rose to ask Her Majesty’s Government what is their assessment of the role of solicitors and the Law Society in the British Coal miners’ compensation litigation.
The noble Lord said: My Lords, I declare an interest having been a claimant and as the author of an article in the Times on 30 May 2006, for which I have received payment. Both of these payments have been paid to the Prince of Wales Hospice in Pontefract.
I rise to address your Lordships’ House in sadness and disgust—disgust at the solicitors claiming fees from miners’ compensation when they have already received agreed fees from the Government of £2,100 per case. Having been fighting in your Lordships’ House and in another place for the past 24 years for justice for disabled miners, I feel some responsibility speaking for thousands of elderly miners and widows who are claimants under the British coal miners’ litigation.
On the day of my 14th birthday I went down the pit, where it was my privilege to work alongside some of the finest, hardest-working men this country has ever seen. Tragically, as a result of labouring underground in terrible conditions, many of the miners had their lungs destroyed and suffered vibration white finger.
Following upon the High Court rulings in favour of the miners, it is to the credit of Her Majesty's Government that they provided uncapped funds to facilitate the swift delivery of compensation. In that process, the claimants were generally represented by solicitors who, in turn, were regulated by the Law Society. My task this evening is to assess the performance of the solicitors and the Law Society. The conduct of a number of solicitors handling miners’ claims has, in my view, been disgraceful. Between 1999 and 2005, many solicitors acquired vast fortunes; double-charging lawyers had a charmed life, since the Law Society appeared to be in a coma. The Law Society appeared to wake up in 2004, but that was because of intense parliamentary pressure.
We are concerned about the conduct of solicitors over seven years. A 1999 Law Society report said that the ruling was a charter for double-charging solicitors. I have consulted widely on these issues. In recent weeks, I have met Ed Balls, Member of Parliament and Economic Secretary to the Treasury; I have spoken to Zahida Manzoor, the Legal Services Ombudsman; and I have met the Law Society, which informed me that it was keen to bring to justice the solicitors who have been guilty of deducting fees from miners’ compensation. I have also been assistedby Written Answers provided by Her Majesty's Government in response to several dozen Questions that I tabled. After this exhaustive investigation, it is my belief that we cannot depend upon either the solicitors concerned or the Law Society to put matters right.
In a special report on the miners’ cases published on 5 April 2006, the Legal Services Ombudsman castigated the Law Society for its failure to investigate the miners’ complaints properly. The ombudsman described the miners and widows as being very vulnerable, mainly elderly, with some having severe health problems. It was also evident to the ombudsman that the Law Society was operating the same arbitrary conciliation process without any proper investigation of individual cases.
The ombudsman ruled that the Law Society’s failure had left these people badly let down. That was a damning indictment. However, the Law Society had the arrogance to respond with an attack on the ombudsman; indeed, it wrote to me on 19 June to say that it did not accept the report.
So there you have it. According to the Law Society, the Legal Services Ombudsman got it all wrong. On that basis, it would appear that I have also got it all wrong. It must follow, therefore, that tens of thousands of miners and their widows have got it all wrong. However, nothing could be further from the truth. The Law Society and the solicitors have failed the miners and their families, a very vulnerable group, and are trying to shirk their responsibilities for this appalling state of affairs.
Under the schemes, the solicitors get an average fee of £2,100 per case. However, more than 166,000 claimants received less in compensation than the costs paid to the solicitors. The outstanding claims will not be concluded until 2009, by which time the solicitors will have been paid a staggering £1,851 million. However, many of them betrayed their clients by double charging and acting as debt collectors for claims farmers and certain unions intent on exploiting this vulnerable group.
While the solicitors have their snouts in the golden trough, it is left to us to secure justice for the miners and widows. These good people are desperate for our help. Some of the men are close to drawing their last breath and even then, can do so only with the help of an oxygen cylinder. It cannot be left to those poor souls to take on the lawyers and their regulators. For my part, I will use my remaining time on this earth to try and ensure that every last penny is paid back, with interest and compensation on top. I also demand a full regulatory investigation to ensure that every offending solicitor is hauled up before the solicitors’ disciplinary tribunal.
It will be noted that I have not named the solicitors at fault. However, I give notice that if this matter is not resolved forthwith, then when it comes back before this Chamber, if it ever does, I will name and shame every last one of them.
