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Solicitors Fee Structure – Coal Health Claims

In my contribution I want to do four things:

1. By way of background explain how the procedure for making a claim works
2. Explain the link between Claims Handling Firms and some Solicitors Firms
3. Use examples to show the way that mining communities are being exploited by Claims Handling Companies and some forms of solicitors
4. Suggest as I go through my contribution what the Minister might do to remedy the issue

This month marks the 20th Anniversary of the beginning of the year long 1984/85 Miners’ Strike. It should not go unnoticed that here we are 20 years on discussing how we can prevent the further exploitation of the mining communities.

For the record I Chair the All Party Parliamentary Coalfield Communities Group and I am Chair of the Miners’ Parliamentary Group. I am also a member of the Miner’s Coal Health Claims Monitoring Group.

Coal Health Schemes and the Handling Agreement

The Coal Health Schemes comprise the VWF Scheme, the COPD Scheme and the Coal Industry Pneumoconiosis Scheme. Although it is fair to say that as far as this debate is concerned it will for the most part concentrate on the operation of the former two Schemes.

Formers miners and their widows as well as their estate can claim compensation under the Schemes but they must register their claim for either VWF or COPD through a solicitor. Progress on the latter scheme is periodically reported to the court along with any proposed changes to the Handling Agreement.

The procedure for processing the claims is set out in the Handling Agreement. It is an accord agreed by both sides that is still evolving. The Claimants Solicitor Group (CSG) meets regularly with the DTI solicitors to discuss changes and amendments. It basically identifies the information that is required alongside the claims forms to be completed by each claimant. This information is then passed onto the Insurers formerly AON-IRISC, now taken over by CAPITA Insurance Services.

When the information is submitted to the insurers it is checked and the work record of the claimant is sought to verify the claim. It has to be said at this point that the number of fraudulent claims is extremely small and this demonstrates the honesty of the claimants. When information regarding the work record has been verified the claimant is referred for a medical examination. If it is a posthumous claim records are generally sought from the DSS, GP’s notes and the Hospital to assist in making a diagnosis.

The VWF Scheme closed on the 31st March 2003 for live claims and 3 months after for posthumous claims. To date there are 168,000 registered VWF claims. The COPD Scheme is still open will close on the 31st March 2004. Already there are more than 400,000 registered claims and they are still arriving at the rate of 8,000 per week.

To date more than £1.9 billion has been paid to claimants under both Schemes. Solicitors firms dealing with these claims number in excess of 500 and they have received around £300 million to date for the work that they have done. These statistics give some idea of the size of the claim which I am told is the largest common-law claim run anywhere in the world.

Claims Handling Companies

It became clear from the complaints the Monitoring Group was receiving from miners and their families, as well as from talking to other colleagues, that certain firms of solicitors were charging claimants in addition to receiving their costs and disbursements from the DTI. The charges levied on the claimant vary in form. Some firms charge a success fee whilst others charge an extra hourly rate for coal health work, particularly on VWF claims.

The situation is made more complex by the Claims Handling Firms that have become involved. They collect potential claims and then they pass them on to solicitors. Some of the Handling Firms actually sell the claims to solicitors. Here I refer the House to a letter dated the 20th February from Zuko Legal Limited to Towell’s Solicitors of Wakefield. The letter reads:

I understand that you may be interested in buying minerworkers claims for compensation under the DTI Scheme from us. The number of claims our company source each week continues to escalate as the cut off date of this Scheme nears. I would, therefore, welcome an early opportunity to discuss the development of potential relations between us. We are able to provide a large volume of extremely high quality, signed Client Claim Forms carefully vetted by in-house solicitors. We have produced so far in excess of 5,000 with only 1% being rejected on the basis of previous solicitors having been instructed.

Towell’s declined this outrageous offer and passed the information onto the DTI and perhaps the Minister, who I know is as sickened as I am by this market, could say a little about what he intends to do to immediately stop this trade in exploitation of elderly miners and their widows.

When a payment is made the claimant, either an interim payment or a final settlement, a proportion is paid to the Claims Handling Firm. Some of these firms have adopted names like Union & General or the Miners Welfare & Compensation Agency Limited. The names of some of the companies are deliberately tailored to mislead by giving the impression that they have some formal link with the union or the Coal Industry Social Welfare Organisation.

