FIRMS paying into the Scottish Solicitors’ Staff Pension Fund are likely to see their share of the scheme’s £18 million deficit decrease thanks to an opinion delivered by the head of the judiciary.

While Motherwell firm Marshall Ross and Munro (MRM) had argued that changes to its partnership over the years meant it should not be liable for a £90,000 deficit-reduction payment, Lord President Lord Carloway said that to anyone outside the firm the changes were irrelevant.

It is the latest court decision to strengthen the hand of the scheme to recover contributions from firms whose former employees it pays pensions to.

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Set up in 1947, the pension fund provides retirement income to the employees of 40 firms, with around 190 of its 300 members already drawing their pensions while the remainder have yet to retire.

Although the fund closed to new entrants and future accruals in 2003, firms are still required to fund it on an ongoing basis to ensure it will be able to make all the payments its members are entitled to.

How much each firm has to pay varies depending on their share of the deficit, which in turn depends on how many of their employees signed up to the scheme, how long they were employed for and how much they were earning when they either retired or stopped accruing benefits.

In its accounts for the year to August 2017, Anderson Strathern noted that its share of the deficit stood at £2.1m, with the firm paying £393,000 into the scheme over the course of the year. Brodies, meanwhile, was responsible for £991,000 of the overall deficit in the year to April 2017 and expects to pay at least £217,000 a year on an ongoing basis.

However, as Pinsent Masons partner Ian Gordon pointed out, a number of smaller firms that only had a handful of employees in the scheme have tried to get out of making deficit-reduction payments, leading the fund’s trustees to take action against them as a result.

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The case involving MRM, which historically paid pension contributions on behalf of three employees, is the latest. Despite more than two decades passing since any of the employees worked at the firm – one was employed by MRM between 1955 and 1989, another from 1989 to 1994 and the other from 1960 to 1986 – the portion of the pension deficit allocated to the firm stands at £90,000.

MRM had argued that because its partnership had changed every time someone left or joined, the firm today is not the same entity that employed the scheme members, meaning it is not liable to contribute towards its deficit.

For Pinsent Masons partner Craig Connal QC, who acts for the trustees of the pension scheme, the case and an earlier one involving Pattison & Sim – which was pursued for contributions of over £62,000 - highlighted a “tension between legal theory and the practical realities of trading”.

When dealing with the Pattison & Sim case in 2011, Lord Hodge – who has since moved up to the UK Supreme Court bench – concluded that while it is true that a partnership is dissolved and reconstituted every time a member leaves or joins, the next iteration of the partnership assumes “responsibility for the prior business debts of the practice, including the contingent liability to the [pension fund]”.

However, when the MRM case came before Lady Wolffe in the Outer House of the Court of Session earlier this year, she disagreed, saying the current MRM partnership does not have a liability to the scheme.

Following an appeal to the Inner House, a panel of three judges led by Lord Carloway rejected that view in favour of the reasoning put forward by Lord Hodge.

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While the matter will now go to a full hearing to determine how that interpretation of the law will impact on MRM specifically, Mr Gordon at Pinsent Masons - who acts for the pension scheme alongside Mr Connal – said the decision is good news for firms that have been paying into the pension.

“The scheme is structured in a way which means that potentially all the liabilities could end up being borne by the larger employers with the broadest shoulders,” he said.

“On the back of Lord Hodge’s decision we’ve been chasing a number of other firms – I’m hoping this is the decision that makes them pay up.”