Letter from Sir Brian Bender
Dear Sirs
COAL HEALTH COMPENSATION SCHEMES: PUBLIC
ACCOUNT COMMITTEE HEARING FOLLOW UP
Following the publication of the National Audit
Office (NAO) report on the Coal Health Schemes, I appeared before
the Public Account Committee, as a witness on Monday, 22 October.
During the proceedings there were a number of
areas where the Committee requested further information. Two of
those, relate directly to the claimants' representatives listed
in Appendix 7 of the NAO Report. I have attached a copy of the
relevant page.
The table lists the total payments to the top
10 claimants' representatives by coal health fee income as at
31 March 2007. The Committee has asked that we write to all the
claimant representatives listed in Appendix 7 to enquire as to
the deduction of fees whether in respect of costs or any other
payment from claimant compensation paid under the Claims Handling
Arrangements for either COPD or VWF.
To assist with responding to the Committee your
response on the following points would be helpful:
(a) Has your organisation ever undertaken
this practice?
(b) If so, has it sought to reimburse any
fees so deducted to the claimants affected?
(c) If so, how much money has been reimbursed
to those claimants?
In addition, the Committee also raised questions
on the amount of money paid to individual Partners/Directors of
the claimant representatives in Appendix 7. In particular the
Chairman of the Committee, Edward Leigh MP, asked that we provide
the Committee with details on the number of Partners/Directors
who have been or who are now Partners/Directors in the practice.
Again to assist the Committee I would be grateful if you could
confirm the number of Partners/Directors in your organisation
and of this number how many have received income from such payments.
The Department has to respond to the Committee
in a timely manner and therefore would be grateful if you could
reply by 16 November 2007 to inform that response.
Sir Brian Bender KCB
Permanent Secretary, Department for Business, Enterprise
and Regulator Reform
31 October 2007
SUMMARY OF THE RESPONSES TO SIR BRIAN BENDER'S
LETTER, 31 OCTOBER 2007, TO CLAIMANT REPRESENTATIVES IN APPENDIX
7 OF NAO REPORT
1. The table below sets out the organisations
the Department wrote to and the date of their response as at 13
December 2007. Where the Department did not receive a response
by 30 November 2007, the organisation was sent a reminder to ensure
they had received the initial letter and ask whether they intended
to respond.
| Organisation |
Date of Response |
| Thompsons—Newcastle | 15 November 2007
|
| Thompsons—Cardiff | 15 November 2007
|
| Thompsons—Edinburgh | 13 November 2007
|
| Beresfords | 13 November 2007
|
| Hugh James | 13 December 2007
|
| Raleys | Declined to Respond
|
| Browell Smith & Co | 19 November 2007
|
| Mark Gilbert Morse | 16 November 2007
|
| Avalon | 4 November 2007 |
| Union of Democratic Mineworkers | No Response
|
| Watson Burton LLP | 23 November 2007
|
| Graysons Solicitors | 15 November 2007
|
2. The Department asked the organisations to respond
in four specific areas:
(i) Has the organisation undertaken the practice of deducting
fees whether in respect of costs or any other payment from claimant
compensation paid under the Claims Handling Arrangements for either
COPD or VWF?
(ii) If so, has it sought to reimburse any fees so deducted
to the Claimants affected?
(iii) If so, how much money has been reimbursed to those
Claimants?
(iv) Confirm the number of Partners/Directors in the organisation
and of this number how many have received income from such payments?
3. Of the 10 organisations (Thompsons has three main
offices—hence the individual letters sent to each office)
the Department received 10 responses and a summary of their responses
drawing on verbatim comments from the letters is set out below:
THOMPSONS NEWCASTLE
AND CARDIFF
(i) A joint letter was received from Thompsons Newcastle
and Thompsons Cardiff as a co-ordinated response on behalf of
England and Wales. They confirmed that they have not received
any contributions or payments in successful Claims Handling Agreement
(CHA) cases for VWF or COPD other than costs paid by DTI (now
BERR). As a firm Thompsons have not retained any part of any claimant's
damages.