Every single case must now be properly investigated. If the Law Society does not discharge its regulatory duties, then let Her Majesty's Government bring in an internal investigation team to sort out this unholy mess. Regrettably, time is no longer on the side of the miners and widows. We know that more than 12,000 of them have already died, without receiving any compensation.
Since it has taken the Law Society seven years to start tackling the offending solicitors, there is a real risk that thousands more elderly miners and widows will die being denied justice. I urge noble Lords to join me in expressing unreserved condemnation of the offending solicitors and their regulators, the Law Society, thereby assuring the miners and widows that they have the support of this Chamber.
Let me recount my own experiences. The lawyers agreed a figure with Her Majesty's Government or the department, whichever it was, to cover legal fees.I take the view that if they were not satisfied withthe fees, they should have negotiated with the Government to increase them. I think the figure was too much in any case; nevertheless, they should have had the opportunity. They should not have been deducting money from the miners’ compensation, some of it a measly £500 or less. That cannot be right.
The lawyers may argue that they are within their rights; they have the agreement of the men, the women, and all sorts of people. But that pales into insignificance beside the fact that if it is legally right—which they will argue—more importantly, it is morally wrong. I will never rest until these miners and their wives get justice.
Twenty-four years ago in another place, I did not spend my time presenting Bills and sitting up all night to get a slot for them with the intention of lining the solicitors’ pockets unfairly. I did it for the protection of those men who I worked alongside. I saw them lose their faculties. They could not breathe and could no longer work. I saw that at first hand. I was at the side of those men on the coalface when I was aged 17 and a half and I saw it all happen. I am asking tonight for this noble Chamber to give justice to these miners and for us to give them our support.
My Lords, I congratulate my noble friend Lord Lofthouse on raising a debate on this important issue. My noble friend has an outstanding and lifelong record and reputation for fightingfor miners and their families. Indeed, much ofthe legislation on compensation is down to his considerable efforts. It is clear that the main issue of this debate is one on which my noble friend and I agree.
Like my noble friend, I have a trade union background. I spent all my working life fighting for workers’ rights. Since standing down from my main roles in the labour movement, I have become the non-executive chair of the supervisory board for Thompsons Solicitors and I declare that interest. Thompsons is the UK's largest trade union law firm. The first clause in its partnership deed states that it exists to help the trade union movement not to maximise income for partners but for trade union members. Most unions use Thompsons and to some extent my own union, Unison, uses it solely as its legal provider, but it acts for many unions including the Transport and General Workers’ Union, GMB, Amicus and many others. For many years, Thompsons has also acted for many areas of the NUM. It is instructed at present by the Scottish, South Wales and Durham areas of the NUM.
For me, this debate is essentially about the exploitation of hard-working men—working people who have been injured through no fault of their own and have not been properly compensated. Both my noble friend and I have been sickened by the stories of personal wealth built on the back of poor service by claims companies and mediocre law firms. The problem is essentially that, on the introduction of the coal health scheme, more than 700 law firms, many of which had no experience of trade union work, let alone miners’ work, became involved in what can only be described as a feeding frenzy to make money from the scheme. Many, but not all of those law firms, have been named in another place. There has been heavy criticism of UDM/Vendside both in another place and in newspapers and it is clear that there has been bad abuse of the scheme, the extent of which we will only know in time.
Far too many law firms have been allowed to get away with cherry-picking safe cases, being paid by the DTI and at the same time making deductions from compensation. The Law Society, as my noble friend said, has been making efforts to deal with that. Sadly, it seems from what we have heard tonight and what we have read in another place that its performance has been poor. It has attracted widespread criticism for the way that it has been conducting its investigations and I hope that the Minister will be able to apply pressure to remedy that fault.
Much has been said about the level of fees covered by law firms. My noble friend mentioned it in his speech and gave more detail in his earlier article in the Times. I suspect that neither of us would argue that lawyers should not be paid what the DTI and the courts have deemed appropriate, and there is a fixed scale of charges in that respect. The problem has come with law firms wanting to make extra money to feather their nests and in some cases buy their Bentleys and private yachts. Not only are they being paid the sum set by the DTI, they are making deductions from miners’ damages. That is where the real problem and scandal lie in this debate.
