Solicitors repay £10m to miners as compensation scandal nears end

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By Legal Futures

7 March 2011

Miners: partners from 33 firms will have appeared before the tribunal by the end

Solicitors have repaid nearly £10m to miners who had sums wrongly deducted from their damages, Legal Futures can reveal. 

The Legal Complaints Service (LCS) has now closed the last complaint arising from the miners’ compensation scandal ahead of its formal shut-down this month. 

It ordered the repayment of £2.7m following direct complaints, and a further £7.2m after working with 22 law firms to write directly to clients to inform them about the deductions. 

The firms’ error was that they had not made it sufficiently clear to clients that the deduction – which sometimes went to the miner’s union but also to other third parties – was voluntary, explained Deborah Evans, chief executive of the LCS. The solicitors should also have explained that they could have gone to another firm which would not deduct anything. 

More than 91,000 letters were sent out in all, and led to both formal complaints and informal resolution by the firms. Ms Evans said that not all clients took up the opportunity to recover their money if the deduction had been passed to their trade union. 

The names of the firms have been kept secret in return for their participation in the write-outs. 

The LCS has been criticised for generating complaints against solicitors, but Ms Evans described its work as “awareness-raising”. She added: “We realised there was consumer distress and that a very vulnerable group had been taken advantage of because of poor advice. It was very clear that the balance needed to be redressed and that if we sat back and waited for complaints to come in, we would have been perpetuating the consumer distress.” 

Ms Evans praised the support of the Law Society in this work even though it knew that some members would not be happy. “It has gone some way to repair the reputation of the profession,” she said. “It’s a massive step forward and an interesting example of how a regulator can work with a profession in new and innovative ways to deliver the resolution of complaints.” 

In all, the two miners’ compensation schemes paid out £4.1bn to around 760,000 claimants. So far partners from 27 law firms have appeared before the Solicitors Disciplinary Tribunal over deductions, with six more scheduled. Some of these have concerned solicitors also keeping money themselves as success fees on top of the fixed fee agreed under the schemes’ rules.

A spokesman for the Solicitors Regulation Authority said that in the more recent prosecutions, several of the firms had mitigated their conduct by repaying monies deducted. The authority has also reached regulatory settlement agreements with other firms. Recoveries by the SRA are included in the £7.2m.

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