Supplementary memorandum submitted by
the Department for Business, Enterprise and Regulatory Reform
Question 90 (Mr Austin Mitchell): Indications
of fraud in the case of Mrs Ann Elizabeth Evans
The Committee requested a note explaining the
case of Mrs Evans. The Department has reviewed the history of
the issues raised by Mrs Evans.
Complaints made by Mrs Evans
In 2001 Mrs Evans made multiple complaints to
the Law Society against the solicitors (Hugh James in Merther
Tydfil) who handled her compensation claim for respiratory disease
in respect of her late father William John Thomas. The various
documents attached to Mrs Evans' letter outline the complaints
made. In particular Mrs Evans alleged that her solicitors had:
— delayed in "registering"
Mrs Thomas' claim until May 1998;
— failed to make a timely application
for an interim payment;
— failed to respond to individual letters
and telephone calls;
— delayed in providing costs and client
care information;
— provided advice and information that
was confusing;
— failed to apply appropriate supervision
to junior staff; and
— altered the claims form (claim questionnaire)
without her knowledge or consent, in a way that artificially inflated
the value of the claim.
Appeal to Law Society
Mrs Evans appealed the Law Society's original
decision and this was reviewed by the Adjudication Panel and their
ruling was handed down on 22 June 2005. The upshot being that
Mrs Evans' appeal was upheld and two partners at Hugh James each
received a severe personal reprimand from the Law Society in respect
of their failure to properly supervise their staff. Additionally,
it is clear from the Law Society's findings that the only reason
a finding of misconduct had not been made is that (by reason of
the poor supervision) it was not possible to identify the individual
at Hugh James guilty of the misconduct. The Adjudication Panel
raised Mrs Evans' compensation from £1,250-£5,000. Hugh
James challenged the decision by way of Judicial Review.
Throughout the dispute Mrs Evans kept the Department
(through its external lawyers Nabarro) appraised of her case and
she also sent copies of the Law Society's report and findings
to Sir Michael Turner, the Judge then overseeing the COPD scheme.
Department's consideration of the position
The Department carefully considered the issues
raised, especially in terms of potential impact on the wider administration
of the schemes. The main issue being the Law Society's finding
that Hugh James Solicitors had altered Mrs Evans' claim questionnaire
form. Furthermore, the nature of the supervisory failures by Hugh
James Solicitors ("...monitoring individual files by computer
screen and monitoring DTI statistics...") raised concern
that these failures were not limited to Mrs Evans' case alone.
It was also apparent that the two partners were two out of five
members of the Co-ordinating Group (CG) of solicitors representing
the claimants under the scheme.
A range of actions were undertaken:
— Nabarro (the Department's legal advisers)
held a full meeting with Mrs Evans on 29 June 2004;
— a request was put to Capita's Security
Investigation Department (SID) to filter out similar type cases
intimated via Hugh James Solicitors for analysis;
— a letter dated 7 September 2005 was
sent to the Senior Partner at Hugh James Solicitors requesting
a full written explanation and detailing the organisational failures
which have led to the findings against them, together with details
of what changes have been made, in light of those findings; and
— a copy of the letter to Hugh James
Solicitors was copied to a member of the Claimant's Group, suggesting
that the CG should raise the issue at the next Review Hearing
and address the issue in its written report to the Court.
Current position
As far as the Department is aware the case remains
subject to ongoing review by the Solicitors Regulation Authority
(SRA). In these circumstances the Department is not currently
in a position to take further action.
Question 94 (Mr Alan Williams): 10 organisations
who have been paid the lowest coal health fee
The table below lists the 10 claimant representatives
who have received the lowest fee income as at the end of March
2007.
| Solicitor | No. of COPD Claims
| COPD Solicitors Costs (exc Litigation) £'s
| No. of VWF Claims | VWF Solicitors Costs (exc Litigation) £'s
| COPD & VWF Solicitor Costs (exc. Litigation) £'s
|
| Barry F Cosier Associates | 4
| 30.00 | 0 | -
| 30.00 |
| Trueman | 1 | 30.00
| 0 | - | 30.00
|
| Walker Smith & Way | 2 |
559.30 | 0 | - |
559.30 |
| Frank Howard | 6 | -
| 2 | 587.50 | 587.50
|
| Anderson Eden Solicitors | 2
| - | 2 | 587.50
| 587.50 |
| Moore & Blatch Solicitors | 1
| - | 2 | 587.50
| 587.50 |
| Huitson & Wittrick Solicitors | 1
| - | 4 | 764.02
| 764.02 |
| Pawson & Murray Solicitors | 1
| - | 2 | 766.10
| 766.10 |
| Richards & Lewis Solicitors | 1
| - | 1 | 787.25
| 787.25 |
| Tierney & Co Solicitors | 1
| - | 1 | 949.40
| 949.40 |
Question 98 (Mr Richard Bacon): How much the Department
expects to recover from each of the 10 organisations in Appendix
7, and how much each of them has paid so far
The table below sets out the total amount that the Department
is seeking to recover from the top 10 claimants' representatives[24]
and the amounts recouped as at 2 November 2007. As at 2 November
2007, the Department has received £18.9 million and has a
further £31.8 million to recover.