It is worth recording that the fees paid to law firms are on a case-by-case basis, so that the higher the case-loading by a firm, the higher the potential fees. The scheme was thought financially to be more attractive overall than the prospect of each case being litigated one by one through the courts. That is why the scheme was introduced by the DTI. Having agreed the scheme and the fees, the DTI positively encouraged miners and their families through adverts and newsletters to go to their well established trade unions for the advice and the quality of legal service that was offered. It is a pity that more miners did not do that in areas where sensible and legitimate law firms operate and have long-standing relationships with the trade unions.
Also prominent in the debate has been the issue of deductions by trade unions from compensation for members—a separate but related matter. I am sure that we are in total agreement that law firms making deductions for private profit when they have been paid by the DTI is unacceptable, but are deductions by unions in any way acceptable? In some cases perhaps they are; it depends on the circumstances. Deductions for trade unions are not new. Most unions have made them over time. Indeed, in the past, before the introduction of collective conditional fee agreements and before insurance cover was available for personal injury cases, they were very common. Since then, where unions have been able to get insurance cover for a case, they have done so. Deductions have become unnecessary if insurance can be obtained to cover the risk of losing. Deductions can still be necessary, however, if there is no insurance and if unions want to band together to take test cases to prove possibilities for a wider membership.
If there is a dispute about deductions by the union in any mining community, it should be resolved within that community rather than be made into a political football, as it has been by some. The communities have been injured enough and if a resolution is available without harming the good work of legitimate and committed trade unions and law firms that is the appropriate approach. The energy Minister in another place recognised that when he said in a debate on coal surface workers on7 February 2006:
“With such huge amounts of money being paid through the scheme to solicitors and the unions having had extra money, surely it is possible for those bodies—for moral and political reasons, if nothing else—to support individual cases so that the individual claimants are not put at financial risk. I do not believe that the cost should be borne by the general taxpayer. The solicitors and, perhaps, the unions—after all, what is the purpose of a trade union?—have a moral duty to do so”.—[Official Report, Commons, 7/02/06; col. 224WH.]
That Minister is right to say that trade unions have a unique role, but they are able to make a contribution and lead the fight only if they have the necessary funds. In the case of miners’ funds, that has not always been the case. The Durham area of the NUM is to use funds to fight miners’ knee cases and possible surface workers cases for which there is not yet funding.
In reading the debates in another place on this issue and looking at some recent comments, it is possible to think that this is all about individual consumers in cases against big employers or insurers without trade union backing. That would be a big mistake. Let us condemn law firms and claims companies who exploit workers’ cases by all means, as we are doing tonight, but let us not in the process damage trade unions and their trusted lawyers who are, at the end of the day, the only ones with the commitment, capability or expertise to fight the major cases and pursue a health and safety agenda with the kind of resources and vigour required on behalf of ordinary working people.
My Lords, I will speak briefly and make three main points. The first is to support my noble friend Lord Lofthouse. I recall his campaigns on these issues over many years and on many occasions in another place. Indeed, if I have any interest to declare, it is that I was his minder in the by-election that saw him elected into another place. I remember at that time that our daily campaigning activity was to visit different pits at different times for different shifts, because that was the core of the industrial activity in that part of West Yorkshire.
I know that many people regret the demise of the pits, and my noble friend spoke this evening with affection and admiration for his former colleagues in the coalmining industry. I have mixed emotions about the decline of the pits because, having been down one, even a modern one, and seen the claustrophobic, dirty, dangerous conditions in which people work, I am not sure that I would want anybody to work in those conditions for my benefit. I am not just talking about the obvious danger of accidents, but about the long-term consequences of the many health risks, from lung disease to vibration white finger, with all the consequences for miners and their families.
The need for compensation for these debilitating illnesses has occupied my noble friend for many years. I recall all his efforts—all the Private Members’ ballots—and his sheer determination, and it is appropriate that I should pay tribute to his work and his persistence on this issue until he achieves recognition of the plight of his former mining colleagues. He has gone down on record as being of very significant importance in that campaign.
I pay tribute, as the noble Lord did, to the Government for the provision of uncapped funds to help to compensate miners and their families—and I say “help to compensate” because clearly there can be no recompense in full for such debilitating and life-curtailing illnesses. We can be genuinely proud of the attitude of a whole range of Ministers who have listened and acted and given proper recognition to this problem and have been prepared to make changes to improve the scheme with such issues as fast-tracking.
