Blair forced to launch inquiry into miners' compensation scandal

The Government has been pressurised into launching an investigation into law firms allegedly exploiting sick miners under the coalminers' compensation scheme.

Labour peer Lord Lofthouse of Pontefract's final report on the conduct of firms handling claims under the compensation scheme lambasts them as "greedy lawyers" and has led to a Government inquiry.

In his report, which was presented to Tony Blair last Wednesday (25 April), Lofthouse alleges that law firms have been "double-charging" and siphoning money from miners' compensation.

As The Lawyer revealed (9 April), the Department of Trade & Industry (DTI) paid out more than £800m to 30 law firms for handling claims for coalminers who have suffered from respiratory diseases and vibration white finger.

Lofthouse claims that, in addition to the DTI payments, which the Government had hoped would mean miners receiving 100 per cent of their compensation, firms have been levying administrative costs and referral fees.

Following The Lawyer's research, the Labour peer laid down accusations against Doncaster-based solicitors Beresfords and Warrington's Avalon.

As revealed by The Lawyer (9 April), Beresfords senior partner Jim Beresford is the UK's richest lawyer, earning £16.8m in one year, overtaking Avalon's Andrew Nulty, who took home £13m in a year.

In stark contrast, Lofthouse reports that 17 miners received less than 99p in compensation, 82 less than £2 and more than 6,000 collecting below £100.

Lofthouse, an ex-coalminer himself, also lashes out at what was the Law Society's regulation arm, now the Solicitors Regulation Authority (SRA), accusing it of "supporting and defending" law firms that have "double-charged" miners.

Peter Williamson, chair of the SRA, said there is no evidence to support the contention that the SRA has failed in its duty to deal firmly with solicitors who are guilty of professional misconduct.

However, Williamson did support Lofthouse's condemnation of those firms that had made deductions from the compensation of sick miners.

"I'm ashamed that solicitors whose costs are being met by the Government should do such a thing," said Williamson. "Solicitors are supposed to put their clients' interests first, that is a fundamental professional principle. The row over solicitors making deductions from the compensation to sick miners has seriously damaged the reputation of the profession."

The SRA has launched more than 50 investigations and referred 17 law firms to the Solicitors Disciplinary Tribunal (SDT).

To date, the SRA has won the two disciplinary cases heard by the SDT, enforced compensation awards for two miners and seen solicitors refund more than £2.5m in success fees in the face of regulatory action.

Additional pressure on the Government to investigate the miners' scheme also came after it was revealed that firms involved had been ordered by the High Court to pay back in the region of £100m to the DTI.

Mrs Justice Swift said the DTI had been paying too much in legal costs on claims that had been fast-tracked, such as cases where the claimant may die before settlement or the victim's family's case met the threshold criteria.

Swift J noted in her judgment that a detailed study of the time spent by solicitors on each coal claim "gives rise to the strong inference that the work has been significantly less onerous than had originally been anticipated".

Blair has confirmed that an investigation is ongoing, while a DTI spokesman insisted that the department was "doing everything it possibly can" to contact affected miners and help them reclaim fees.

The spokesman went on to say that, because it is a "moral issue, not a legal issue", there is little it can do to force firms to repay fees.

In February the Law Society wrote to senior managers at the law firms involved and urged them to repay the fees.

The compensation scheme, which makes monetary payments to miners for injuries such as chronic lung disease, has so far paid out £3.4bn to around 760,000 former British Coal employees.