By Michael Murphy, Solicitor, Litigation Department
Please note, the following information relates to firms that ceased in practice prior to 30th November, 2012 and entered the Run-off Fund for the 2012/2013 indemnity period. The information below is intended as general guidance and does not constitute a definitive statement of law.
The Run-off Fund provides run-off cover for legal firms ceasing practice who meet relevant criteria under the regulations. HOMS are instructed by Capita the manager of the Run-off Fund.
The Special Purpose Fund (“SPF”) was established for the 2012/13 indemnity period onwards and consists of two elements:
1. the existing Assigned Risks Pool (“ARP”); and
2. the new Run-off Fund (“ROF”).
The ARP and the ROF are managed by the SPF Manager but each fund is still a separate entity. The position of SPF Manager was awarded to Capita Commercial Insurance Services following an extensive tender process and Holmes O’Malley Sexton is one of the firms of panel solicitors appointed to act for the SPF Manager.
The Run-off Fund was established in the current indemnity period in order to assist firms ceasing practice, make retiring more affordable for solicitors, improve public protection, prevent abuse of the system, and provide incentives for solicitors ceasing practice to do so in an orderly fashion.
The Run-off Fund provides run-off cover for firms ceasing practice:
i. who have renewed their professional indemnity insurance (“PII”) for the current indemnity period; and
ii. subject to meeting eligibility criteria, including that there is no succeeding practice in respect of the firm.
The 2011 Regulations (SI 409 of 2011) set out the eligibility criteria. Any firm with a successor practice will not be eligible for entry to the ROF. A firm is not eligible for entry to the ROF until the practice period after that in which it ceased practice. “Phoenix firms” will also be deemed to be ineligible for entry to the ROF.
Run-off cover is provided to firms through the ROF under the following terms:
• Run-off cover is potentially indefinite in duration (subject to the Regulations being amended)
• The cost of providing this run-off cover is borne by insurers through general premiums collected
• All firms will carry the same self-insured excess into run-off that they had in their last coverage period in practice.
• Firms are obliged to comply with the following:
a) written notification of closure to the SPF Manager at least 60 days prior to ceasing practice/expiry of its coverage period;
b) provision of last proposal form and policy document to the SPF manager;
c) adherence to close of practice guidelines;
d) meeting a minimum common risk management standard;
e) prompt notification of claims to the SPF manager; and
f) cooperation with the conduct of claims.
• Failure to comply with the close of practice guidelines as published by the Society will result in the imposition of a maximum additional self-insured excess per indemnity period of €30,000.
• Run-off cover will commence at the end of the expiring coverage period for a firm.
• Before the date of cessation, the firm must provide confirmation to the SPF Manager that it is not aware of any other claims or circumstances which may give rise to future claims and must continue to notify its insurers of any such matters warranting notification until the expiration of their policy.
The firm must report any matters to the SPF Manager which come to their attention with regard to claims, notifications or circumstances which may give rise to claims in a timely manner, following commencement of coverage of the firm by the Run-off Fund.
Any interested party may notify a claim or circumstance on behalf of a run-off firm to the SPF Manager.
If you require further information please contact Michael Murphy, Solicitor, or Harry Fehily, Managing Partner.