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Miners' compensation: third of solicitors now flout rules on secret payments to win work
Frances Gibb, Legal Editor
div#related-article-links p a, div#related-article-links p a:visited {color:#06c;}The legal profession faces a radical overhaul of a multimillion-pound trade in which thousands of solicitors fork out confidential payments or commission to obtain work.
Figures seen by The Times show that a third of solicitors now flout rules on providing full transparency of financial arrangements for their clients, a rise of 50 per cent on 2006.
The practice will be further high-lighted next week when Jim Beresford, said to be Britain’s highest-earning solicitor, is accused of failing to comply with transparency rules over how he made millions of pounds from miners’ personal injury claims.
The landmark hearing into Mr Beresford, before the Solicitors Displinary Tribunal, is the most significant from the biggest inquiry into allegations of misconduct within the legal profession. The hearing comes after a Times investigation into how law firms made millions of pounds by allegedly exploiting sick miners, slicing money from their compensation claims.
The Solicitors Regulatory Authority (SRA) is now looking at imposing a ban on the widespread practice of payments made by solicitors for work referred to them – by estate agents, insurers or claims handling companies.
Last year the SRA, which polices the legal profession, decided against outlawing such payments. But increasing concern about firms flouting rules has prompted the SRA board to revisit the issue when it meets next month.
Next week’s case is the most spectacular to arise out of the miners’ compensation scheme and involves 11 allegations against Mr Beresford, 58, and Douglas Smith, 51, his partner at their firm, Beresfords, in Doncaster, South Yorkshire.
The pair are accused of failing to act in the best interests of their clients, of not giving adequate advice and entering into contingency fee deals against their clients’ best interests. The firm is also accused of entering into arrangements for claims to be referred that were “a sham” and improper.
Both men robustly deny the charges. So far 25 firms have been referred to the Solicitors Disciplinary Tribunal and many more may follow, involving hundreds of lawyers. To date, 40 investigations have been concluded, with a small number of fines and reprimands.
The tribunal has fined eight solicitors up to £15,000 each and reprimanded three others. The SRA has reprimanded more than 30 solicitors. Its inquiry is likely to run for another three years.
Beresfords’ earnings by March last year had run to £115 million for more than 90,000 claims; in one year, Mr Beresford made a personal profit of £16.8 million.
Meanwhile tens of thousands of miners received awards of less than £1,000 each and many died before they received anything.
If found guilty of professional misconduct, the partners could be struck off, be suspended or fined £15,000 for each allegation, or suffer lesser penalties such as reprimands.
At the heart of the miners’ cases are allegations that as well as legitimately – if controversially – reaping vast fees from the Government for handling the miners’ claims, some law firms charged fees to the miners out of their compensation awards. This “success fee” was often charged on the ground that the miner had been introduced to the solicitor by a claims handling company or trade union that had charged the solicitor to send the case to them.
The scandal was exposed by The Times in a series of articles from June 2005. In February 2006 the Law Society sent a warning letter to more than 500 firms saying that the furore had a significant impact on the profession’s reputation, and many agreed to hand back to miners the excess fees taken. About £350,000 is known to have been refunded.
Monday’s case will deal specifically with the issue of miners’ claims, but will also refuel debate on the ethics and potential conflicts of interest in what are called “referral fees”.
The SRA estimates that in the last year alone almost half of all solicitors failed to comply fully with professional rules to inform clients of such arrangements. At the same time, the percentage of firms failing to give clients a statement that their advice is independent rose by nearly 12 per cent to more than 60 per cent, while the percentage of firms failing to disclose to clients any financial arrangement they have made to receive work rose from 21.5 per cent to 31.5 per cent.
Solicitors pay from £150 to £700 for cases to be referred. Despite the widespread breach of the rules on disclosure, action is almost never taken against law firms.
An official with the SRA said: “The profession is deeply divided over the ethics of these payments. One solicitor described them to me as the ‘work of the devil’. But to others they are their lifeblood.”
Antony Townsend, chief executive of the SRA, said: “This trend [increase in firms’ noncompliance] is disappointing, especially given our efforts to increase awareness of the rules. It is hard to believe that such high levels of noncompliance are entirely caused by ignorance. I am also concerned that the economic climate might increase the temptation not to comply.”
Beresfords, along with other firms with cases pending, are expected to contest the allegations. Mark Farrell, the firm’s chief executive, has pointed out that the sums earned reflected both the massive numbers of claims handled and several years’ work.
According to a written Parliamentary answer, by last month Beresfords had handled the largest number of miners’ claims, 80,320, for chronic obstructive pulmonary disease.