Example of Exploitation

Only recently one of these firms, the Miners Welfare & Compensation Agency Limited, wrote directly to Mrs. Leadbeater, one of my constituents and whose late husband I was privileged to know when I worked at the colliery. They misrepresented themselves by stating that they had helped thousands of ex-miners and their families and offering her a service that was totally free. The totally free service cost Mrs. Leadbeater £9,000 and it took all the efforts of myself and my colleague, Eric Illsley MP, along with the Politics Programme, to get the money refunded. The solicitors who dealt with the claim were Lopain Wagner of Manchester.

I am aware that the Law Society does not regulate Claims Handling Companies. I also know that a review is to take place shortly and perhaps the Minister will refer to this in his response. Nevertheless, I do believe that because these companies are registered companies the DTI could regulate or control them.

In general these companies take a percentage of a claimant’s damages. Normally they have an agreement or an arrangement with the firm of solicitors to whom they are supplying cases that the claimant’s cheque is passed onto them first and the claimant then gives directions for deductions to be made before the cheque is finally handed over.

I take the view that since the Claims Handling Company is dealing directly with the law firms with whom they have an arrangement, it should be for that firm to pay for the service and not for the claimant. If we were to go down this route I think that it would restrict the operation of these companies. I think it is a disgrace that these companies are able to prey on miners and their families and action needs to be taken immediately to obtain refunds and for the longer term they need to be regulated.

Solicitors

It has to be said that some firms of solicitors have refunded claimants when they have been approached by the constituent’s MP. Others have adopted a refund policy and I think that it is only fair to give credit to Beresfords of Doncaster who have taken a decision to refund all their Coal Health clients where an additional charge has been made. Others like Atteys in South Yorkshire, who charge an extra hourly rate for doing VWF Coal Health work, levy the claimant a charge which is the difference between the costs they receive from the DTI and the number of hours spent on the claim. It can result in the claimant having to pay more than £1,000 to the solicitor.

I appreciate that not all firms of solicitors have the same cost structure. However, it is swings and roundabouts. Some cases will not be able to be established but others can be set on their feet. Moreover, the risk associated with the claims is substantially mitigated under the Scheme. Therefore, it is my view that a firm who charge an extra hourly rate have a duty to first inform the claimant of their policy and give him the option of going to another firm who would not levy such a charge. Where this is not done I contend that the firm has a duty to refund the claimant.

Other firms like Venside Limited who operate through the UDM charge claimants a fee. I have had occasion to write to them o several occasions. I am aware that the DTI has said in a press announcement that it did not see UDM charges in the same light as legal fees. I would point out, however, that the UDM and Venside are one and the same. It means, therefore, that in addition to the costs paid by the DTI they are also pocketing a fee from claimants.

It was recently reported in the press and I have seen documents which I am aware have been passed to the DTI showing the two Union Officers, who represent only 1300 members, both ‘Nominee Directors’ of Venside earned £151,000 and £110,000 by way of annual salary. Perhaps the Minister will cause the firm to be looked into with a view to taking them off the approved list.

Some firms of solicitors who have already replied to the Minister’s letter indicating they do not charge clients like Kidd & Spoor Harper of Newcastle and Robinson King of have failed to mention the fact that they use Claims Handlers. The charge for which falls on the claimant. The former firm use P.R. Associates Advice Bureau and the latter one General & Union Services Limited.

The Law Society

Let me say that the Law Society have been most helpful. I know that the Minister’s Officials have also met with the Law Society and found them helpful. They have sent a letter to all their members advising them that they should not be charging Coal Health clients and warning of the consequences should they do so. They have also asked in certain circumstances that their members refund the claimant where an extra charge has been levied.

Conclusion

The Coal Health Claims are helping to restore much of the damage that has been caused by the negligence of British Coal. The money paid to claimants tends to go directly into the local economy and it is having a noticeable effect in some areas like Barnsley. Indeed, many local solicitors have been able to grow their business legitimately on the work of Coal Health Claims. I have no objections to that – what I do find scandalous is that solicitors and Claims Handling Firms should seek to conspire together in circumstances that are tantamount to robbery.

MICHAEL CLAPHAM MP
3RD MARCH 2004