| Ranking | Solicitor
| Total Debt (including interest) |
Total Debt Recovered (incl. off set and write off)
| Total Outstanding Debt |
| 1 | Thompsons | £5,171,007.97
| £3,449,270.05 | £1,721,737.92
|
| 2 | Beresford | £13,816,568.20
| £2,374,269.16 | £11,442,299.04
|
| 3 | Hugh James | £5,780,597.30
| £0.00 | £5,780,597.30
|
| 4 | Raleys | £5,442,336.63
| £5,442,336.63 | £0.00
|
| 5 | Browell Smith & Co |
£4,210,965.91 | £4,210,965.90
| £0.01 |
| 6 | Mark Gilbert Morse |
£1,168,813.14 | £1,168,813.14
| £0.00 |
| 7 | Avalon | £8,537,854.68
| £311,261.49 | £8,226,593.19
|
| 8 | UDM | £2,342,039.83
| £52,405.46 | £2,289,634.37
|
| 9 | Watson Burton LLP | £2,447,613.47
| £87,737.64 | £2,359,875.83
|
| 10 | Graysons Solicitors |
£1,796,473.44 | £1,796,473.44
| £0.00 |
| | £50,714,270.57
| £18,893,532.91 | £31,820,737.66
|
Avalon, ranked 7 in the table above, is contesting the Department's
entitlement to recoup any money. As they are not members of the
Claimant Group (CG), Avalon argues that the Court Order[25]
is not binding on them. A Court Hearing to resolve this issue
has been scheduled for w/c 26 November 2007. In the meantime the
Department is beginning to recover the debt via a set-off arrangement
of fees for claims due to the firm.
Question 104 (Mr Richard Bacon): Fast Track Scheme Solicitor
Costs
The Committee requested a note explaining why the Department
did not negotiate reduced solicitor fees when the Fast Track Scheme
was introduced, as it knew it was a simpler process which required
less legal input. At the end of February 2005, the Department
introduced a fast track scheme, known as the Optional Risk Offer
Scheme (OROS) aimed at cases likely to attract smaller amounts
of compensation. The aim of this process was not only to speed
up COPD compensation payments but also to cut down on medical
and administration costs. An initial assessment of these savings
estimated that OROS would reduce the life of the COPD Scheme by
two years and could save the Department over £170 million.
The Department did seek to negotiate lower fees for the Fast
Track scheme with the Claimants Group but a sensible compromise
could not be reached. It was therefore left to the Judge to decide
the figures. The Department thought that the figures awarded by
the Judge were too high and successfully appealed to the Court
of Appeal who set aside the Judge's figures and remitted the matter
back to the Judge for re-hearing. Ultimately (and following a
change of Judge) revised figures were awarded in April 2007 which
were substantially lower than the awards of the original Judge.
Question 107 (Mr Don Touhig): Solicitor partnerships with
claims handlers
The Committee asked the Department to investigate whether
it had seen copies of the agreements the claimants had signed
with solicitors. As these agreements are between the claimant
and their representatives the Department would not expect to see
copies. However, by chance the Department has seen some examples
of such agreements, the first one being in 2000, which prompted
it to act. Since the Department became of aware of this issue,
it has taken a number of actions to encourage solicitors to stop
this practice. If a claimant wishes to enter into a separate agreement
with their claimant representatives, the Department has no right
to intervene to stop solicitors deducting fees. The Department
remain of the view that the deduction of fees from the compensation
without the knowledge of the claimant is unacceptable.
In 2001, the Law Society took the line that the charges were
proper provided the amounts concerned were not unreasonable and
that the client has been properly informed as to the charging
arrangements (as stated in the report). In December 2003, the
Department wrote to all solicitors requesting an assurance that
they would not impose additional fees. Those solicitors who did
not respond, were removed from the list of solicitors provided
to all potential claimants, although this did not preclude claimants
using these solicitors should they wish to do so. In the July
2005 review hearing Sir Michael Turner looked at the issue and
urged that the practice of working with claims farmers stop and
deductions cease. In June 2007, Malcolm Wicks and Bridget Prentice
wrote a joint letter to all solicitors in England and Wales asking
them to repay all deductions taken from compensation without the
full understanding and agreement of the claimant.[26]
Whilst complaints about solicitors are a matter for the Legal
Complaints Service to deal with, both this Department and the
Ministry of Justice are continuing to monitor the position.
24
By coal health fee income as at 31 March 2007 as set out in Appendix
7 of the NAO Report. Back
25
On 3 April 2007 the Court ruled in favour of the Department and
solicitors were ordered to repay the difference between the original
tariff paid by the Department and the new tariffs set by the judge.
In a subsequent order, the Judge ruled that the solicitors were
also liable to repay the interest incurred on the principal sum
(at a commercial rate of 1% above the Bank of England base rate)
and the overpaid VAT in respect of the principal amount. Back
26
Information provided, not printed. Back
|
