So-fa no good

There was much trumpeting outside the Royal Courts of Justice last week after Mr Justice MacDuff approved plans for a compensation fund for victims of the toxic sofas scandal.

More than 1,500 people were told they were entitled to a payout from Argos, Land of Leather and Walmsleys after they were sold leather sofas containing a highly sensitising chemical called DMF (Dimethyl Fumarate).

Claimants said that after being exposed to the chemical they were affected by severe skin or eye complaints, breathing difficulties or other medical complications. The three outlets all admitted liability.

In logistical terms, managing a claim that involved more than 200 firms and 1,600 individual claimants was never going to be easy.

The claim failed at the first hurdle when it was decided in March that insurance giant Zurich could not be held liable for claims against Land of Leather, which had gone into administration.

The insurer agreed to pay only the claims against Land of Leather where the sofas had been supplied by Chinese company Eurosofa, otherwise, the court ruled, it would not be held liable for Land of Leather’s losses.

“Zurich and their solicitors knew that there was a question about indemnity, but they didn’t tell us or the court,” says Russell Jones & Walker (RJW) partner Richard Langton, who led the case for the claimants.

“This meant the claimants got an admission of liability in a case management conference in March 2009, but a year later they were told they wouldn’t get any compensation.”

He adds: “If the retailer was still trading as a half-billion pound company they would’ve been forced to pay up. Had we known what was happening a year earlier we would’ve done something. We’re very, very unhappy we were kept in the dark.”

That strand of the case will be taken to the Court of Appeal, possibly before the end of the year. In the meantime, 350 people will be refused compensation for the same injury that will gain more than 1,500 people a payment.

Despite this ongoing dispute, RJW has taken an innovative approach to working with the defendant solicitors – Halliwells partner Jim Bryant, Berrymans Lace Mawer partner Jim Sherwood and Beachcroft partner Wendy Hopkins – to manage payments to claimants.

The compensation fund is being managed by a team of 12 RJW paralegals who are under the supervision of four partners. Claimants contacting the firm will be asked for certain details before their claims are assessed and their compensation level agreed. This should take under an hour, speeding up the process and minimising legal costs.

Last week, Collins Solicitors senior partner Des Collins highlighted inefficiencies in Lord Justice Jackson’s recommendations for reforms in the litigation process (21 April 2010). In particular Collins, supported by Old Square’s David Wilby QC, slammed plans to move away from the conditional fee agreement (CFA) system.

Without the use of a CFA it is unlikely that this case would ever be seen by a court. What Jackson LJ proposes is a streamlined system that encourages greater cost efficiencies.

The toxic sofas case illustrates just how lawyers can embrace Jackson’s values without compromising profit streams.


Claimant lawyers: Russell Jones & Walker partner Richard Langton instructed Ralph Lewis QC of No 5 Chambers.

Defendant lawyers:

For Argos Home Retail Group: Halliwells partner Jim Bryant instructed Michael Kent QC of Crown Office Chambers.

For Unibrook trading as Walmsley Furnishing: Berrymans Lace Mawer partner Jim Sherwood instructed Jonathan Waite QC of Crown Office Chambers.

For Zurich: Beachcroft partner Wendy Hopkins instructed Colin Edelman QC of Devereux Chambers on policy coverage issues, while Beachcroft partner Tania Sless  instructed Neil Block QC of 39 Essex Street on personal injury claims.