Advising the Elderly and the Solicitors Indemnity Fund

Feature

posted 1 May 1998 in Volume 3 Issue 4

Advising the Elderly and the Solicitors Indemnity Fund

All solicitors will be aware of the proposed new rules for calculating contributions to the Solicitors Indemnity Fund to cover the shortfall. The proposals as recommended by The Law Society's standards and guidance committee are summarised in the Law Society's Gazette of 16 February and 5 March 1998 but the full consultation document has now been issued. I have not had time to study this in detail so this article is based on the summaries in the Gazette.

Basically The Law Society have to raise £460million to cover claims made on the SIF by the negligence or wrongdoing by Solicitors - and a lot of those claims go back to the late 80s.

There are two proposals. The first is based on a calculation of the shortfall based on gross fee income using a tapering percentage of rates and suggests this is then coupled with risk banding. The second proposal couples the gross fee calculation with the current low risk work discounts.

I want to concentrate on the idea of risk banding - but this could also apply to the current low risk work discounts, as both apply to those of us who read the Elderly Client Adviser -i.e. those who specialise in advising the elderly.

Very simply, my question is, what band would we fit into? In the box attached is set out the work categories with the risk factors that the SIF have calculated on the current information available to them. Rather interestingly this is not given in the consultation document itself, but only in the Gazette article.

It can be seen, for instance, that commercial and domestic conveyancing have the highest bare risk factor (2.29 and 2.02 respectively) and that, amongst the lowest (0.04) are such descriptions as 'Welfare' and 'Mental Health Tribunal'. Amongst the lowest, also, which I will refer to later, is no. 27, described as 'litigious (other)' (0.55)

How do we categorise the work we do for clients?

If we look at articles in the most recent ECAs we seem to concentrate on the following: -

(a) Advising on Care in the Community and how it works.

(b) Inheritance tax and financial planning.

(c) How to 'save' the value of the home from being used for funding care.

(d) Enduring Powers of Attorney: how they work and the practical applications of using them.

(e) Dealing administratively with clients' affairs when they are no longer able to.

(f) Court of Protection work, involving receiverships and registrations of enduring powers of attorney.

Where do these fit into the twenty-eight bands?

Would (a) be classed as 'welfare?' I could accept that the Court of Protection work might fall into category 27 (Litigious - other) but where do dealing with clients' affairs go in the above categories?

I deliberately set myself up three years ago as a solicitor advising the elderly. It is true that part of my work involves writing wills and probate but an analysis of my computerised bills rendered shows that 27% of my work is not covered specifically in the above work categories. This involves preparing Enduring powers of attorney and advising generally on financial affairs, including advice on Care in the Community, and administration of receiverships. I have written to the Gazette (letter published in Wednesday 25 March edition) and to the standards and guidance committee on this point.

As I said in that letter, I may well be raising a hornet's nest, as I have no idea how many solicitors have, in the past, run off with the money of elderly clients for whom they were acting. I suspect not many - not only am I subject to the Court of Protection's careful eye in the Receiverships that I have (indeed they have asked for a guarantee in one case which I have protested about), but for most of my clients there are nursing or other home fees to pay and if these are not paid in one month I soon get to hear of it - I suspect that in practical terms, if I were so inclined to run off with my clients' funds, I would only get away with a month's funds! This sounds flippant but is not meant to be.

Again, what measure of damages would follow from getting advice wrong with regard to Care in the Community? Presumably, the claim would be limited to the loss to the client which, with welfare benefits always kept low, would not be great. This sounds cynical, but I assume this is how the SIF would calculate the risk.

The above has been written as a discussion point for others, like me, who specialise in this relatively new "branch of the law". There are other Solicitors, such as Olswangs, who specialise in "Entertainment law" or others who specialise in "Charity law". All of us market ourselves with a particular type of client in mind, rather than a branch of the law. I am not suggesting that new categories be added (there are enough already!), to cater for the particular client we deal with. However, I would suggest that this aspect of a lawyer's work needs to be taken into account.

Would a new category, for instance "administration of clients" affairs" be an appropriate answer? And what risk would it carry? If it is a new category the SIF would not, of course, have figures upon which to rely.

I hope this engenders some interest from readers. But crucially the Committee have asked for comments from the profession. I would therefore urge all other "elderly client advisers" also to submit their representations.

Jennifer Margrave, 19 Woodlands Park, Merrow, Guildford, Surrey, GU1 2TH. The author is a solicitor, who specialises in advising the elderly client.