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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
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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,
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.
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8.33 pm
Lord McKenzie of Luton: 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
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The review also noted that not every claim would always require the assistance of qualified legal professionals and that the cost to public funds,
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
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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.
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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.
Lord Lofthouse of Pontefract: 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.
Lord McKenzie of Luton: 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
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