It was reported in 2009 that a firm of solicitors had agreed to repay money which was deducted from miners’ compensation claims and paid to a claims management company. The following points emerged:
· The firm admitted breaches of professional rules.
· It had acted for a number of claimants who had registered claims with the DTI under a scheme to compensate coal miners and their families for respiratory diseases and vibration white finger.
· The firm had bought the claims from Freeclaim IDC, a claims management company.
· The chairperson of the Solicitors Regulatory Authority is reported to have commented that complaints about the miners’ compensation had seriously damaged the reputation of the profession.
· In May 2006 an MP stated in Parliament that solicitors, claims handlers and some trade unions had raided victims’ compensation. There had been a feeding frenzy.
· Of 427,969 claims for compensation which had been settled, approximately 60,000 were settled for less than £100.
· In 65 per cent of the cases, average fixed costs paid to solicitors had exceeded the amount of compensation paid to the miners.
One solicitor reportedly made £13 million in 2006, mainly from industrial disease cases.
The scam was reported as deluding people and taking payments from their compensation. This could not have gone on without collusion between solicitors, claims handlers and some trade unions.
The company reportedly handled 5000 cases a week. The defendants’ insurers refused to pay out on £1250 insurance policies which claimants were obliged to take out. Tactics involved high-pressure sales tactics by unqualified intermediaries
The national press described this affair as a series of money scandals which had seriously, perhaps irrevocably, tainted the reputation of English lawyers.
In January 2009 James Beresford and Douglas Smith, solicitors, were ordered to be struck off. The Solicitors Disciplinary Tribunal found that they had breached Solicitors Practice Rules as follows:
A conflict of interest between their own interests and those of their clients.
Failing to act in the best interests of their clients.
Entering into a sham agreement with the Union of Democratic Mineworkers (UDM).
Sharing professional fees with a non-solicitor.
Improperly releasing confidential information.
Failing to give their clients sufficient information about costs.
Beresford and Smith were reported to continue to deny all the allegations and to intend to appeal.
The following points were made to the tribunal:
Beresford and Smith’s firm had expanded remarkably after the government set up a compensation scheme for former miners whose health had been permanently damaged by underground work.
In 1998 British Coal (as it then was) was found liable for vibration white finger and for chronic lung disease caused by coal dust. Beresford and Smith’s firm then had 10 employees and its annual income was reported to be £684,000. In 2006 the firm made a profit of £36.2 million. £23.2 million was paid to Beresford and Smith.
80 per cent of the firm’s income was from the coal health scheme. The firm registered 97,500 claims. There was no evidence that clients were informed, as they should have been, that the government would pay solicitors’ fees and that other firms were not charging success fees.
Thousands of UDM claims came to the firm through a company known as Vendside. This was a claims handling company wholly owned by the UDM. Beresford deducted £300 from each client who received compensation. This was paid to Vendside.
The widow of a miner was offered £281.77 compensation by the government. Beresford’s firm had been paid £2,431.08 by the government to handle the claim. The firm charged the widow a £64.04 success fee, reducing her compensation to £217.73.
In December 2009 it was reported that Beresford and Smith’s appeal to the High Court had been unsuccessful. The court commented that the Solicitors Disciplinary Tribunal made a cumulative series of findings of very serious misconduct on a huge scale and in relation to thousands of vulnerable clients in proceedings which were expensively contested in nearly every particular.