I wrote previously about the professional indemnity insurance crisis that hit the solicitors’ profession in late 2009. The solution adopted was a guarantee by the Law Society in favour of a specialist insurance broker, the SMDF.
Before the deadline for renewal of insurance, many speculated that the crisis was a result of the economic turmoil generally or the actions of a very small number of solicitors. The guarantee was kept secret until well after that deadline passed. The Society then emailed its members outlining the real reason for the crisis: the SMDF could not offer insurance without plugging a hole that had emerged in its finances when one of its financial investments lost between 97-100% of its value. The Society’s guarantee would allow the SMDF to borrow the sum lost.
Many members of the Society (ie. solicitors) were incensed to learn the details of this rather shocking development and of the similarly disastrous investment by the Society in a property neighbouring its Blackhall Place headquarters, purchased for €22.4 million in 2006 and valued at €7 million in 2009. An EGM was called to discuss both incidents and various motions were to be debated seeking to limit the ability of the Society to enter into such transactions.
The motions were strongly defeated at the EGM. More than 100 signatories called for the convening of the EGM, yet each motion received the support of only 21 – 39 votes. The motions were soundly defeated, though that does not quite equate to the guarantee being “endorsed”, as reported by the Irish Times.
The votes have put an end to the story for now, but further detail is sure to emerge if the proceedings arising from the Saturn bond go to trial.
Endnote: The Society communicated details of the upcoming EGM by post. Solicitors receive a large volume of correspondence from the Society during the course of a year, most of it consisting of magazines, promotional brochures and the like. Much of it is binned or shelved, unread. Recently, however, the Society has made greater use of email to communicate urgent or important messages; indeed, the outcome of the EGM was communicated the next day by email. It appears quite odd that the letter notifying solicitors of the upcoming EGM was not also emailed, though it should be noted that the EGM was comparatively heavily attended.