An insurance fund for solicitors that ran into serious financial difficulty more than five years ago is to be taken over by a British company.
The Solicitors' Mutual Defence Fund will be taken over by Randall & Quilter Investment Holdings Ltd, a London-based, non-life insurance acquirer and underwriting manager.
In a statement issued to members of the Law Society, society president Stuart Gilhooly said as a result of the takeover, an annual subvention of €200, paid by every solicitor in the country, would be reduced in 2019. The reduction would come "three years ahead of schedule, and cease thereafter", said Mr Gilhooly, who has been a director of the fund since 2011.
“Additionally, if certain performance targets are achieved, there will be a further financial return to the society,” he said.
At the height of the boom, in 2007, the fund, which provided professional indemnity insurance to more than half of all solicitors in Ireland, had reserves of €23 million. But once the economy collapsed, these were virtually wiped out and, at the same time, claims against solicitors increased rapidly.
By 2011, the estimated gross liabilities of the fund were €200 million, with approximately 1,200 claims against members, Mr Gilhooly said.
Following an emergency meeting in May 2011, solicitors voted to pay the annual subvention until 2021 to create a support package of €16 million for the fund.
In its most recent filed accounts, for the year ending November 2014, auditors said the fund had net liabilities of more than €6 million and gross liabilities of more than €116 million.
Fund directors
The accounts also show there were five directors of the fund in 2014; Mr Gilhooly; Patrick Dorgan, chairman; Frank Burke; Paddy McSwiney; and Jim Graham, who resigned in August.
More than €120,000 was paid “for services as director”, the accounts show. In addition, wages and salaries cost almost €334,700. The accounts record an average of three people employed by the company in 2014, excluding directors.
The fund’s 2015 accounts have not yet been filed.
Mr Gilhooly said at the end of November 2015, gross liabilities were reduced to a figure of approximately €80 million from 300 claims. He did not stipulate net liabilities.
He said the precise terms with Randall & Quilter were commercially sensitive but, as a result of the deal, it was “highly unlikely” the full commitment of €16 million would be required from members.
He also said the fund and the Law Society had received extensive professional advice and were satisfied with the terms of the deal, and with “the solvency, strength and reputation of Randall & Quilter”.
