Dr. Shane McCarthy, Chair
The Regulation of Practice Committee has two primary functions:
The income and expenditure account of the Compensation Fund reflects a surplus of €2,575,991 for the year ended 31 December 2025 (representing an excess of income over expenditure before fair-value movements arising on revaluation of investments and liquidity funds and tax), as compared to a deficit of €234,787 for the year ended 31 December 2024. The increase of €2,810,778 is due primarily to a reduction in net claims of €2,669,697, an increase in income of €201,593, and a surplus on realised movement of investments and liquidity funds of €81,571 being incurred compared to a net loss of €129,312 in the previous year, resulting in an increase of €210,883. This was partially offset by an increase in expenditure of €271,395.
During 2025, Compensation Fund investments experienced an increase in fair value arising on the revaluation of investments of €601,543, as compared to an increase of €1,713,156 in 2024. In addition, money invested in short-term liquidity funds during the year increased in fair value on revaluation by €96,044, as compared to an increase of €148,524 in 2024. There was a taxation charge of €96,492 on a deemed disposal during the year. Accordingly, the surplus after fair-value movements arising on revaluation of investments and liquidity funds and taxation was €3,177,086, as compared to a surplus of €1,626,893 in 2024.
Income in 2025 reduced by €150,585. There was an increase of €152,271 in contributions receivable due to an increase in practising certificates taken out. There was also an increase in returns on realised movement of investments and liquidity funds of €77,643, along with an increase in recoveries of legal costs, disciplinary fines, and investigation levies of €49,323. However, there was a reduction in recoveries from defaulting solicitors of €429,822, resulting in a net reduction of €150,585 in the total income of the fund.
There was a reduction of €2,961,363 in expenditure compared to 2024. This was primarily due to a reduction in the provision for claims of €3,099,519 and a loss incurred in 2024 of €133,240 on realised movement of investments not recurring. These reductions were partially offset by an increase in operational costs of €271,396.
The net assets of the fund, as at 31 December 2025, stood at €31,707,808, as compared with €28,530,722 at 31 December 2024. The increase of €3,177,086 in the net asset position of the fund as between the two year-ends is reflected by an increase of €2,479,499 in revenue reserves, together with an increase of €697,587 in the unrealised profit on the investment and short-term liquidity fund portfolios.
The decision to transition to the new investment portfolio in 2024, designed to reduce the risk profile and concentrate on capital preservation while providing a return above inflation, has paid dividends during the recent market volatility due to geopolitical turmoil, resulting in an increase in the portfolio’s valuation in the first four months of the year.
In the four months ended 30 April 2026, 34 claims were received, amounting to €808,348. Payments totalling €282,089 were made during that period, of which €60,049 was in respect of claims received in 2026 to date, with claims amounting to €743,455 remaining under consideration.
Insurance cover for €55 million in excess of €5 million is in place for the year ending 31 January 2026, with a further saving of €52,744 obtained.
The Regulation of Practice Committee, following a rigorous review of the financial position of the Compensation Fund and the effects of inflation and the geopolitical unrest, decided that it was appropriate to maintain the Compensation Fund element of the practising certificate fee at €700 for the fourth year in a row.
The largest standing committee in the Law Society, the committee sits in four general divisions, a claims division, meets in plenary session, and subdivides into specialist subcommittees/working groups where required. The committee met 50 times during the period reported on.
Arising from these meetings, the committee decided to:
In addition, three practice notes were published relating to interest on client moneys; moneys remaining in the client account; and the use of the client account for loans to solicitors or between clients.
