HC Deb 30 March 2000 vol 347 cc600-8

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Mike Hall.]

7.15 pm
Mr. Kevin Barron (Rother Valley)

I thank Madam Speaker through you, Mr. Deputy Speaker, because I understand that she selected my debate for this evening. The practice known as administration or success fees has been an issue in my constituency and many others for many months. The fees are asked by some solicitors from ex-miners who make successful claims under the schemes that have been agreed with the Department of Trade and Industry and a group of solicitors.

In the middle of last year, I was approached by someone who works for the Coal Industry Social Welfare Organisation—CISWO—which is based in my constituency. The organisation has a long and proud record of working in coal mining communities, looking after the interests of retired miners and miners' widows. Families that suffered bereavement due to industrial accidents used to get good support from the organisation.

I was told that miners and miners' widows were asking for advice on correspondence from solicitors that they found confusing. In July last year I sent copies of some correspondence to the previous Minister, my hon. Friend the Member for Leeds, West (Mr. Battle), showing that a firm of solicitors called Raleys in Barnsley is involved in the practice of getting claimants to agree to an arrangement under which 3 per cent. of any compensation received, up to a maximum of £750, is paid to them. That sum is paid in turn to the National Union of Mineworkers.

Raleys argued: Under a Conditional Fee Agreement ("no win, no fee") solicitors are entitled to receive up to 25 per cent. of the claimant's damages (however large the damages are) which for a £25,000 claim could be up to £6,250; but under the mandate the Union administration fee is limited to £750 (3 per cent. of £25,000) and in many cases will be less. Does my right hon. Friend the Minister agree that, in the circumstances, the statement of the solicitors is grossly misleading? As part of a package agreed with the legal profession, the Government are paying all solicitors' costs for successful claims and even some costs for unsuccessful claims.

Another argument used in the correspondence is: I believe that the Union exists to fight for the rights of working men and women. … The Union has for nearly 30 years been at the forefront of the campaign to have bronchitis and emphysema recognised as an industrial disease. I am sure that we all agree with those sentiments; I have been arguing the case for many years. However, that does not justify the union taking a cut from the compensation awards for those disabling diseases.

Mr. Alan W. Williams (East Carmarthen and Dinefwr)

The South Wales area of NACODS—the National Association of Colliery Overmen, Deputies and Shotfirers—has a similar levy of 5 per cent. of the eventual award, or 10 per cent. in the case of lapsed members. In one case, there is a claim of £7,250 from a member's compensation.

Mr. Barron

I am grateful for that intervention.

Mr. Allan Rogers (Rhondda)

As one of the Welsh members on the monitoring group that was set up by the Government to expedite the claims, I have had a number of complaints. My hon. Friend the Member for East Carmarthen and Dinefwr (Mr. Williams) has passed some on to me. To put it in context, I understand that the solicitors are being paid tens of millions of pounds out of the money that has been made available. It is not as though it is petty cash. I am sure that the Minister for Energy and Competitiveness in Europe, my right hon. Friend the Member for Airdrie and Shotts (Mrs. Liddell), will give the exact figure.

Mr. Barron

I ask my right hon. Friend to do exactly that.

I have a constituency case of an ex-miner who was originally asked by Russell Young Solicitors of Newcastle to pay an administration fee of £1,000. He objected. That was consequently reduced to a maximum of £200. Because Russell Young went out of business, his claim, which was for vibration white finger, was sent to Thompsons Solicitors of Newcastle, which asked for and, I understand, has now received consent to take a £200 administration fee from my constituent's compensation.

On 1 November last year, I sent those two cases to the Office for the Supervision of Solicitors, asking if it were able to take action to stop the practice of asking for fees from compensation, when the solicitor fees had already been met by the taxpayer.

I emphasise that I did not write in any formal complaint on behalf of any constituent. I was concerned simply about the practice that I have outlined. I intended to bring the matter up in Parliament on Wednesday 10 November last year in a debate on the coal industry, but, sadly, I was not called.

On that day, an article appeared in the Yorkshire Post, explaining what I had done and including some comments from the Minister. I received a letter from a firm of solicitors in Sheffield, Irwin Mitchell, which wrote on behalf of the co-ordinating group of claimants' solicitors, which represents former mine workers in the litigation. That firm was responsible for the handling agreement, which it agreed with the Department of Trade and Industry.

The firm stated in its letter that the article in the Yorkshire Post was misleading. I wrote back telling it what the Minister had said in correspondence and asking the following three questions, given that it seemed to be the lead partner in the group.

