Many solicitor firms in Ireland finding it a struggle

Many solicitor firms in Ireland are finding it a struggle to keep their doors open due to the foundering economy and rampant professional indemnity insurance premium costs.

Smaller solicitor firms have been hit particularly hard, industry experts say, as one and two partner firms have found it more and more difficult to survive, as declining fee incomes meet head-on with increasing overheads caused by expensive professional liability insurance premiums.  Property transactions have traditionally been these firms’ bread and butter, but since the global economic downturn, fewer people are buying or selling property, which then has a knock-on effect on both probate and family law as well.

Many of these solicitors had become embroiled in partnerships with clients in the property business, which has led to these solicitors taking on massive liabilities.  A handful of unscrupulous solicitor firms gave undertaking to improperly established banks or dipped into their clients’ accounts to finance property transactions, and as a result these business liability insurance cases are now grinding their way through the court system.

These massive insurance claims against these solicitor firms, sometimes running into the millions and millions of euro, have of course led to increased professional indemnity insurance prices for all solicitors, even if they have no claims history and only deal minimally with property business.  With liabilities of €170 million, the Irish Solicitors Mutual Defence Fund has utterly collapsed, and the average insurance premium price for a firm with one or two partners has risen to an eye-watering €20,000, up from its previous average annual price of  €5,000 to €6,000.

This price increase comes at what could be the worst time for the solicitor market, as fee incomes have collapsed because of a lack of property transactions, the inability or unwillingness of clients to pay fees that had been all too manageable when times were better, and the overall global economic downturn.

© 2017 All rights reserved. Reproduction in whole or in part without permission is prohibited. See our copyright notice.

Tags: , ,