Taken from the BBC
BRITISH BROADCASTING CORPORATION RADIO 4 TRANSCRIPT OF “FILE ON 4” CURRENT AFFAIRS GROUP TRANSMISSION: Tuesday 22nd June 2004 2000 - 2040 REPEAT: Sunday 27th June 2004 1700 - 1740 REPORTER: Fran Abrams PRODUCER: Gregor Stewart EDITOR: David Ross PROGRAMME NUMBER: 03VY3025LHO 1 THE ATTACHED TRANSCRIPT WAS TYPED FROM A RECORDING AND NOT COPIED FROM AN ORIGINAL SCRIPT. BECAUSE OF THE RISK OF MISHEARING AND THE DIFFICULTY IN SOME CASES OF IDENTIFYING INDIVIDUAL SPEAKERS, THE BBC CANNOT VOUCH FOR ITS COMPLETE ACCURACY. “FILE ON 4” Transmission: Tuesday 22nd June 2004 Repeat: Sunday 27th June 2004 Producer: Gregor Stewart Reporter: Fran Abrams Editor: David Ross WOMAN: The latest letter I’ve had now is to say that I owe £1,400. I can’t afford to pay it. My husband’s on long term sick. ABRAMS: This woman’s just found out she’s deeply in debt, and she blames her solicitor. WOMAN: Solicitors are supposed to be higher people. They’re supposed to help you. Who else can you trust? I’d rather go to prison than pay it. ABRAMS: Last year more than 200 solicitors in England and Wales were disciplined by their professional body for misconduct. But we’ve discovered delay and inaction has allowed many more to continue when there are question marks over their behaviour. Now ministers have given the profession a final chance to clean up its act. They’ve commissioned a major review of how the legal system is regulated. So, are solicitors ready to put their own house in order, or will someone else have to step in to police them? SIGNATURE TUNE 2 HAMILTON: I knew it was coming, you know. It was just this years and years of living with the threat anyway, and I didn’t realise when people say that it’s like somebody’s hit you, it does actually feel like that. You feel like you’ve been punched. ABRAMS: When Pam Hamilton left her Tunisian husband, she knew full well there was a chance he might abduct their daughter and twin sons and take them abroad. She did everything she could to prevent it, even to the extent of sitting outside her husband’s house while they were visiting their father. Her solicitors obtained a court order under which they could prevent him from getting a passport for the children. So even when he took the boys and disappeared, she believed they couldn’t have left the country. HAMILTON: It wasn’t till some weeks later I found out that my husband was in Tunisia with my sons. I was thinking, well how could he have took them out of the country if he didn’t have a passport? On the off chance I rang Newport Passport Agency and I asked them, surely any passports couldn’t be issued, and then they said to me that yes, they issued a passport to my husband a month before, in June. ABRAMS: Mrs Hamilton’s solicitors, David and Snape of Bridgend in Wales, had asked the Agency to refuse any passport applications for her children. But when the twelve month ban expired, they didn’t ask for it to be renewed. Despite years of fighting, she’s never recovered the boys, and she still feels angry. HAMILTON: David and Snape knew from day one, when I first went to see them, that this case was a threat of abduction, and the only safeguard I did have from the courts was for the passports not to be issued, and that’s the only thing I had in place. And then for them just to forget it and not renew it after twelve months is just beyond words, because I can’t understand what they were thinking, and I just think it’s terrible because they were there to protect my sons from abduction. They would just probably say, ‘Oh it was just a mistake,’ but then we’re not a family anymore. For me it’s my whole life. ACTUALITY AT CONSUMER COMPLAINTS SERVICE 3 MAN ON TELEPHONE: Good afternoon. You’re through to the Consumer Complaints Service helpline at the Law Society. May I take a note of your name please? ABRAMS: This modern office in Leamington Spa is the first port of call for people who want to complain about their solicitors. It’s the complaints division of the Law Society, the profession’s regulatory body in England and Wales. There are ten people answering the phones today, more dealing with ongoing complaints. On the walls, electronic display boards flash red if callers wait too long to get through. The service can award small amounts of compensation or bring disciplinary action. But its first advice is always to complain to the solicitor concerned. MAN ON TELEPHONE: What happens is, you send that through to the firm of solicitors. They have 28 days in which to resolve your complaint. Then, if they haven’t responded to your complaint or they haven’t resolved the complaint in a satisfactory term, then really …. ABRAMS: But the one thing they don’t deal with in Leamington is cases like Pam Hamilton’s. Because she suffered a major personal and financial loss, her case was classed as a negligence claim. And if your solicitor has been negligent, the Law Society won’t help you. It’ll insist you go to another solicitor, which Pam did. David and Snape offered mediation, but she decided to go to court. She was awarded £55,000 in damages. But the Legal Ombudsman, Zahida Manzoor, is concerned the Law Society may be using this regulatory gap as an excuse to offload some complaints it could deal with itself. MANZOOR: From a consumer’s perspective, many consumers see negligence as a poor professional service