The first was: Why do you think it is right that a successful claimant or, on some occasions, his widow, has the responsibility/obligation to pay money towards an unsuccessful claimant's costs? The second was: Why is it that some solicitors are charging different administration fees? I have seen examples of some charging £200 and some charging up to £750. We have heard from my hon. Friend the Member for East Carmarthen and Dinefwr (Mr. Williams) that there are different charges in South Wales.

The third question was: Why is it that one firm of solicitors is charging an administration fee on successful claims and passing it on to a third party (the claimant's trade union)? Irwin Mitchell's replies to my three questions are as follows. In reply to question one, it was stated: During the course of the passage of the Access to Justice bill and the withdrawal of legal aid for personal injury claims, the Government has made it clear that solicitors should adopt a business-like attitude towards claims funded by Conditional Fee Agreements and view successful claims which attract success fees as funding for unsuccessful claims. In answer to question 2, it was said: I am not in a position to comment on administration fees levied by some firms of solicitors. Funding and billing arrangements between solicitors and their clients are essentially private matters and I have no knowledge of the arrangements that most members of the solicitors group have made with their clients. I know some firms make no charge at all until the end of a case and from what I know of the litigation personally a charge of £750.00 would seem to be a lot, however I am unaware of the circumstances in which this sum is claimed and thus I am not in a position to express a considered opinion. The regulation of solicitors costs does allow clients the facility to challenge charges that they think might be inappropriate and if you consider it helpful I can provide you with the information as to this process. In answer to my third question, I was told that the arrangements made by trade unions to fund their members' claims varied from union to union. The matter you raise is one between the particular firm of solicitors, that firm's clients and the trade union concerned. I am not in a position to offer an explanation. In reference to the reply to my first question, does not my right hon. Friend agree that, if solicitors agree that they should be more businesslike, they should agree some form of code of conduct and scale of charges? However, I find it difficult to accept that successful claimants have any form of obligation to fund unsuccessful claims.

Although the firm considers that the charge of £750 is high, it does not argue against some charge. As to the final response to my final question, I go back to the reply to my first question: on what basis can one of the charges be made when these solicitors are not retaining the fees for funding unsuccessful claims but are handing them over to a third party—in this case, a trade union?

I sent this correspondence to the Office for the Supervision of Solicitors, which has appointed a leading solicitor in the west midlands to look into the matter. His preliminary report was completed on 27 January, and I am waiting to see whether there will be a full investigation. I would hope that that would include the collection of more evidence into what I believe is a very unsatisfactory situation.

Meanwhile, the problem goes on. I received a letter dated 6 March from CISWO, stating that it had identified a differential fee charged by the company Irwin Mitchell, which is based in Sheffield. That differential fee is charged particularly in posthumous cases. One widow was asked to sign a conditional fee agreement for 10 per cent. payment, while another was asked to sign for a deduction of 20 per cent. CISWO pointed out that the charge can go as high as 25 per cent. in some cases.

That is true. I have here correspondence sent last month to a miner's widow in my constituency. Under the heading "Respiratory Disease", it states: If your claim proves to be successful generally "costs follow the event". This means that if you are successful in proving your claim for compensation then the party paying that compensation will in addition pay your legal costs. Under the terms of a Conditional Fee Agreement, you will then be liable to pay a success fee. The success fee being 25 per cent. of our basic costs. The letter goes on to state that the terms of the conditional fee agreement mean that if a claim failed, the claimant would not have to pay any costs. However, the fee agreement sent to my constituent to sign stated, under the heading "Paying Us", stated: If you win the case, you are liable to pay our disbursements, basic costs and success fee. Will my right hon. Friend confirm that, under the scheme agreed with the Government, disbursements and basic costs are met by the taxpayer, not by the successful claimant? Yet the conditional fee agreement makes it clear that that is what is expected to happen.

I agree with CISWO: the whole matter is confusing to my constituents, many of whom are elderly or who have difficulty reading the reams of paper involved and coming to decisions that are in their own interests. I believe that most solicitors dealing with mineworkers' claims are not charging any success or administration fee.

