Nearly Legal

Having posted on the costs raked in by Beresfords and others from the Miners’ Compensation Scheme, and having suggested that it was the DTI’s problem for setting the fixed costs, it naturally turns out that I should have done my homework, as the DTI had a High Court action underway seeking to reduce the payments and claw back payments already made. (Times article)

And Lo! the DTI won. A bit. Per case payments reduced from £1,769 plus VAT for each deceased claim and £1,561 for each live claim to £1,192 and £1,103 (presumably plus VAT) respectively. The DTI is apparently looking for £74 million back.

Each case was estimated at seven hours work, making the initial awards pretty generous from a Legal Aid practioner’s point of view - £200-250 per billable hour is not a low rate. But this was the rate offered.

The initial costs level might have been a mistake, and the mistake would of course be correctable, but to make the change retrospective is an interesting move, which is indeed the result of the DTI’s appeal. This should be a gripping judgment to read.

Mrs Justice Smith was pretty scathing, in High Court terms, in her assessment of the relation of costs to work, being quoted as saying that study of the cases

“gives rise to the strong inference that the work has been significantly less onerous than had originally been anticipated”.

But the Times article like all the articles I’ve seen, let alone the comments, confuses a number of issues. For the sake of clarity, these are:

1. The fixed costs awarded to solicitors making claims under the DTI scheme. Yes, these were bloody high for the work involved (but also presumably included disbursements). This judgment seems to have addressed that. But these were the DTI’s fixed fees, not ‘overcharging’ by the solicitors, unless they were expected to voluntarily give up an element of the fixed fee. It is easy to be outraged by the amounts involved in comparison with the compensation - I know I am - this should not mean confusing the two, so issue 2…

2. The low level of compensation awarded to the miners, or their estates. Granted, the awards are very low for any sense of justice, but not outside what I understand to be the usual range (not my field). Any outrage at the level of compensation should be directed at either the general framework of Personal Injury awards, or the framework of the DTI compensation scheme. It has nothing to do with the level of the fixed fees. The compensation scheme was not capped. This was not a zero sum game.

3. The allegedly dodgy practice of a number of firms and claims farmers in taking a cut from awarded compensation in the past. If true, this is illegal, unethical and to be condemned and prosecuted.

4. The allegedly dodgy ‘arrangements’ between solicitors, the UDM, a UDM owned claim management firm (Vendside) and a company supposedly owned by the then manager of the UDM’s claims firm (Indiclaim Ltd). Again, should the allegations be true, this is illegal, unethical and to be condemned and prosecuted.

A saga that apparently has it all: Government mismanagement; greedy fat cat solicitors; honest, undercompensated victims; dodgy claims managers; and allegedly illegal behaviour in moderately high places. It isn’t surprising the story has become a lightning rod for a lot of anger and frustration, but it does no-one any good to run all the different components together.

And right on cue, the Law Society’s plans for complaint handling over the next year are ‘adequate‘ according to the Legal Services Complaints Commissioner (can’t you just hear the ‘barely’ muttered under her breath?).

The issues of fees in miner’s white finger and respiritory disease claims, following the institution of a compensation scheme, has been rumbling on for some time. All hell seems to have broken loose with the report that Beresfords, a small firm that, via some sort of association with the Union of Democratic Mineworkers (UDM), handled many of the claims made £20.4 million (pre-tax) in one year, including a personal profit of £16.8 million (pre-tax) for the lead partner of three.

This has been met with howls of outrage, not least because, as the Times points out, more than half of the miners, or their estates, only received £2000 or less. The usual misunderstanding that somehow the solicitors’ fees came out of the miners’ money raises its head all over the place. Let’s get that straight, it didn’t. The solicitors’ fees made no difference to the awards made.

There was a flat fee from the DTI, apparently of £2125 per case. As far as I can tell this would include disbursements for a medical report.

Beresfords claim to have handled 92400 claims for VWF and respiratory combined. I make this a total of £196,350,000. This makes Beresfords’ profits an average of 10% (or 9 and a bit) of the fee. Given that there was little to do apart from obtain details and a medical report, this is hardly an impressively high profit rate (hefty overheads for a three partner firm perhaps?). But it puts their proud boast to have obtained £180 million of compensation into perspective - £16 million less than the fees paid.

The set fee was a matter for the DTI. It is their problem, not that of the solicitors. What might be a problem for some of the firms is the apparently ongoing Serious Fraud Office investigation into financial relationships with the UDM, never the least shady of unions.

Beresfords might also have a more pressing problem. According to the Times

The coal-fired surge in the firm’s fortunes is also reflected in its glittering head office. Until 2003, Beresfords operated from a cramped, redbrick building on one of the main arterial routes into Doncaster.

Following a £4.8 milion investment, its home is now a glass-fronted lakeside development covering 38,000sq ft at the town’s prestigious Quay Point business park.

But miners, like mines, are a dwindling resource, victims of the 1980s in several senses. I hope the firm owns that Lakeside development, because they might need the money. Still, at almost 11,000 sq ft per partner, you’ll never run out of meeting rooms in the meantime.