The chief executive of national trade union firm Thompsons has been reprimanded by the Solicitors Regulation Authority for the firm’s mishandling of sick coal miners’ government compensation claims.
In a regulatory settlement agreement signed on 30 September, Stephen Cavalier accepted a severe reprimand on behalf of five Thompsons partners, and the firm agreed to pay £88,000 in costs.
An SRA investigation found that five current and former partners – Michael Antoniw, Philip King, Anthony Patterson, Geoffrey Shears and Robert Wood – committed numerous breaches of the Solicitors Code of Conduct when handling miners’ claims under the coal health compensation scheme.
The SRA said that recourse to the Solicitors Disciplinary Tribunal was not necessary because the firm had acted quickly to correct its mistakes.
Cavalier said today in a statement: ‘The agreement brings to an end over five years of investigation of Thompsons by the SRA. Thompsons and the mining unions played a crucial role in pursuing the test cases which led to the establishment of the scheme and the coal claims handling agreements. Despite achieving better results than any other firm, including the highest average damages for our clients, and believing at the time that our approach was consistent with professional standards, we have accepted that our advice in the early period of the claims was deficient. We took substantial steps to mitigate our conduct, but as current chief executive I have accepted responsibility on behalf of the firm for those deficiencies.’
The SRA noted in its decision that the involvement of some solicitors’ practices in miners compensation claims ‘has attracted widespread public concern and as a consequence has damaged public confidence in the legal profession’, but said that ‘the level and degree of misconduct varies between the firms as does the level of involvement of individual parties’.
Thompsons received case referrals from several miners’ unions and Newcastle firm Russell Young.
Under agreements between the unions and Thompsons’ miner clients, fees were deducted from miners’ compensation awards in the form of administration charges, and paid to the unions. These charges varied from a fixed fee of £50, to 7.5% of the first £13,333 of damages.
Thompsons’ Newcastle and Cardiff offices received approximately 23,500 miners case referrals from the unions. The firm deducted and paid to the unions administrative charges totalling £10.9m.
In 1998, Thompsons acquired 469 miners’ claims from Russell Young for approximately £37,500. Thompsons deducted and retained success fees from the damages received. Success fees were initially 10% of compensation up to a maximum of £2,000; and then subsequently, on a sliding scale of £50 for a settlement of £500 to £999, and up to £200 for a settlement over £3,000.
With regard to the union claims, Cavalier admitted that Thompsons failed to act in the best interests of its miner clients by failing until February 2005 to advise them that they were free to instruct solicitors of their own choice; by failing to advise them on the merits of paying the administration charges under potentially misleading agreements; and acting or continuing to act in conflict of their interests.
Cavalier also admitted that Thompsons accepted introductions and referrals in breach of solicitors’ rules, and failed until February 2005 to provide miner clients with adequate costs information, in particular about the effect of entering into the union agreements and the deduction of the administration charge from damages, and about alternative methods of funding the claim.
With regard to the Russell Young claims, Cavalier admitted that Thompsons failed to act in its miner clients’ best interests by charging success fees; charged contingency fees when such agreements were not permitted by law; and failed to provide clients with adequate costs information.
In mitigation, Cavalier said Thompsons had been ‘very proactive’ in addressing the criticisms made against the unions and the firm’s involvement in miners’ claims. Cavalier pointed to a number of initiatives Thompsons had undertaken, such as contacting clients and giving them further costs information; persuading one of the unions to make its administration charge voluntary for all outstanding claims or refund the charge on completed claims; mailing former clients under Legal Complaints Service guidance to offer repayment of deductions paid to the unions, which involved refunds totalling £3.6m on 6,304 claims; and voluntarily refunding success fees taken in the Russell Young cases.
The SRA’s decision was published on 18 October.