I have evidence from two solicitors' firms. Towells from Wakefield states in correspondence received by my constituents: We also confirm that whether or not your claim is successful, no charge will be made by this firm for work undertaken in connection with your claim. In the event that you are awarded compensation, our fees will be paid by British Coal's insurers. No monies whatsoever will be deducted from your compensation. Keeble Hawson in Sheffield, whose offices are a few hundred yards from those of Irwin Mitchell, states: I confirm that this firm does not charge any success fee on any claim whether the claimant is referred to us by a Union or from any other source. In addition we do not charge for any unsuccessful case again whether or not the individual has been referred from a Union or not. The only item we would charge is if we have to incur any disbursements such as GP records etc, then we usually ask the Claimant to confirm that they will meet the costs of such a disbursement or deduct it from their compensation. I would say at this stage, it has been rare if ever this has actually happened. Is there any way in which we can get messages to retired mineworkers to tell them that they do not have to sign up to these additional fees if they do not want to? Has my right hon. Friend thought of using the newsletter of the mineworkers' pension scheme—obviously at the Government's own expense—to put the message across to people, many of whom will be getting the newsletter, that they do not have to sign up to those solicitors who are levying charges on their rightful compensation?

My right hon. Friend wrote to Members earlier this week with a progress report on the processing of compensation claims. I am grateful that the Department has come to an agreement with the British Medical Association regarding general practitioners assisting quickly in retrieving medical records of claimants. Will the Department look into the retrieving of mineworkers' past work records, as I understand that that matter is causing some delay in terms of the levying of these claims?

The Government are doing all within their power, and they have put many millions of pounds into this area to compensate people who have been disabled by these diseases. As a Member of Parliament from a coal mining area, I am grateful that that is happening, and it has the potential to help many hundreds, if not thousands, of my constituents. However, we need to try to speed the process up as best we can, and we need to make sure that constituents are getting good, sound advice on what they should be paying, or not paying, in relation to settling these damages against British Coal.

7.33 pm
The Minister for Energy and Competitiveness in Europe (Mrs. Helen Liddell)

I congratulate my hon. Friend the Member for Rother Valley (Mr. Barron) on securing the debate. I am grateful to him for putting so many of these issues on the record. I have been dealing with this matter since August last year, and my emotions have gone from shock to despair to anger at some of the stories that I have heard about how men—and their widows, sadly—are being abused in a situation where the Government are trying to make due recompense for terrible suffering that they have experienced as a result of their occupation.

My hon. Friend has raised a large number of issues, not all of which I may have time to answer this evening. I will take on board the issues that he has raised. I draw to his attention and that of the House the fact that I am accompanied on the Front Bench by the Parliamentary Secretary, Lord Chancellor's Department, my hon. Friend the Member for Wyre Forest (Mr. Lock), who has taken copious notes of the points made by my hon. Friend in relation to the activities of solicitors.

First, let me make it clear that there are some solicitors involved in this matter—as my hon. Friend pointed out—who are extremely honourable and give of their time with great dedication, often above and beyond the call of duty. Regrettably, there are others who see this as a dripping roast and do not give a service, leaving us in a situation where not only do we have difficulty progressing these claims but, in some cases, we cannot even get a response from them at all.

Mr. Rogers

I hope that my right hon. Friend and my hon. Friend the Member for Wyre Forest (Mr. Lock), who represents the Lord Chancellor's Department, will look not only at the morality but the legality of solicitors charging success fees when they are not involved in litigation. All that solicitors do in this instance is process claims. They are not taking the matter to the courts, so how on earth they can claim success fees is beyond me.

Mrs. Liddell

I am grateful to my hon. Friend for raising that point. We will look into it.

It may help the House if I go through the handling agreement that we have with solicitors and what they get paid for. We are paying solicitors' fees to the tune of £100 million. We are not talking about small sums of money.

My hon. Friend the Member for Rother Valley also talked about obtaining information using the mineworkers' pension scheme. I will look into that. I am aware of the difficulty of accessing British Coal records. There are five and a half miles of records, many of them incomplete, which also slows down the process. I say to my hon. Friends—hon. Friends, because the Opposition Benches are completely empty for this important debate—

Mr. Deputy Speaker

Order. I have to say, consistent with Madam Speaker's rulings, that Adjournment debates, which are individual debates initiated by a particular Member, are not a matter for any Member of the House other than the Member speaking to the motion and the Minister who replies. They are not general debates.

Mrs. Liddell

I am grateful to you, Mr. Deputy Speaker, and 1 apologise for that remark. May I make the point, however, that these are extremely significant issues? Nearly 100,000 miners or their widows have already submitted claims.