Thompsons Newcastle/Cardiff act for a number of Areas of the
NUM and for their members, including the Durham Miners Association
(DMA). Thompsons say the DMA, which is a non-profit organisation,
has been the subject of vilification. All the contributions from
damages by successful Union claimants have been paid to the DMA.
Unions have always used any contributions from damages to fund
the various services provided by the Union. These services include
test litigation, litigation support and administration of legal
aid.
(ii) Thompsons Newcastle/Cardiff confirmed the money has
been reimbursed to those Claimants.
(iii) The following refunds have been paid:
— closed cases claims = 3,620 refunds £2,119,650.00
— current cases claims = 576 refunds £128,408.00
= Total refunds £2,248,058.00
(iv) Thompsons Newcastle/Cardiff has 36 equity partners
and 16 salaried partners. None of them have received any income
from any contributions from damages, as Thompsons have not retained
any of those contributions. They have all been passed on to the
DMA.
(v) As part of Thompsons reply they attached a background
briefing and a short summary of the history of the Trade Union
funding litigation in the Coal Board cases.
THOMPSONS EDINBURGH
(i) Thompsons Edinburgh confirmed that the firm has never
deducted fees from claimant compensation under either CHA during
the lifetime of the Coal Health Compensation Schemes. Thompsons
Edinburgh has been content at all times to accept Handling Agreement
fee tariffs.
(iv) Thompsons Edinburgh did not confirm the number of
Partners in their firm; however they did confirm that no Partner
within the firm has received income from deductions from compensation
because no deductions for solicitors' costs or fees have been
made.
(v) Thompsons Edinburgh wished to clarify that whilst
the firm of Thompsons is shown in Appendix 7 as having received
£123.6 million of fee income from the schemes that is not
the figure received by Thompsons Scotland which is both financially
independent from the sister firm in England and Wales as well
as separately managed.
HUGH JAMES
(i) Hugh James confirmed they have not made any such deductions.
(iv) There are 47 Partners in Hugh James. The Partnership
constituency has changed over the years.
(v) For completeness, Hugh James has included a brief
account of the firm's relationship with the Trade Union, NACODS
South Wales "the Association", and that Union's involvement
with the BCRDL. Please see the response letter from Hugh James
which provided details on the way in which the Unions funded the
test cases that led to the Claims Handling Agreement. For members
who had a successful claim, Hugh James received the appropriate
compensation payments by cheque. Where they had written client
instructions to do so, they passed on those cheques (without making
any deduction) to the Association. It is believed that the Association
would then implement the above mentioned contribution arrangements
and the member would receive whatever net sum was appropriate
as a result. If Hugh James did not receive client instructions
to send the cheque to the Association, they sent it directly to
the client. Hugh James highlight in their response that only a
handful of Association members asked them to send them their compensation
cheques directly, demonstrating that the above arrangements to
make contributions to the Association from their compensation
has widespread support within the Association.
BERESFORDS
(i) Beresford confirmed that very early on in the scheme
they made deductions from claimant's compensation (as allowed
by The Law Society regulation).
(ii) When it became evident to Beresford that there was
little financial risk to the investment, they immediately stopped
the practice of deducting compensation from claimants and have
reimbursed every single penny back to claimants.
(iii) Beresford did not confirm in their letter the amount
of compensation paid back to Claimants.
(iv) Beresfords confirmed that at the time of the income
being generated there were 3 Partners within the business, the
details of which are registered with Companies House.
BROWELL SMITH
& CO
(i) Browell Smith & Co acts on behalf of various Mining
Unions ie certain Area Unions of the National Union of Mineworkers
and NACODS. They confirm that as a firm they have never asked
claimants to enter into any form of conditional fee agreement
in this litigation nor have they double charged, nor have they
sought to enter into any form of contingency agreement. Browells
have only ever claimed the fixed costs agreed with the Department
of Trade and Industry and payable under the provisions of the
British Coal Respiratory Disease Litigation and Vibration White
Finger Handling Agreements. They state that they have been vociferous
in arguing since 1998-99 both in the press and elsewhere, that
the costs provided through the Schemes, were sufficient and did
not require an uplift, although, with hindsight, in VWF the costs
agreed were not adequate for the work involved.