My second point is that, while I congratulatemy honourable friend and the Government on a significant achievement, I share my noble friend’s concern and I can understand his anger at what he has described this evening. The achievement of providing proper compensation has been spoilt by the actions of those who have seen the scheme as a means of making an income for themselves. In fact, as he has made clear, some people have made vast sums of money out of the misery of others.
My noble friend has outlined the amount paid to solicitors. We would all agree that everyone needs to be paid for the work that they have done, but I remind the House that these fees are more for legal administration rather than litigation and in the scale of solicitors’ fees generally they are not small amounts. The problem that my noble friend focused on in particular—that of solicitors claiming extrafees from miners’ compensation when they have already received the agreed fee of £2,100 fromthe Government—needs urgent and continuous attention.
It has been mentioned this evening, and I know that it is true, that some solicitors would argue that their clients signed an agreement to allow this to happen; but I know from my previous constituency experience how vulnerable and often unquestioning many ex-miners and their families could be in what was bound to be a difficult and often emotionally charged situation of having to apply for compensation. Many of those who have applied for compensation and then agreed to deductions of this kind may have agreed to this when they were totally unaware of the full circumstances in respect of payments to solicitors from government sources. Talking as I have in the past few days to my former colleagues in another place, I am struck by how many of them have individual constituency cases that seem to confirm this and how many Members in another place are still extremely exercised by this problem and finding it a frequently mentioned constituency matter in surgeries and advice centres. There is no doubt that there is a problem here.
I agree with my noble friend that more needs to be done, in particular by the Law Society, which seems to be moving extremely slowly on this urgent issue. There is a need for a more proactive approach to help those miners and their families who have had money unduly deducted from their compensation. The Law Society has eventually acknowledged that there is a problem, but we have to ask whether the mechanisms for redress are sufficient and comprehensive. From what I see, I do not think that they are. We should be asking what should be done now and how the Law Society can improve its attitude and speedily deal with these problems before it is too late.
I want to mention an idea suggested by a colleague in another place. My right honourable friend Kevin Barron, the Member for Rother Valley, has suggested to Ministers one course of action that could be taken in respect of those companies with which the Law Society has found that there could be a problem. He suggested that all the claimants who used such companies should be written to and informed that they may—and it would have to be “may”—have had part of their compensation stopped in error. Such a letter could also explain the procedures open to them to seek redress. I am told that the DTI has a database that could facilitate this, as records there would match claimants to companies. Clearly this would not solve the problem entirely, but it would be a significant next step forward in ensuring that miners and their families got the full compensation to which they are entitled. I emphasise the need for urgency, given the age of most of the claimants, be they ex-miners or widows. As my noble friend said, 12,000 have already died.
Miners waited for years for any compensation scheme of this kind, and my noble friend and others worked hard to achieve a good scheme for compensation, but it is not enough if that scheme is being abused. I sincerely hope that all those involved, in particular the Law Society, will take swift action to ensure that any past abuses are remedied and that miners and the families get the money that they need, that they are entitled to and that they deserve.
My Lords, I hope I may have two minutes to speak in the gap in the speakers’ list—I think that I am eligible for it. I did not intend to speak in this debate but, in view of what my noble friend Lord Sawyer said, I want to point out that a lot of trade unions have an arrangement with their members to take a proportion of any compensation for which they have successfully prosecuted. My own union did not ever do that and does not do it to this day—but some unions did, on the basis that when they lost the case, they absorbed the whole of the costs. However, they are cases that are prosecuted in the courts, not knowing the outcome. In this case, it was not a question of unions being placed in that position; the miners were awarded this money by the Government, so there was no justification for trade unions taking any proportion of it—and solicitors who did it on their behalf must have been wrong.
My Lords, I join other noble Lords in thanking the noble Lord, Lord Lofthouse, for introducing this important debate. Despite the fact that our crowd has departed, this is exactly the sort of issue that this House ought to be debating, and which finds this House at its best. Even a cursory study of the newspapers in recent months would give anyone who looks at this issue the view that something funny has been going on, and that indeed there seems to be the beginning, if not the middle and end, of a scandal in the enormous compensation that various firms of solicitors have been making at the expense of miners and their families, as the noble Lord, Lord Lofthouse, has indicated.