I would like to go through the handling agreement so that people in this House and outside know exactly what solicitors are paid for. Solicitors have a table of tariffs that cover their profit costs plus reasonable disbursements. The tariffs relate to the stage in the process that a claim is settled and the complexity of the work. At the lower end, a solicitor who represents a claimant who accepts an expedited offer after the initial spirometry test would receive £900 plus reasonable disbursements. At the top end, a solicitor representing a claimant who receives compensation having gone through the medical assessment process is entitled to £1,750 plus reasonable disbursements. In addition, certain top-ups are paid, ranging from £200 to £500, to reflect various difficulties that may be encountered during the life of a claim. Involving co-defendants, invoking the disputes procedure and carrying out complex calculations of special damages can all merit top-up payments.

In addition—I make this point forcefully—the Department is paying a proportion of solicitors' costs incurred on unsuccessful claims because we agreed to pay towards client care for all claims received before 14 June 1999, regardless of whether they are ultimately successful or not; so any of the success fees recovered by the solicitors would be additional to these sums and would obviously reduce the compensation received by the claimant.

The solicitors' tariffs were agreed after a great deal of negotiation. They reflect a great deal of work and cover a variety of tasks, such as keeping clients informed of the progress of their claim, giving face-to-face assistance with completing the various forms—which can take between one and one and a half hours—checking that offers of compensation are correct and that they accord with the terms of the agreement.

I have seen the preliminary report of the complaint that my hon. Friend the Member for Rother Valley made to the Office for the Supervision of Solicitors. It is important that the conclusions are borne in mind. However, many of the claims are being settled under an agreement whereby the Department of Trade and Industry meets the cost of collecting all medical records and the cost of medical consultation, regardless of the outcome of the claim. This is a risk-free enterprise for solicitors. The Government are carrying the risk. That is what I find so difficult to accept.

I have some encouragement for my hon. Friend. First, in relation to the British Coal records, we will be content with a statement of employment where no record exists, to ease the search for records. However, the Parliamentary Secretary, Lord Chancellor's Department, informs me that under any conditional fee agreements entered into after 1 April, success fees can be claimed and paid by defendants, not out of damages. Not only will the success fee be paid by defendants—in this case the Government—but the percentage can be challenged by the defendant if the fee is excessive. My Department will take that into account if we receive evidence of excessive success fees being claimed after 1 April. We shall study all claims carefully.

The president of the Law Society may have some interest in several points made this evening. Any claims for success fees from before 1 April can be challenged, and the reasonableness of charges can be analysed through an application for a remuneration certificate. Many elderly people will not want to go down that route. I hope that moral suasion will bring common sense to some of the activities taking place.

This is the largest ever personal injury case, and that has brought significant difficulties. It is a one-off case, and we are to some extent learning as we go. It is a source of intense frustration to the Government that we have not made more progress, although the first major MAP compensation—in excess of £50,000—has been paid this week. To those awaiting payment, I can say only that we need the co-operation of solicitors. We need them to fill in forms and to have mandates signed. We shall consider every opportunity to progress matters as quickly as possible.

Let me take the opportunity provided by my hon. Friend's debate to appeal to doctors and health authorities to help us to make quicker progress. People are dying. We are helping lawyers and health authorities with the administration related to releasing medical records. We are paying £100 a day for access to the records, and I appeal to the caring professions to help us to proceed as quickly as we possibly can.

Much of what we have discussed tonight is not illegal, although it is immoral—a point that should be forcefully made. I want to issue another warning. We have talked tonight about solicitors, but the substantial sums of money involved have also been recognised by many people who describe themselves as claims handlers. IRISC—which handles claims for the Department—has been approached by claim-handling firms asking for a database of the miners who seek to pursue claims. The claim-handling firms also want success fees.

I have no doubt that when significant sums are eventually paid to miners, another new form of vulture will appear in the mining communities—people who will seek to advise miners, their widows and their families on how to invest the compensation. It is as well to warn people now to be cautious and not to be taken in by those who would seek to make a killing from people who are suffering, and, in some cases, from people who have lost their lives.

We have heard that unions are seeking contributions from compensation. I can see a case for that in some circumstances. The unions began the whole process, and we recognise that they need help with the legal costs that they incurred. However, fairness is vital.

I urge those who are circling people who are desperately ill to be aware that wider society and the Government are watching what they do. I repeat that these people are very ill.

Many important points have been put on the record tonight, and my Department and the Lord Chancellor's Department will consider them closely. 1 hope that the wider community will do the same.

Question put and agreed to.

Adjourned accordingly at sixteen minutes to Eight o ' clock.