(iv) Browell Smith & Co Solicitors did not confirm
how many Partners were within their firm.
(v) Many areas of the National Union of Mineworkers are
independent Trades Unions in their own right and therefore every
area has its own arrangements for supporting compensation claims.
One of the largest areas, for whom Browell Smith act, namely the
Midlands Area of the NUM does not ask for any donation at all.
However, other areas ask a claimant to make a voluntary donation
to Union funds at the conclusion of a successful claim. If the
claimant wishes to make a donation he will have made a separate
voluntary agreement with the Union. If the claimant authorises
Browell Smith to do so in writing, the donation is usually collected
at source from the final payment of damages. Any donation made,
is paid in full to the Trade Union and the solicitors do not receive
any additional payment or benefit. Every claim is pursued at no
legal cost to the claimant irrespective of whether or not they
choose to make a donation. Browell Smith have also provided a
copy of a report they made to the Lord Chancellors Department
about the activities of some solicitors and claims farmers.
(vi) Browell Smith & Co confirmed that they have seen
many examples of claims farmers targeting elderly and vulnerable
people and also of overcharging, undersettlement and poor service.
They stated that they have never supported these practices and
do not condone them.
MARK GILBERT
MORSE
(i) Mark Gilbert Morse confirmed that they undertook the
practice of deducting fees from claimant compensation.
(ii) They confirmed that they reimbursed claimants.
(iii) Mark Gilbert Morse confirmed they voluntarily reimbursed
to all claimants all costs or deductions of any nature in full,
with full interest from the date of any deduction to the date
of payment to the claimant.
(iv) Mark Gilbert Morse did not respond on the fourth
point relating to the number of Partners.
AVALON
(i) Avalon confirmed that in the initial stages of dealing
with the Coal Health Schemes Cases, under the guidance of the
Law Society did make deductions from clients damages. Of the 36,000
claims, which Avalon Solicitors initially registered with the
Coal Health Scheme, only 361 (1%) had any deductions made from
the award.
(ii) Upon receiving further guidance from the Law Society
in January 2004, the Practice ceased taking deductions from settlements
and has subsequently paid 100% compensation to all clients. Avalon
stated they have taken all steps, often at the expense of the
Practice to pay back monies along with any interest that had accrued
at the prevailing Bank of England base rate at the time.
(iii) Avalon confirmed that a total of £210,527.79
plus VAT and interest, equating to around £295,000 has been
reimbursed to the Claimants. This represents refunds to 98% of
the Clients who were originally deducted monies. Avalon confirmed
that they continue to instruct search agents to assist them in
locating the miners (or estates of the miners) who they have failed
to locate.
(iv) Since Avalon Solicitors has been handling Coal Health
Scheme Cases, there have been nine Partners, over a six year period.
They confirmed that all Partners have received monies from the
scheme.
WATSON BURTON
LLP
(i) Watson Burton confirmed that they had received only
payment from the DTI in the sums set by the DTI or by the Courts.
(iv) Watson Burton did not respond on the fourth point
relating to the number of Partners.
GRAYSONS SOLICITORS
(i) Graysons Solicitors confirmed that no charges or deductions
had been made from any clients' award of compensation for fees
or costs.
(iv) Grayson currently have nine Partners. The number
of Partners in the firm has changed since they started dealing
with the schemes and the number has varied between five and nine.
Graysons confirmed that no Partners in the firm have received
income from fees deducted from Claimants' awards of compensation,
because no deductions for solicitors' costs or fees have been
made.
(v) Graysons raised the issue that they act (and continue
to act) for private clients and for clients pursuing claims as
members of the NUM (Derbyshire Area). Miners (and the Personal
Representatives of deceased miners) who pursue their claims through
the NUM (Derbyshire Area) do so pursuant to an agreement with
the Union to pay a retired members contribution upon conclusion
of a successful claim. In these cases a deduction from the Claimant's
award of compensation may be made in accordance with the agreement
entered into between the Claimant and the Union and subject to
Graysons having the authority of the Claimant to make the deduction
in favour of the Union.
18 December 2007
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