I have a number of questions for the Minister. What concerns me is that there seems to be a complete mismatch between the assumptions that we are all making—I have not yet heard what the noble Baroness, Lady Miller of Hendon, will say, but I doubt that she will disagree with anything that has been said tonight—and the position that the Law Society has taken. Those of us who have received the Law Society’s brief know that its position is that it has,
“acted promptly to deal with complaints about…deductions; informed solicitors dealing with these cases of the correct approach, and is pursuing robust regulatory action against any solicitors who may have been guilty of misconduct”.
Having heard the remarks of noble Lords opposite, and having read the newspapers and looked into this myself, I have some difficulty accepting that the Law Society’s interpretation of the facts is correct, but the matter could be pursued if the Minister could indicate which of the following contentions from the Law Society he agrees with.
On the background, I understand that two particular problems have arisen. First, a number of solicitors entered into agreements with clients by which the firm of solicitors was due a success fee if the claim succeeded. As the noble Baroness mentioned, in many cases the idea of a success fee was ludicrous as a lot of the work was simply form-filling and administration. The idea that there should be a success fee—which you might have on a no-win, no-fee basis if there was litigation—was ridiculous. As there was not any risk of lack of success, it was an additional charge.
The Law Society’s case is that after MPs expressed concern about success fees, the society informed its members that the additional charges could be justified only if the charge was reasonable. It also set out a number of other conditions. The Law Society contends that £3.6 million in success fees has been returned to individual claimants or their families following its intervention. I do not know whether that deals satisfactorily with the “success fee” issue, but I would be interested to know whether the Government believe that the Law Society has dealt with it.
A number of noble Lords have touched on the second issue, which is third party deductions. There has been an issue here for the trade union movement. Some unions have made third party deductions, but there have also been other organisations that are not trade unions and yet may have masqueraded as such. We can name names: Miners’ Welfare, Union and General, the Miners Community Advice Centre, the Legal Rights Board, the Legal Advice Bureau and, notoriously, UDM/Vendside—which the UDM is blamed for, but I do not think is anything to do with it. The firm is a claims farmer that claims it is owned by the UDM, but I suspect it is not. The noble Lord, Lord Sawyer, is nodding, presumably on the basis that I am correct.
My Lords, the noble Lord says that it is owned by the UDM. The Law Society contends that third party deductions are not paid by a solicitor, but the regulatory issue is what advice a solicitor or firm of solicitors should have given to their client on third party deductions, and whether they were in breach of their obligations as solicitors in not giving proper advice to those clients on third party deductions.
That brings us to the fundamental point raised by a noble Lord opposite on the opinion of the Legal Services Ombudsman. The latter has taken a very strong stance on the advice that solicitors gave on third party deductions. As noble Lords opposite have indicated, the Law Society fundamentally disagrees with the opinion of the Legal Services Ombudsman. It says in substance that each case has to be decided individually on its merits and that a blanket condemnation by the Legal Services Ombudsman is inadequate.
I should very much like to hear whether the Minister considers valid the suspicions that noble Lords on both sides of the House have about the conduct of individual firms of solicitors, and about the Law Society as the regulator being inadequate in the areas that I have set out. Or does he accept that the Law Society’s representations are correct? The Law Society is basically saying that there has been a handful of bad boys, but that they have been dealt with and all is well in the counties of Yorkshire, Nottinghamshire and wherever else these unfortunate incidents have occurred.
My Lords, I thank the noble Lord, Lord Lofthouse of Pontefract, for having initiated this important debate. I congratulate him on the extraordinarily moving way in which he did so. Like the noble Lord, Lord Razzall, I consider that it is a tragedy that so many Peers left the Chamber and did not hear what was said, because it is important that people should.
This debate is not about the compensation that has, or in many cases has not, been paid to miners; it is about expanding on the information previously extracted from the Government by the noble Lord on the way in which some of the claims have been handled by solicitors and others who were supposedly acting in the best interests of the victims.
Advertisements have appeared on television, often several in a single hour, to try to attract people to come forward. Claims farmers have proliferated as a result of this Government’s virtual abolition of legal aid, which made many miners think that it was necessary to approach such people. It has resulted in a procession of no-hope claims, which were awful, but the claims that we are discussing do not fall into that category, even though in 2003 some solicitors were reported in the press as advertising for potential claimants. The Government have in effect admitted liability for paying the compensation, so all that was totally unnecessary.