that they’ve received rather than negligence in a technical sense. I am concerned that the Law Society do not close cases that they could deal with themselves, and in many instances negligence and poor service are very entwined, and I am concerned that the consumer isn’t repeatedly asked to go back to another solicitor and back to the courts – a legal system that they feel, in their eyes, that has already failed them. I have asked the Law Society to provide me with a draft plan of how they intend to improve complaints handling, that’s systems and processes that they themselves have, and one of the areas that I will certainly be looking at will be to ensure that issues to do with conduct are being addressed if they’re not currently being addressed, and how then improvements are being made to the service that are being provided to the consumers. 4 ABRAMS: The Law Society refers about a hundred cases a year to specialist solicitors who handle negligence claims. When it does that, it closes its files on them. But we’ve spoken to several senior negligence lawyers, and they say this causes a problem. It doesn’t allow the society to pick up on patterns of behaviour which may require disciplinary action. But Janet Paraskeva, the Society’s Chief Executive, says the financial stakes in these cases can be too high for it to handle. PARASKEVA: We deal with poor service and we deal with conduct. Real negligence is actually the issue for the solicitor and their insurance. That is what they have to insure against, so that if they have been negligent, there is a proper redress for the consumer. ABRAMS: Solicitors dealing with professional negligence cases are telling us though that the cases they deal with often allow bad solicitors to slip through the net. When you close a case and send someone out to a solicitor to deal with their negligence claim, they don’t come back to you to deal with the professional conduct issues that might have arisen. PARASKEVA: It’s clearly possible for solicitors to slip through the net, and I think if there is an Achilles heel in the whole operation, it is in this difficult area of negligence, where the courts and the insurers really have jurisdiction. I think what we have to rely on is people reporting back to us, and we can now follow up any of the tip offs that we get in that way. ABRAMS: But the problems of the Law Society’s complaints service aren’t all attributable to gaps in the regulatory system. It’s also faced complaints that on some occasion it’s been guilty of failing to act on matters it really should have addressed. ACTUALITY OF NEWS REPORT NEWS READER: A landmark legal ruling has opened the way for claims of up to £1 billion by miners suffering from lung diseases. A High Court judge ruled in favour of six men who had claimed they had been …. ABRAMS: Seven years ago, former miners won two major court victories in which they were awarded compensation for industrial diseases they had contracted down the pits. The government, which had taken on the liabilities of the old National Coal Board, 5 ABRAMS cont: was well aware the test cases would be followed by many thousands more claims. So it set up a special scheme to deal with the required compensation payments. A group of solicitors took on the job of handling the claims, and payment terms were agreed for the work. COURT: He worked down the mines, he was on the coal face. Don’t know how he worked down there, fourteen, fifteen year old, on his hands and knees, pick and shovel. That’s as much as really he used to tell us about it, other than ponies down there. ABRAMS: Do you know how long he was down the pit altogether? COURT: I would say nearly fifty years, yes. He had a good life. He didn’t complain. My dad were like that. Never wanted us to think he was ill. So we used to take him to the doctor’s if he got a really bad cough, and the doctor used to just reply by, ‘Can’t expect to be a miner all your life and not have chest problems.’ ABRAMS: Linda Court’s father died of lung cancer, even though he was never a smoker. It didn’t occur to the family they might be eligible for compensation until twelve years later, when a letter dropped onto their mat from a solicitor called Coleman’s in Manchester. The firm said it would take the case on a no-win-no-fee basis and would take a proportion of their compensation if they won. COURT: They did tell us from the start that it would be 15% of his compensation that we got, so we did think that were fair, yes. ABRAMS: And how much compensation did you get? COURT: We got about £5,000 something, yes, £5,000 and something, and they took 15% of that. They were quite happy with that. We thought everybody were paying it, so we just accepted it, we thought that was okay. ABRAMS: But what Linda Court didn’t know was that under the government scheme, the DTI paid solicitors who made successful claims. Most of the 500+ firms involved were prepared to do the work for those fees. But some, like Coleman’s, decided to take 6 ABRAMS cont: fees out of clients’ compensation, on top of what they were already receiving. It was only when Linda saw local publicity about this that she realised she had been double-charged. COURT: But then when we saw it all on the television and we saw all the advertising, we saw everything in there, we thought, well, they’ve been paid twice. They’d got