A challenge to the Isle of Man Law Society's ("the Society") compulsory professional indemnity scheme has failed meaning that all Manx law firms must continue to partake in the scheme. A ruling of the Isle of Man's First Deemster David Doyle sitting as Visitor of the Society dismissed an application by a Manx law firm in connection with the Society's refusal to grant it a waiver from the requirement to take out professional indemnity insurance through the Society's indemnity insurance scheme known as the Master Policy.

The Society declined to grant the applicant firm Appleby the waiver in May 2013 and Appleby deployed provisions of the Advocates Act 1995 of Tynwald in an effort to redress its grievance at the refusal. Both parties accepted that the decision made by the Society had been a very difficult one to take.

Appleby's application was made on the basis that the firm constitutes approximately 22% of the Isle of Man bar in private practice yet it already has indemnity insurance through the Appleby Group policy thus contributing to the Society Master Policy by way of substantial annual premiums did not benefit Appleby. The Deemster, being Visitor to the Law Society, was asked to consider whether the Society was wrong to refuse Appleby a waiver and whether the decision was tainted by unfairness. For a number of reasons the Deemster ruled that the decision was not wrong and had not been tainted by unfairness. The matter was considered afresh by a re-hearing on the merits and the Deemster concluded that it would not be appropriate to grant Appleby a waiver.

The Deemster accepted that the Appleby Group policy provided the necessary indemnity to protect Appleby clients. He went on however to point out that the Society must have regard to the interests of other members of the public and the interests of the legal profession in relation to legal matters. Deemster Doyle commented:

"Sometimes, in the fast moving modern global commercial world where financial targets and the pursuit of profit appear to dominate centre stage, we need to pause and remind ourselves that the legal profession is a profession. It is not simply a money generating business. It is far more important than that. Independent advocates providing properly insured legal services are important to the maintenance of the rule of law in a civilised society. Members of the Society which comprise the Manx legal profession provide legal services over a wide range of matters to both local and international clients. That is in the public interest."

Deemster Doyle went on to indicate that:

"Sometimes if you are a member of a society you have to do something which you may perceive is not in your own personal interests and which may impact adversely upon you financially but is necessary for the greater good of the society of which you are a member and the interests of the public which the society serves. All members of the legal profession must on occasions put the interests of the legal profession as a whole and indeed the interests of the public over and above their own perceived personal interests. A classic occasion when that needs to happen is when members are dealing with professional indemnity insurance and the Master Policy."

Deemster Doyle recognised the financial impact on Appleby if a waiver was not granted but stated that this was a cost advocates have to bear if they are members of the Society in the local legal profession. He was content that the Society had properly considered this point. The Deemster was also content that the council of the Society had done its best in very difficult circumstances to arrive fairly at a decision considering and debating the real and genuine concerns to the legal profession and the public.

After a detailed analysis of the grounds for the application and the procedure adopted by the Society in making a decision, the Deemster concluded that it would not be legitimate for him to interfere with the decision and that he had not been persuaded that the decision was wrong. The Society's decision to refuse to grant Appleby a waiver from the requirement to take out professional indemnity insurance through the Society's indemnity insurance scheme therefore confirmed.

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