The amount paid out in claims by the Law Society to compensate clients of rogue solicitors rose by 29 per cent to €3.67 million in 2014.
The Law Society has in place a compensation fund to deal with people left out of pocket by defaulting solicitors.
Between 2014 and 2009, the fund has paid out €23.35 million in claims.
The most high-profile case to come before the fund in recent years was solicitor Michael Lynn.
Mr Lynn cost his fellow professionals almost €2.6 million in compensation paid out, with an additional €2.1 million recovered from Lynn’s client accounts to compensate clients.
The overall €3.67 million paid out by the fund in 2014 compared to €2.85 million in 2013; €4.3 million in 2012 and €3.69 million in 2011.
At the end of 2014, the fund’s accounts show it had €23 million in financial assets.
Director general of the Law Society Ken Murphy yesterday revealed the highest single amount paid out in 2014 was €205,000.
In 2014, each solicitor taking out a practice certificate paid €760 into the compensation fund. Total contributions from solicitors into the fund increased from €6.58 million to €6.81 million.
The fund increased its provision for claims from €2.96 million to €3.83 million in 2014.
Mr Murphy said: “While provision for claims increased by €870,590, there was an increase in recoveries from defaulting solicitors of €1,182,615.”
The figures show that the amount recovered from defaulting solicitors totaled €1.68 million compared to €499,303 in 2013.
Mr Murphy pointed out that the net cost of claims after recoveries was €2.149 million in 2014 as compared to €2.461 million in 2013 – a reduction of €312,025.
He said: “It is normal for both provision for claims and recoveries from defaulting solicitors to fluctuate from year to year. No special significance should be attached to this.”
The fund enjoyed a bumper year in its return on investments, increasing from €686,811 to €2.2 million.
Overall, the fund’s income in 2014 increased by 37 per cent, going from €7.9 million to €10.83 million.
The fund’s expenditure increased by €683,567 or 8 per cent, going from €8.23 million to €8.92 million.
The spend includes the €3.8 million paid out in claims; €2.2 million in administration costs; €1 million in Law Society overheads; €644,499 in practice closure administration costs and €350,478 in legal and other professional fees.
As a result mainly of the fund’s investment income increasing, the fund recorded a surplus in 2014 of €1.9 million, compared to a loss of €336,560 in 2013.
Mr Murphy said: “The surplus for 2014 reflects the prudent investment policies of the compensation fund together with a stringent oversight of all costs associated with the maintenance of the fund and administration of the regulation of the profession.”
At the end of 2014, the fund had financial assets of €23.67 million that are readily convertible to cash. Staff costs at the fund totaled €2.54 million in 2014.
This article was originally published in the Irish times by Gordon Deegan on the 5th January 2016