The courts gave a ruling on how the claims were to be dealt with and undertook to supervise this by requiring a regular reporting procedure to be followed. On the orders of the court, detailed claims handling agreements were entered into between the DTI, claimants’ solicitors, medical assessors and the DTI’s own claims handlers. It is undoubtedly true that the cases are not all open and shut. However, unlike in normal litigation, where legal costs take into account the value of the claim, the solicitors were to be paid a fee which disregarded the amount of compensation recovered.
Under the claims handling agreement sanctioned by the court, in the case of a successful claim the solicitors or other claims handling organisations would not need to charge any costs or fees to the claimant. That is because, as I have said, the legal fees were to be met by the DTI. Indeed, they were to be met by the DTI in full. Despite this, there are many cases reported of claimants being charged a so-called registration fee, which was non-refundable, simply to get the solicitors to take on the case.
Even worse than that is the fact reported in the press of substantial sums being deducted by solicitors from the compensation awarded. The Times reported on 6 May that the average amount of costs by the DTI was, and indeed is—the noble Baroness, Lady Taylor, mentioned this—£2,125 and that one firm alone had received £41 million in costs from the public purse. If one firm alone has received that staggering sum, how much has been paid in legal fees to the 515 firms which have acted in these cases?
I was going to ask the noble Lord whether there was a ceiling fixed for the compensation, but the noble Baroness, Lady Taylor, said clearly that there was no cap. However, was there a separate ceiling on costs and medical experts’ fees? In each case are the costs assessed on its merits, taking into account the complexity of the case, bearing in mind that the amount of compensation awarded is not a factor?
Prima facie, it appears that serious overcharging has been taking place. That is admitted in the briefing by the Law Society that I will shortly refer to, which I believe all noble Lords have received. The Under-Secretary of State at the Department for Constitutional Affairs, in a Written Answer, said that the chairmen of the Law Society’s regulation board and consumer complaints board had jointly written to the senior partners of the 515 law firms, urging them to refund any improper charges that may have been levied. The noble Baroness, Lady Ashton, said that the legal profession was independent and self regulating and that therefore the conduct of solicitors was the responsibility of the Law Society. I shall come back to that point in a moment. Since many of us have received the brief, there is no point in my commenting on it in detail again, except to welcome the promise of,
“robust regulatory action against any solicitors who have been guilty of misconduct".
While no one would suggest that overhasty proceedings would be appropriate in cases where a person’s profession could be taken away from them, I remind the Law Society, which undoubtedly will read this debate, that justice delayed is justice denied, and that includes justice for the victims. The noble Lord, Lord Lofthouse, explained that some claimants had died and that widows were waiting for money. That situation cannot be allowed to go on.
I said that I would return to the fact that the noble Baroness, Lady Ashton, said that this was a matter for the Law Society. It is also a matter for the Government, and they have a major responsibility. It is no good them just saying, “This is a matter for the Law Society”. It is not just that it is public money that we are talking about. It is not just that the miners have always had a close association with the Labour Party. The Government, in the form of the DTI, area contracting party to the two case-handling agreements sanctioned by the court. The other party are the solicitors for the claimants. Those agreements specifically provided that the DTI would pay the costs of the claims and that the claimants were not to be charged. So, in addition to the very proper question raised by the noble Lord, Lord Lofthouse, about the Government’s assessment of the Law Society’s role in this matter, I have some questions of my own.
Rather than washing their hands of the matter, as the Written Answer implied, by saying that this was a matter for the Law Society, what steps are the Government taking to enforce the contractual provisions about not charging the claimants and to recover any such sums that have been paid for the benefit of the injured parties? How will the Government give back to the miners what is, after all, their own money?
The Opposition have welcomed the draft Legal Services Bill, including the way in which legitimate concerns about complaints will be dealt with. However, if your Lordships listen very carefully, you will hear the sound of stable doors being slammed shut on the miners’ claims; that has already happened. Apart from what the Law Society is going to do if any cases of abuse or malpractice are proved, the essential question is what the Government are going to do to enforce their legal rights on behalf of the injured parties whom the Government were trying to compensate.
My Lords, I startby thanking my noble friend Lord Lofthouse of Pontefract for securing this debate and for continuing to keep this important issue in the public eye. Like other contributors today, I pay tribute to his tireless efforts on behalf of miners and their families, without which the British Coal compensation scheme might not have come to fruition.
