how this would work, but I am sure there is not one of us now who has not been involved in a Skype or Zoom or Microsoft Teams Meeting.
Touching firstly on the 2020 conference we have to be very grateful to our Chair, Penny Raby and her colleague Jennifer Houlian who has worked tirelessly engaging with the Malaga hotel to discuss firstly a potential delay in the conference to September, but when that became impractical, then a possible rebooking for next summer, but now that that also is not a clear situation, to manage to disengage from our relationship with the hotel, and the recovery of the significant deposit which we had already paid.
We therefore approach a future conference with no obligations one way or another and can make a reasoned decision as to whether to go to Spain next year or in the foreseeable future or hold next year’s conference in this country. A preliminary decision will be made by the Executive Committee at their next meeting.
On the subject of Executive Committee meetings, these are now being held on an ad hoc basis as and when there is matters to be discussed arising out of events. We had a very successful meeting on Zoom with most of the committee members present, which took place on the 18th May. It is likely that the next meeting will also be on Zoom.
That meeting announced the retirement of Charley Maserati and her partner, Nick, who have provided sterling help to us as administrators over the last few years, particularly in relation to past conferences. We are very grateful to them for their help.
They have been replaced by an Anika Holm who is providing excellent administrative backup to me as secretary. She deals with the telephone queries, and is keeping the emails in order, reminding me who needs a reply. I can say that there is a steady stream of queries from sole practitioners both active, potential and retired all requiring some form of advice which can be quite often easily given and hopefully can be reassuring.
So can I take this opportunity to say that if anybody does feel they want to share any problems with the Group then email info@SPG.co.uk which will be seen by Anika and myself and I will either reply to it or pass it on to one of the other officers or another member of the committee if it is more specialised. Do email even if you don’t have a problem, but merely wish to pass on a particular view which you think would be helpful to the Group and other sole practitioners.
Anika’s work will be supplemented by Jennifer Houlian who will deal with conference organisation which has always demanded a lot of concentrated work leading up to the conference and it will help to have this function and the general administrative function separated.
Also dealt with at the last committee meeting was the question of the Annual General Meeting which was to have been held at the Malaga conference. This has been dealt with on the basis of a resolution circulated to the Executive Committee and which was passed unopposed. The resolution was firstly to the effect that there should be no AGM called for 2020 and that the next AGM of the Group shall take place at the same time in 2021. Secondly that all the provisions in the constitution relating to election and re-election of officers be postponed to the AGM to take place in 2021 and that in the meantime all officers and committee members retain their respective positions.
This is in line with the position adopted by many organisations and we are fortunate that our Chairman, Penny Raby, has agreed to stay on for an extra year and that our Vice-Chairman, Jo Connolly, has also agreed to continue her vice chairmanship for the extra year which will mean that if she takes up the chairmanship role she will have been an officer for three years when she completes her chairmanship.
Many of you may know informally, but not formally, that in April Penny underwent a cancer operation (which if the conference had gone ahead she would have been prepared to postpone until June). Shortly after that she contracted coronavirus symptoms. Thankfully she is now well on the way to recovery and gave a very good presentation at a recent Zoom conference putting forward the sole practitioners’ position in relation to the lockdown.
I should add that our executive committee has not been unaffected by the virus and that at least two members and their families suffered from the virus in the early part of the pandemic but hopefully are now fully recovered.
At an early stage in the lockdown we were asked to make a comment to the Gazette as to its impact on sole practitioners. Penny’s view leading the Group was that we should put a positive spin on this showing that sole practitioners can be flexible in responding to unexpected circumstances and servicing their clients’ needs whatever arises. There obviously were, and are, many members of our Group who have been badly affected by the virus and the lockdown effectively shutting down some aspects of legal work particularly for those who are in niche practices where their work is affected.
However looking back we think the positive response that we gave has been important. This may have contrasted with the somewhat pessimistic response which may have been given by The Law Society, which may have had the effect of putting clients off going to High Street solicitors, and which was possibly an unfortunate impression to give to the public.
