The British Coal compensation saga has seen lawyers scoop more than £800m of taxpayers’ money in legal costs by handling the claims of the sick coalminers, The Lawyer can reveal.
Figures released by the Department of Trade & Industry (DTI) show that just 30 firms shared a pot of £797.9m for litigation over respiratory disease and
vibration white finger alone.
One DTI insider said the amount paid out to lawyers in legal fees had “in reality surpassed the billion-pound mark” if all the fees from “the scores of law firms” are totalled and other claims by miners, such as hearing loss, are taken into account.
The suffering of the coalminers has been a goldmine for Doncaster-based three-partner personal injury (PI) boutique Beresfords Solicitors in particular. Beresfords was paid £97.8m from the world’s largest-ever PI compensation scheme, which started at the turn of the century, putting it second in the table to Thompsons, which made £106.4m.
It has helped Beresfords senior partner Jim Beresford and his daughter Esta, who is also a partner, become multimillionaires.
The exclusively ‘no win, no fee’ firm made a total net profit of £20.4m in 2005 at the height of the compensation payouts, when the Government was handing over £2m each day.
According to Beresfords’ LLP accounts, uncovered by The Lawyer, Beresford took home £16.8m in one year.
This makes him the highest-earning lawyer in the UK, eclipsing Avalon Solicitors senior partner Andrew Nulty, who last year made £13m.
The firm’s only other partners, Beresford’s daughter and Doug Smith, on average made just less than £2m each in 2005.
In contrast, 58,000 miners were paid less than £1,000, of whom almost 4,000 banked less than £100.
Due to Beresfords’ small size the LLP accounts are an abbreviated version, where turnover is not required to be disclosed. But its gross profit (or net fee income) of £29.6m and its highly leveraged model helped the firm record a profit margin of around 69 per cent – 20 per cent higher than the usual margin expected for City M&A lawyers.
Beresford’s take-home pay allowed him to buy a £1.8m Beechcraft turboprop aircraft at a time when coalminer scheme money was pouring into law firms during 2005.
Beresford was unavailable for comment. However, a firm spokesman said the firm, in addition to coal claims, acts for clients across a range of common law industrial disease matters, including asbestos poisoning, which also accounts for its 2005 profit.
“Beresfords is delighted to have settled more chronic obstructive pulmonary disease claims for clients than any other firm in the country and to have been able to obtain for clients in excess of £180m of compensation,” said the spokesman.
The £7.5bn scheme began after British Coal was found negligent in relation to vibration white finger and respiratory disease in 1997 and 1998 respectively.
While the miners received so little, firms on average received a flat-rate fee of £2,125 per claim from the Government for handling claims.
Several firms also dipped into the coalminers’ actual compensation despite the Government’s wishes that the awards should not be touched – the flat-rate fees were meant to cover all costs.
These firms hold that the money was taken legitimately from the miners’ compensation. The cash was used to pay for referral fees to companies that found them the cases. This was investigated by the police and is still the subject of a Solicitors Disciplinary Tribunal investigation.
The Union of Democratic Mineworkers (UDM) has been investigated by police for such a practice, because a claims management company called Indiclaim was owned by one of its employees.
Indiclaim was involved in referring cases to firms, including Beresfords, for a fee of £100 to £500 per claim. No charges have been brought and the UDM denies any wrongdoing.
The Solicitors Regulation Authority is currently ploughing through 53 investigations into the conduct of law firms that syphoned off coalminers’ compensation.
The Beresfords spokesman said: “We’re one of a considerable number of firms who’ve been involved with investigative reports from the Law Society. We’ve responded fully and openly to any questions asked of us in that connection.”