Solicitors represent claimants in processing their claims under the compensation scheme. Many claimants have had entirely appropriate advice and have received their full compensation under the schemes, but some claimants have not, and that is to be condemned. A co-ordinating group of solicitors negotiated the handling agreement for claims and now works with the DTI on those issues that remain unresolved or are preventing settlement of claims.
There are two schemes covering respiratory and vibration-related diseases, both of which are now closed. Over 580,000 claims have been fully registered under the respiratory disease scheme, with some 316,000 claims being received in the last six months of the scheme. Some 170,000 claims were registered under the vibration scheme. In total, over 500,000 individual compensation payments worth over£3 billion have been made so far to former miners, their widows and families. These form the largest personal injury schemes ever in the UK—possibly in the world.
No one anticipated that anything like as many as 750,000 claims would be submitted under the schemes, and in particular that there would be so many relatively low-value claims. The existing schemes are now well established. Changes to thelung disease scheme have been introduced in the past 18 months to speed up the processing, accelerating the delivery of compensation.
Last year, the Energy Minister, Malcolm Wicks, commissioned an external review of the integrity of the administration of the schemes. The review report identified two main areas of concern in relation to solicitors’ fees: the levels of solicitors’ costs compared with the level of compensation received and the issue of so called “success fees” claimed by solicitors.
The external review pointed out that the legal cost structures were largely negotiated, along with the agreements themselves, at a time when the anticipated volumes of cases under the schemes were considerably lower and their complexity greater than has proved to be the case. The DTI believes that it would be wrong not to recognise that higher than anticipated volumes of cases undoubtedly bring opportunities for batch processing and reduced costs per case.
The review also noted that not every claim would always require the assistance of qualified legal professionals and that the cost to public funds,
“does not now necessarily reflect the more routine nature of the work”.
That point was stressed by my noble friend Lady Taylor and the noble Lord, Lord Razzall. The review recommended, therefore, that the DTI consider whether more can be done in this area, with the aim of ensuring that legal costs more accurately reflect the nature of the work actually undertaken.
At the time of the report, the department was already actively pursuing the issue of solicitors’ costs. In particular, for lung disease fast-track claims, average damages are £2,038 and average solicitor costs are £1,815. In our view, the new fast-track approach implemented in 2005 for the lung disease scheme required significantly less input by solicitors and should incur considerably reduced costs. We have argued that case with the solicitors’ representatives and, indeed, before the High Court. We then took the issue to the Court of Appeal and the department won the appeal. The Court of Appeal asked Sir Michael Turner, the judge then overseeing the respiratory disease scheme, to review his methodology for assessing an appropriate level of costs for these claims. The judge has subsequently made some amendments. However, the department has sought and been granted permission to make a further appeal against the methodology used. Significant sums in legal costs are at stake—tens of millions of pounds—and I hope that the noble Baroness, Lady Miller, will recognise that this is one action that the Government are taking to address some of the issues involved.
There are also other areas where the DTI has yet to reach agreement with the claimants’ solicitors on costs, and it is pursuing these equally vigorously to ensure that they reflect work done while also providing a reasonable level of return. The department is also challenging the claimants’ solicitors’ assertion that they need conditional fee arrangements in place to indemnify themselves against the cost of a claim being unsuccessful. Although the High Court has ruled that the success fees are now standard practice, we have been given permission to appeal.
I would now like to turn to the issue of so called “double-charging”, which was referred to by my noble friends Lord Lofthouse and Lord Sawyer and by other noble Lords. In this context, the external review report also discussed concerns that in some cases solicitors had taken money from claimants’ compensation to cover costs even though the legal costs are met by the Government, and that in some cases union fees have been deducted from compensation.
It would be wholly unacceptable for deductions to be made from any compensation payment without the claimant’s agreement, although the review noted that as far as they were aware, there were no examples of that happening. But the review suggested that some claimants appear to have been invited to agree to make such contributions without it being clear to them that such contributions were a matter for their choice and that other solicitors would not seek to make them. The report specifically recommended that, subject to the outcome of any legal action in this area, the legal profession should take up this matter.
