ARP Enforcement Strategy continues apace as indemnity year end approaches

As the indemnity year draws to a close, the Solicitors Regulation Authority (SRA) is stepping up its efforts in taking strong enforcement measures against firms in the Assigned Risks Pool (ARP) insurance scheme that are failing to pay their premiums.

Since the strategy was introduced in July 2010, 89 of the firms covered by the ARP during 2009-10 have now closed down, with a further 48 currently covered by open market insurance for 2010-11. Of the firms covered by the ARP during 2010-11, 64 have already closed, including ten that have been closed by the SRA.

Out of the 309 firms covered by the ARP (at some point) during 2010-11, 163 have now paid their premium in full, with the SRA taking firm action against those remaining firms that fail to pay their premium and enter into policy default.

To date, formal disciplinary proceedings have begun against 17 firms that have failed to pay their ARP premium. The SRA has welcomed a recent decision by the Solicitors Disciplinary Tribunal (SDT) to suspend for 18 months a solicitor who failed to pay his ARP premium as well as failing to co-operate with the SRA during the course of its investigations.

Wendell Arnold, a former director of the firm of Arnolds Solicitors in Swansea, appeared before the SDT together with his former director, Lisa Jones. He faced two allegations of breaching the Solicitors Indemnity Insurance Rules 2008 and one of failing to cooperate with the SRA. All three allegations were proven. In its judgment, the SDT commented that: "It was well established in law that the Tribunal had a duty to protect the public and the reputation of the profession and the public's confidence in that reputation. It was essential for the protection of the public and the maintenance of the reputation of the profession that principals of firms put professional indemnity insurance in place and paid the premiums promptly".

As the indemnity year end draws to a close the SRA will also be putting greater effort and resources into helping firms manage their way out of the ARP.

The SRA's Chief Operating Officer Mike Jeacock said: "The SRA appreciates that economic conditions are difficult for many firms. During the course of the coming weeks we shall monitor and assist those firms currently in the ARP who are unable to find insurance in the open market and whose only option is to close.

"But we also have a responsibility to the public and the profession to ensure that appropriate action continues to be taken against those firms which owe significant amounts of premiums to the ARP."


Note to editors

The allegations against Wendell Arnold and his partner Lisa Jones are listed below:

  • Allegation 1: They failed to comply with Rule 10.3 of the Solicitors' Indemnity Insurance Rules 2008.
  • Allegation 2: They failed to comply with Rule 10.12 of the Solicitors' Indemnity Insurance Rules 2008.
  • Allegation 3: They failed to cooperate with the SRA in the course of its investigations and so committed a disciplinary offence as defined in Rule 20.05 of the Solicitors' Code of Conduct 2007.

All three allegations were found proven against Arnold. The first two allegations only were found against Jones, who was reprimanded. In deciding upon sanction against Jones, the Tribunal concluded that it was Arnold who was the director with sole responsibility for financial affairs, including the firm's insurance arrangements.

In addition, the Tribunal concluded that Jones (who was newly qualified) relied heavily upon Arnold and that she did not have the necessary experience either as a solicitor, or as the director of a legal practice, salaried or otherwise, of the duties and responsibilities required of such a role. The Tribunal accepted that she relied heavily upon Arnold for information about the firm's financial matters, which was to be expected as he was the equity principal and had been qualified for over 45 years.

The statistics quoted in this press release are accurate as at the date of publication.

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