The Group have passed on all Government and Law Society recommendations as to coronavirus and the grants that were available. At an early stage, at the request of two of our members we made strong representations to The Law Society to try to emphasise the difficulties of those who worked as directors and shareholders, through a limited liability company and whose earnings by way of dividends, as opposed to directors fees, were not taken into account in the calculation of the grant – open to small firms with earnings of less than £50,000 per annum. The representations were well received but unfortunately have not been acted on by Government, presumably because of the difficulties of calculating how the grant should be made. I find there is a significant pressure group building up, supported by over 200 MPs, to try to remedy this injustice.
Finally I hope as many of you as possible have been able to survive the coronavirus lockdown and to be able to work as much as possible from home and stay safe.
Professional Indemnity Insurance Questions
My other hat is as chairman of a committee of one dealing with our relationship with our preferred insurance brokers who are now Locktons. It was disappointing to lose contact with Richard Brown who had supported us for many years through his various organisations. Incidentally, many of you who remember him at conferences will be pleased to know that I have heard from him again that he has emerged from gardening leave as a consultant broker.
Our relationship with Locktons got off to a good start in early 2019 with their immediate support for us at our 2019 conference followed by their support at our autumn 2019 meeting at The Law Society. Obviously we were hoping that they would have a presence at the Malaga conference but they have accepted the inevitable with very good grace on the basis that they have made it clear that they see their relationship with the Group as a long-term relationship, even though the formal agreement between us is currently on a year-to-year basis.
I have been pleased to be able to report to the officers and in particular the Treasurer that the full amount of the payment due to the Group from the agreement with Locktons for last year has now been received. Whilst not providing specific details in this article, as opposed to the AGM, I can say that this is in line with the higher of the projections which Locktons made and whilst for this year it was lower than our usual annual receipts, the projections look good for the future because Locktons are receiving a lot of support from sole practitioners as a result of their promotion and the service that they are now providing the Group.
Incidentally during a recent insurance Zoom seminar organised by SPG in conjunction with Locktons on “The impact of Covid 19 on PII renewals”, it was gratifying to see the comments page coming up with various people, unprompted, commenting on the good service that they had from Locktons in the last renewal round. In addition the webinar is available to view on the SPG website for anyone who missed it.
Last week I was fortunate enough to be invited by Nick Gurney Champion, the Chair of The Law Society Professional Indemnity Insurance Committee, to listen in to the regular insurance brokers roundtable with The Law Society representatives. Factors that came out of this discussion are that the market has hardened recently. That hardening took place a year or so ago so there may be more of an uplift on those renewing after 18 months rather than those who have renewed within the last year. Insurers are unfortunately not coming into the market looking for business. If anything they are leaving the market. There was also a discussion as to whether minimum premiums would have to raise to a minimum of £5000 per year, regardless of the amount of business.
As ever the advice from brokers is to provide very detailed answers to questions in the proposal form and to start the process earlier bearing in mind that there is less appetite to take business from people who have started late and have not provided full information. Obviously insurers will need to take into account that much work is being done, and indeed in the future will be continued, on a remote basis and so insurers will want to question the firm’s remote working processes and policies and be told frankly what risks are involved in remote working with individual firms and what has been done by the individual firms to mitigate those risks by way of supervision of work and communications.
In addition insurers would be looking very closely at the financial viability of firms bearing in mind that the minimum insurance terms with which every insurer has to comply is to provide six-year run-off cover, regardless of whether the run-off premium is paid on the cessation of business. This unknown quantity is clearly causing aggravation to insurers who would like to be able to quantify the risk much more accurately.
Features which help negotiations over the run-off premium are the fact that the firm has kept good records and will store those records into the future. This of course is much easier these days on the basis that everything can be scanned onto a disc rather than all the previous firms papers having to be stored in a garage somewhere.
