THE DECISION of the council of the Law Society to guarantee a €8.4 million loan to the Solicitors’ Mutual Defence Fund (SMDF) received the endorsement of a special general meeting of the society on Wednesday night.
The meeting was called by more than 100 signatories to a requisition for such a meeting to discuss three motions which implied criticism of this decision, and of the council of the Law Society generally.
The critical motions were overwhelmingly defeated following a heated debate that continued for over three hours.
The loan guarantee was necessitated by the loss of this sum by the fund, which provides professional indemnity insurance for solicitors, through the purchase of a bond which lost 97 per cent of its value.
The fund has issued proceedings in the Commercial Court against Bloxhams stockbrokers over the bond. Due to the losses, the fund could not continue to provide professional indemnity insurance without a loan, for which it required a guarantee.
At what was described as the biggest attendance at any general meeting of the society for many years, 39 people spoke. As well as raising questions about the decision of the council to guarantee the loan to the fund, speakers also raised the issue of the decision to acquire a 1.1 acre site adjoining the society’s premises in Blackhall Place in 2005.
According to a report to members from the society’s president, Gerry Doherty, there was both criticism and praise for these decisions, as well as criticism of the manner in which they were taken.
“In reply, council members explained in detail the good reasons for these decisions, the responsible manner in which they were taken and why it would be contrary to the best interests of the profession to seek to fetter the council in making such decisions,” Mr Doherty told members.
“A detailed explanation was given of the circumstances, together with the process, in which the council decided to guarantee a loan to the SMDF,” he said.
“It was done in order to ensure a competitive professional indemnity insurance renewal market at the end of last year and to avoid the chaos of a potential market failure. Several council members last night described the decision as necessary and as ‘the least worst option available’.” In his electronic letter to members, Mr Doherty also acknowledged it was necessary for the council to communicate better with the profession.
The three resolutions were heavily defeated, by majorities averaging four to one. The first sought to prohibit the council for entering into any guarantee on behalf of the society without the prior approval of members at a special general meeting.
The second sought to prohibit the council from purchasing any interest in property without the prior approval of a special general meeting. The third sought to prohibit the council from exposing the society to any risk involving exposure to any sum in excess of €500,000 without the prior approval of the members of the society at a special general meeting.