Post Office scandal inquiry told about City law firm’s bias danger

Marshall: Serious question over law firm’s independence

City giant Herbert Smith Freehills (HSF) may not be able to avoid the appearance of bias in its work for the Post Office in compensating sub-postmasters affected by the Horizon IT scandal, a barrister has warned.

Paul Marshall of Cornerstone Barristers, who played a key role in exposing what happened behind the scenes at the Post Office, said it threw into question HSF’s role in administering the historical shortfalls scheme (HSS).

It is one of various compensation schemes set up in the wake of the scandal and is for postmasters who had to cover financial shortfalls in their branch’s accounts caused by the Horizon IT system but were not convicted. It compensates consequential losses too.

Sir Wyn Williams – the former High Court judge chairing the statutory inquiry into the scandal – yesterday held an evidence session updating him with compensation issues.

He heard concerns from lawyers representing postmasters about damages being offered – and accepted – in the absence of legal advice where the claims were worth much more.

In a written submission, Mr Marshall highlighted the case of client Sathyan Shiju, who as a result of a supposed shortfall lost the whole of his £60,000 investment in his Post Office business, saw his properties repossessed because he was unable to maintain mortgage payments and suffered acute depression as a result. He attempted to kill himself.

Mr Marshall explained what a huge continuing impact the events have had on both Mr Shiju and his family in the years since. After being accepted on to the HSS in 2020, Mr Shiju was given a £10,000 interim payment and earlier this year was offered just over £2,000 in full and final settlement.

The offer was said to have been made on the basis that Mr Shiju had provided insufficient evidence of his losses. He rejected it and then sought legal advice for the first time.

Mr Marshall said: “The disparity between what is apparent from his outline of his circumstances, and the derisory offer made a year and-a-half after his acceptance into the HSS scheme, is a matter of concern.

“Perhaps more importantly, the exiguous nature of the offer made to Mr Shiju in the HSS scheme raises a serious question over the independence, and the perceived independence, of Herbert Smith Freehills in its role in overseeing the HSS scheme.

“It is submitted that, subject only to the issue as to whether it has any evaluative role in the assessment of compensation in which it exercises a discretion, HSF is unable to escape the appearance of bias.”

At the same time, he stressed that, if HSF did not exercise any discretion, “it is unlikely the issue can arise”.

If there was a discretion, however, it had to be done in a “demonstrably independent and even-handed” manner.

HSF has worked for the Post Office in relation to Horizon for some years and Mr Marshall noted “the vigour and robustness with which HSF represented and now represents its client’s continuing interests and those of its officers, former officers and employees and former employees”.

He added: “It might be thought a curiosity, if not more than that, that HSF purports to exercise and independent oversight role in connection with the HSS scheme while simultaneously performing a partisan and adversarial role in connection with the Post Office preserved malicious prosecution claims and their settlement.”

He said attempts by MP Kevin Hollinrake in the past to find out whether there was a discretion have not succeeded. Mr Hollinrake has previously criticised HSF for its work for Lloyds Banking Group on the Reading branch scandal and the compensation scheme set up for victims.

HSF declined to comment.

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