Solicitors Indemnity Fund Closure
That brings me finally I hope to the last subject which is the perplexing issue of the closure of SIF. The story so far is that, as many of you will know, and many of you will have paid to the old Solicitors Indemnity Fund, there was a residual balance from the Fund on closure in about 2000 which has continued to pay out for losses sustained after the termination of the minimum terms run-off of six years.
The powers that be say that everybody knew that this fund would come to an end at some stage in the future. However not many people who were around and thinking about matters at that time remember being told that! The Fund is effectively controlled by the SRA as a protection for the public, and the SRA have now taken the view that their regulatory requirements do not require the protection of the public beyond the first six years of run-off following closure of the business in question. The SRA have been working on the assumption that there are very few claims which extend beyond the six years. If that is the case, then why has the residual SIF fund now started to run out of money. As solicitors we all know that many claims extend beyond the initial six years limitation period.
I have been getting numerous concerns from retired solicitors some of whom retired more than six years ago who were worried about waking up on the 1st of October 2020 and finding if an unlikely, but as solicitors know, potentially disastrous claim comes in after that date they could find their personal assets and financial retirement plans at risk, following the withdrawal of cover.
The SRA had already extended the closure of SIF once to the 30th of September 2020. Discussions have been held within The Law Society about this but no plans have been in place to put in hand to create some form of scheme to help the retired solicitors and they were left to make their own approaches to insurers. The insurers were not prepared to hand out ad hoc policies without all the necessary background material as to the risk, to enable them to do so as this would involve extensive investigations which were not under way.
As a result of this and facing the oncoming express train coming down the tracks, The Law Society asked the SRA for a further three years extension to the fund. Having given one extension it was unlikely the SRA was going to give another, but they may have been persuaded by the argument put forward on behalf the Group, that whilst the SRA had made their decision, there had to be a chance for The Law Society, in the light of the current pandemic, to have further time to be able to put together a scheme to provide some protection for retired members.
On that basis the SRA has given a non-renewable extension of the Fund for a period of one year to the 30 of September 2021 which needs to concentrate every one’s mind to some formal scheme. I have already had discussions on behalf the Group as far back as February with Locktons as to the sort of possibilities which are available using the balance of the funds to provide some sort of block premium for a form of policy, possibly with a limited form of cover, to at least provide protection against the worst losses which might be suffered from a post six-year run off claim.
The difficulty is that neither The Law Society nor technically the Group formally represent those ex-members as many of them are now no longer active and practising, but as far as the Group are concerned they are likely to have been sole practitioner members when they closed without finding successor practices.
You will be glad to know that we have Lubna Shuja as Chair of The Law Society Membership and Communications Committee (“MCC”) and a member of the Board nominated as a Council member by the Group, and also myself as a Council member, but outside the internal steering group, and monitoring the position on behalf of the SPG. I have personally been in correspondence with the SRA who are supportive of the need to assist as much as they can to find a future solution and I believe The Law Society accept that this has to be achieved. I know from recent discussions that Nick Gurney-Champion is working to set up and agree a scheme which will continue to provide ongoing cover although investigations into this in the past have felt that there would be significant difficulties funding any such scheme.
I hope that Locktons can take a prominent part in coming up with such a scheme which will take account of the resources that are available and put proposals which can be considered by the profession as a whole and by sole practitioners in particular.
For those of you who remember as far back as far as the Founders Fund, to which I believe original members each contributed £50 to form the Group many years ago, the Executive Committee has taken the view that that would be an appropriate fund to support those retired members by way of any legal advice required to support the SRA and now The Law Society do the right thing by those retired members. That fund has always been £15,000.
The Law Society cannot take any action against the SRA because they are still technically one organisation, but the SPG, having been put in the position of having to leave the formal relationship with The Law Society, is able, if necessary, to take action against either organisation. However, having said that it can be said that the SPG relationship with both organisations is the best that it has ever been in recent years, and we have to get the best deal for retired members as a result of that cooperation but in the knowledge that if the deal is not what it should be the Group has the resources to question it.
As I have said for many years at the end of my client care letter, if you’ve managed to read this far then thank you.
Clive Sutton
Honorary Secretary