Research into Scottish solicitors’ professional indemnity insurance published by the new Scottish Legal Complaints Commission has shown a wide gulf between solicitors' understanding of the purpose of the master policy, and its actual intention.

"Solicitors saw the primary purpose of the Master Policy to be the provision of professional indemnity insurance for solicitors. In their view the reassurance that this provided to clients and potential clients was a by-product of this," the research concluded.

"Claimants saw the effective function of the Master Policy to be the protection of solicitors when it should be the protection of clients. The representatives of the Law Society of Scotland who took part in the research expressed the view that the Master Policy’s primary purpose is not to protect consumers but is as professional indemnity insurance.

"It is our view that material on the Law Society’s website raises claimants’ expectations as to the purpose of the Master Policy. It is clear that under the Master Policy (or any professional indemnity insurance) claimants must prove the solicitor’s liability for the losses which the claimant has suffered. What professional indemnity insurance (including the Master Policy) does is to ensure that if liability is proved compensation will be paid. 

"We have formed the view that use of the term 'Guarantee Fund’ raises the expectations of potential claimants given the discretionary nature of the fund."

"Their perceptions of the operation of the Fund were in stark contrast to how its operation was described to us by representatives of the Law Society and other members of the profession we were able to interview. These claimants had all ended up being party litigants even although they had begun their claim by seeking a solicitor to act on their behalf."

"They report what they perceived as long delays in their claims being dealt with by their own solicitors and had formed the view that solicitors were ‘colluding’ to ensure that payouts from the Master Policy were low.  On the other hand the solicitors whom we interviewed suggested that the problem may lie in claims lacking merit or claimants overvaluing their claims. It was argued that the Law Society’s requirement since 2005 for all firms to have Client Relations Partners and the introduction of a Pursuers’ Panel of solicitors to advise claimants had improved the process. None of the claimants we interviewed were aware of the existence of the Pursuers’ Panel."

Reviewing the research, SLCC Chair, Jane Irvine said  “The research is unique as it is the first to examine how the Master Policy and Guarantee Fund function but we are very disappointed that conditions imposed on the data delivered by the Law Society of Scotland’s broker, proved unacceptable and the transparency of operation, which is key for all users, is not apparent."

The SLCC, which opened for business on 1 October last year, was set up by the Scottish Government primarily to provide a modern complaints handling system enabling complaints against the legal profession to be resolved quickly and effectively.