A group of MPs has criticised the role Herbert Smith Freehills (HSF) played in the Post Office litigation and subsequent compensation scheme, claiming its presence 'undermines any confidence that such scheme can deliver a fair outcome'. Earlier this month, the City firm was reported to the regulator over advice it gave to Lloyds Banking Group during another corporate scandal.

The All-Party Parliamentary Group on Fair Business Banking said it is ‘perverse’ that HSF - which acted for the Post Office in settlement of the group litigation and in a failed appeal - is now overseeing a compensation scheme for the former sub-postmasters.

Writing to the Department for Business, Energy and Industrial Strategy and Justice Select Committees, co-chair of the APPG Kevin Hollinrake MP said the group is ‘astonished that the Post Office, or indeed anyone, can have thought this arrangement could be seen to be either sensible or fair’.

The mammoth Bates v Post Office group litigation was settled in December 2019, with the Post Office agreeing to pay £57.75m. More than 550 former postmasters had brought class action against the Post Office, claiming faults in the company’s IT system led to them wrongly being accused of fraud.

Hollinrake said that under the terms of settlement, negotiated between Freeths LLP (for the claimants) and HSF (for the Post Office), it was agreed that the Post Office was to pay no compensation at all to claimants who had been convicted of criminal offences.

Hollinrake said the set-up would 'offend anyone with a sense of justice'. 

‘I am also very concerned at the involvement of HSF who I understand are advising on the design and implementation of the Historic Shortfall Scheme. The mere fact that HSF acted on behalf of the Post Office in the legal action with the responsibility to minimise losses should prohibit them from taking any role in a compensation scheme,' Hollinrake added. 

A spokesperson for HSF said: 'There is no conflict with the firm acting for the Post Office on this matter.'

Earlier this month, the all-party group filed a complaint with the Solicitors Regulation Authority over advice HSF gave to Lloyds Banking Group during the lender’s review to compensate victims of a fraud at HBOS, which Lloyds acquired in 2008.

A spokesperson for HSF said: 'We are aware of the SRA complaint and, while we are unable to comment on the detail of it, we are very confident in our position. We look forward to assisting the SRA with their enquiries, which are at an early stage.'