These are essentially issues about conduct within the legal profession and the department in that regard has no direct role. That said, the department has made considerable efforts to resolve this issue satisfactorily over the past three years, which included the then Minister Nigel Griffiths writing to more than 700 firms of solicitors that were handling claims seeking assurances that they were not taking a cut from claimants’ compensation and to repay it if they had. He also pressed the Law Society to urge firms involved to be proactive in reviewing their files to repay moneys where deductions had been made.
The Government continue to make clear to the Law Society the importance of taking these issues forward rigorously and we now have an ongoing and constructive dialogue with it. The Law Society has no direct role in the compensation schemes, but it does have a responsibility to regulate and handle complaints about the conduct of solicitors. In 2004, the society’s compliance board issued a statement to the effect that, unless full information was given to the client at the start of the matter and the additional charge was itself reasonable, the making of an additional charge to the client was likely to give rise to a finding of inadequate professional advice. Evidence of taking unfair advantage of a client by overcharging could also lead to a finding of misconduct.
In response, the Law Society wrote to all firms that handled claims for compensation under the DTI scheme, advising them of the society’s policy and reminding them to review all cases they had handled and to repay any money that was inappropriately withheld from miners who had won compensation. It is estimated that £3.6 million was refunded as a result of this and of Nigel Griffiths’ initiative in 2003 to encourage firms to make refunds. In February 2006, the chairs of the consumer complaints and regulation boards of the Law Society wrote again to all solicitors involved in the schemes, reiterating this policy.
The Law Society established a consumer complaints service in 2004 to improve handling of complaints about solicitors. Of 1,112 complaints received as at 24 May 2006, 56 per cent have been resolved by conciliation, with over £208,000 being paid to complainants through conciliation and adjudication. In addition, 48 forensic investigations into solicitors’ firms have been authorised. The Solicitors Disciplinary Tribunal has been asked to consider complaints against more than 35 solicitors from 10 different firms. Another firm faces an application to the tribunal to enforce findings of inadequate professional services. Solicitors from eight other firms have received disciplinary sanctions from the adjudication panel. The tribunal’s first ruling was to uphold the Law Society’s decision that solicitors pay compensation to two former clients as they failed to explain funding arrangements to them.
My noble friend will also be aware that the Legal Services Ombudsman—and this was referred to by a number of noble Lords—published a special report on the handling of miners’ cases in April 2006. In it, he raised a number of concerns and made recommendations on the way forward. The Law Society has now issued a public response to that report, set out its concerns about aspects of the ombudsman’s report and provided an update of its own activities. A number of noble Lords probed that issue. It seems to me that the Law Society is not saying that everything the ombudsman has said is wrong, and there is a commitment to take forward some of the issues raised in the report. The noble Lord, Lord Razzall, asked whether the Government are satisfied that the Law Society has acted as speedily and fully as it could. We would have liked it to act more speedily but think that the focus is now in the right area.
Before I conclude, perhaps I may respond to the suggestion made by my noble friend Lady Taylor. The department will consider suggestions about writing to claimants on an individual basis. We note that the Law Society has advertised in some areas in the press to encourage interested parties to bring forward complaints. The Law Society’s response to the ombudsman’s report recognises that claims are still coming in at the rate of 15 a week. So this is not a closed but an ongoing matter, and it is right that it should be.
In closing, I reiterate that the Government are committed to ensuring that claimants receive the full compensation to which they are entitled. Solicitors should be paid fairly in line with their costs for the advice that they provide to claimants, but no more. Although it has taken longer than we would have liked to reach this point, the Law Society now has the structure in place to handle effectively the complaints received.
My Lords, I think it would be appropriate to put on the record that, considering that the fast-track system does not maintain as much work for the lawyers as it did previously, and considering that some lawyer firms have already received £95 million from the Government, there should now be an investigation into the charges.
My Lords, as I said earlier, we do not think that fees relating to the fast-track approach should be dealt with under the original tariff, and that matter is the subject of negotiation. We must continue to press the Law Society to take these things forward rigorously.
I also welcome the actions that the Law Society has now taken to address the concerns raised most recently by the Legal Services Ombudsman and others. The department will seek to continue to reduce the costs of administration of the scheme, including legal costs, while also seeking to ensure that we achieve our objective of paying compensation to mineworkers and their families. My noble friend Lord Lofthouse is entitled to expect no less of the Government, and I am sure that he has the support of the whole House on this matter.