Hundreds of solicitors applied under a scheme set up by the Department of Trade and Industry in the late 1990s for the handling of the compensation. A total of 760,000 miners have registered claims, with £7.5 billion expected to be paid out. ‘We didn’t know they were getting paid twice’
Miners' compensation: third of solicitors now flout rules on secret payments to win work
Frances Gibb, Legal Editor
div#related-article-links p a, div#related-article-links p a:visited {color:#06c;}The legal profession faces a radical overhaul of a multimillion-pound trade in which thousands of solicitors fork out confidential payments or commission to obtain work.
Figures seen by The Times show that a third of solicitors now flout rules on providing full transparency of financial arrangements for their clients, a rise of 50 per cent on 2006.
The practice will be further high-lighted next week when Jim Beresford, said to be Britain’s highest-earning solicitor, is accused of failing to comply with transparency rules over how he made millions of pounds from miners’ personal injury claims.
The landmark hearing into Mr Beresford, before the Solicitors Displinary Tribunal, is the most significant from the biggest inquiry into allegations of misconduct within the legal profession. The hearing comes after a Times investigation into how law firms made millions of pounds by allegedly exploiting sick miners, slicing money from their compensation claims.
The Solicitors Regulatory Authority (SRA) is now looking at imposing a ban on the widespread practice of payments made by solicitors for work referred to them – by estate agents, insurers or claims handling companies.
Last year the SRA, which polices the legal profession, decided against outlawing such payments. But increasing concern about firms flouting rules has prompted the SRA board to revisit the issue when it meets next month.
Next week’s case is the most spectacular to arise out of the miners’ compensation scheme and involves 11 allegations against Mr Beresford, 58, and Douglas Smith, 51, his partner at their firm, Beresfords, in Doncaster, South Yorkshire.
The pair are accused of failing to act in the best interests of their clients, of not giving adequate advice and entering into contingency fee deals against their clients’ best interests. The firm is also accused of entering into arrangements for claims to be referred that were “a sham” and improper.
Both men robustly deny the charges. So far 25 firms have been referred to the Solicitors Disciplinary Tribunal and many more may follow, involving hundreds of lawyers. To date, 40 investigations have been concluded, with a small number of fines and reprimands.
The tribunal has fined eight solicitors up to £15,000 each and reprimanded three others. The SRA has reprimanded more than 30 solicitors. Its inquiry is likely to run for another three years.
Beresfords’ earnings by March last year had run to £115 million for more than 90,000 claims; in one year, Mr Beresford made a personal profit of £16.8 million.
Meanwhile tens of thousands of miners received awards of less than £1,000 each and many died before they received anything.
If found guilty of professional misconduct, the partners could be struck off, be suspended or fined £15,000 for each allegation, or suffer lesser penalties such as reprimands.
At the heart of the miners’ cases are allegations that as well as legitimately – if controversially – reaping vast fees from the Government for handling the miners’ claims, some law firms charged fees to the miners out of their compensation awards. This “success fee” was often charged on the ground that the miner had been introduced to the solicitor by a claims handling company or trade union that had charged the solicitor to send the case to them.
The scandal was exposed by The Times in a series of articles from June 2005. In February 2006 the Law Society sent a warning letter to more than 500 firms saying that the furore had a significant impact on the profession’s reputation, and many agreed to hand back to miners the excess fees taken. About £350,000 is known to have been refunded.
Monday’s case will deal specifically with the issue of miners’ claims, but will also refuel debate on the ethics and potential conflicts of interest in what are called “referral fees”.
The SRA estimates that in the last year alone almost half of all solicitors failed to comply fully with professional rules to inform clients of such arrangements. At the same time, the percentage of firms failing to give clients a statement that their advice is independent rose by nearly 12 per cent to more than 60 per cent, while the percentage of firms failing to disclose to clients any financial arrangement they have made to receive work rose from 21.5 per cent to 31.5 per cent.
Solicitors pay from £150 to £700 for cases to be referred. Despite the widespread breach of the rules on disclosure, action is almost never taken against law firms.
An official with the SRA said: “The profession is deeply divided over the ethics of these payments. One solicitor described them to me as the ‘work of the devil’. But to others they are their lifeblood.”
Antony Townsend, chief executive of the SRA, said: “This trend [increase in firms’ noncompliance] is disappointing, especially given our efforts to increase awareness of the rules. It is hard to believe that such high levels of noncompliance are entirely caused by ignorance. I am also concerned that the economic climate might increase the temptation not to comply.”
Beresfords, along with other firms with cases pending, are expected to contest the allegations. Mark Farrell, the firm’s chief executive, has pointed out that the sums earned reflected both the massive numbers of claims handled and several years’ work.
According to a written Parliamentary answer, by last month Beresfords had handled the largest number of miners’ claims, 80,320, for chronic obstructive pulmonary disease.
Hundreds of solicitors applied under a scheme set up by the Department of Trade and Industry in the late 1990s for the handling of the compensation. A total of 760,000 miners have registered claims, with £7.5 billion expected to be paid out. ‘We didn’t know they were getting paid twice’
