'Greedy' firms slammed as extent of miners' fee scandal is revealed
9 April 2007
Lord Lofthouse of Pontefract has been leading the campaign to bring to account law firms that have "taken monetary advantage of the coalminers' dire situation".
His crusade is now coming to a head, as he is on the verge of presenting a "damning report" to the Government and the House of Lords, which he believes will lead to an "urgent review" of the coalminers' compensation scheme.
More than 760,000 claims have been registered by coalminers and families who have lost their loved ones from chronic illnesses due to British Coal's lack of safety standards since the 1970s.
The Government has so far awarded more than £3.4bn in compensation, although the total paid out by the Department of Trade & Industry (DTI), once legal fees are included, is more than £4.2bn of taxpayers' money.
Almost a fifth of the money paid out by the DTI from the £7.5bn fund has been made to firms for handling the coalminers' claims at an average fee of £2,125 per case.
The controversy has incensed Lofthouse and has seen him intensify his battle, which began when the news hit the headlines in 2005 that law firms were paying third parties referral fees out of coalminers' compensation.
Claims management companies such as Indiclaim, which is owned by a former Union of Democratic Mineworkers employee, had struck up deals to refer cases to firms for a set fee. This money was being taken from the miners' compensation instead of the cash that the Government paid for handling the claims.
Lofthouse told The Lawyer that law firms deducting the referral fees, even after being paid generous fees by the Government "for the little amount of work that actually needed to be done", is a "major scandal".
"This is why in a matter of weeks I'm going to be publishing a full report on these matters as the subject is one that needs an urgent review," said Lofthouse. "It will show the true costs that the Government and taxpayers have had to pay out to lawyers and claims farmers once they've taken money from the coalminers."
Kevan Jones, Labour MP for the coalmining constituency North Durham, said: "This has been an appalling feeding frenzy for solicitors. The greedy ones aren't simply content with the large costs paid by the DTI. Some law firms have taken 25 per cent in addition to costs. We must insist that this is returned to the victims."
Investigations into the conduct of lawyers are in full swing, with the Solicitors Disciplinary Tribunal (SDT) looking into firms that may have deployed "very aggressive" approaches deemed to be inappropriate behaviour for professional services firms.
In 10 cases alone, 40 solicitors are facing disciplinary hearings. Partners from 11 firms have been referred to the SDT, with a further eight subject to internal Solicitors Regulation Authority (SRA) decisions. Thirty two solicitors have been reprimanded and 22 warned about their future conduct.
An SRA spokesman said these investigations are going to take years to resolve.
A decade of agitation over lawyers' fees was kick-started on 23 January 1998 when Mr Justice Turner made a High Court ruling.
Turner J handed down a highly critical judgment against British Coal, asserting that the corporation was negligent by not enforcing safety standards throughout the coalmining industry when the health risks to miners were well known.
Six former miners were awarded damages of up to £9,000 after suffering from chronic bronchitis and emphysema.
Turner J's landmark judgment followed a similar ruling by Mr Justice Eady at the High Court sitting in Newcastle upon Tyne in October 1997.
British Coal was again found negligent, but this time the miners were suffering from vibration white finger - a debilitating illness that causes muscle spasms and which can result in gangrene.
The court's position was reinforced by Turner J's ruling, which led to the largest-ever number of compensation claims against a single employer.
The Government, however, was the one that had to pick up the bill after British Coal was disbanded, as liabilities of the corporation were transferred to the DTI on 1 January 1998 under the terms of the Coal Industry Act 1994.
VIBRATION WHITE FINGER EXPLAINED
Vibration white finger (VWF) is a condition caused by working with vibrating machinery, such as chainsaws and drills.
The condition is a form of Raynaud's disease, which is caused by a restriction in the blood supply to the extremities, usually the fingers and toes.
The affected parts initially turn white and then become inflamed, which can be accompanied by significant pain, numbness or tingling.
VWF can cause the fingers to go into spasm and can lead to skin ulcers and even gangrene.
CHRONIC LUNG DISEASES EXPLAINED
Miners who do not smoke are 10 times more likely than the general public to suffer from a chronic lung disease.
A lifetime of breathing in large amounts of coal dust irritates the sensitive tissues of the lung and can lead to the development of diseases such as pneumoconiosis and emphysema.
Pneumoconiosis, also known as black lung disease, and emphysema lead to a shortness of breath and a chronic cough, which can lead to pulmonary tuberculosis and heart failure.
1997: High Court finds British Coal negligent in test case for miners with vibration white finger.
1998: Courts find British Coal negligent in test case for miners with chronic lung diseases.
1999: The Department for Trade and Industry (DTI), which is responsible for British Coal's liabilities, signs two claims-handling agreements with claimants' law firms and the Union of Democratic Mineworkers (UDM).
2004: The Law Society investigates complaints against solicitors' firms of alleged abuses of the coal health compensation scheme.
2005: Police launch a fraud inquiry after it is revealed that solicitors and senior UDM officials benefited from the compensation scheme.
2006: In the summer Lord Lofthouse of Pontefract threatens to "name and shame" law firms that did not return the money they took from the miners' compensation. He names the firms in a speech to the House of Lords in November.
15 January 2007: In response to a written question, the DTI reveals which are the top 30 law firms to gain from legal costs taken from the compensation scheme for both respiratory diseases and vibration white finger.