their money off the DTI and then they’d charged us out of our money, what bit we got from them for my dad, they charged us 15% of that. So we thought in the end they shouldn’t have done that. ABRAMS: Did they tell you you had a choice, that you could go somewhere else? COURT: No. No. I think that’s how we got them in the end. They didn’t tell us that. They didn’t tell us we could go somewhere without having to pay 15%, so that made us even madder. ABRAMS: Earlier this year, Mrs Court and her sister went to talk to their local MP, Kevin Barron, about the case. He complained to the Law Society. Three months and several letters later, Coleman’s sent the £800 success fee back, but without admitting liability. In its defence, the firm told us the use of no-win-no-fee arrangements in these claims had been ‘accepted by the Law Society as legitimate’ – and it was right. But according to Mr Barron, that’s only because the Law Society didn’t act when he first asked it to. BARRON: I wrote to the Law Society back in 1999. They said basically, ‘Well, this is allowed under the no-win-no-fee regulations.’ Now I don’t think that was the case, because no-win-no-fee is about the risk of losing and costing a further solicitor a lot of money. Under these circumstances this was administration. Nobody was going back to court. The court issues had been won. My understanding was that the government would pay for the scheme, and I think the Law Society badly let down tens of thousands of people in this country who have had to pay these fees and are now trying to get fees back. 7 ABRAMS: The Law Society’s initial response to Mr Barron was that solicitors were entitled to take an extra fee, so long as they spelled out their charges in advance, which Coleman’s did. But when the issue was raised again last year, the DTI minister, Nigel Griffiths, wrote to all the solicitors, asking them to pay back the money. After that, the Law Society changed its policy. Janet Paraskeva says it couldn’t have acted earlier. PARASKEVA: The original arrangement that the DTI made did not involve the Law Society. They made the arrangement directly with solicitors, we weren’t involved in it, and therefore we had no powers to intervene at that stage, and therefore we didn’t intervene. ABRAMS: But surely you have powers to discipline a solicitor who double-charges a client? PARASKEVA: The original arrangement made by the DTI did not prevent solicitors double-charging a client. We asked solicitors to pay the money back and the vast majority of solicitors have done just that. ABRAMS: You, I think, reminded them to review their files after Nigel Griffiths had written a second time to all the firms concerned. This doesn’t inspire confidence in a regulatory system, does it, if it takes five years to sort something like this out, and even when you do sort it out, all you do is remind people to look at their files. PARASKEVA: We did much more than remind people to look at their files, and the vast majority of solicitors has behaved absolutely properly and repaid the money. This organisation has changed rapidly and radically in the last four years. We were in a position when the information was brought back to our attention in 2003 to act - and to act relatively quickly. We had to get a change of policy for our own Compliance Board. We did that and we acted then directly with solicitors in the way that we could, which was to ask them to repay their clients. ABRAMS: But not everyone who has been double-charged has now had their money back, according to the MP Kevin Barron. He believes some firms are waiting to receive complaints before they take action. 8 BARRON: We cannot have a situation where there’s still delays in paying money back where people have complained, but I have got no faith that people who haven’t complained are getting their money back. What about those probably thousands of constituents who have never written to me? I haven’t sent every case that I’ve got to the Law Society at this stage. I think the Law Society have now got to look at this in the round. We need a comprehensive scheme agreed by them to pay money back to everybody that they wrongly stopped this money from – and not just for people who contact their MP or write a letter to them. ABRAMS: Not all complaints to the Law Society involve straightforward issues, such as mistakes or unnecessary charges. Sometimes the questionable business practices of Law Society members are much more complex. File on 4 has discovered several firms of solicitors are involved in a trade which systematically targets people on low incomes. And although the Law Society has been warned repeatedly about it, it’s done little to stop it. ACTUALITY IN PENCOED ABRAMS: In this quiet side street in Pencoed, South Wales, stands a row of corrugated metal single-storey houses, whose day has long since passed. They should have been pulled down almost half a century ago, but the council, which owned them, never seemed to have the money to do anything about them. The people who live in them are all disabled and are all living on benefits. ACTUALITY WITH ROBIN FRENCH WOMAN: Do you need a hand getting out of the chair? No? FRENCH: Yes, probably. The legs are a bit shaky today. WOMAN: Do you need me to bring your wheelchair in? FRENCH: Erm, yes, okay. Can you give us a hand to get out? WOMAN: Yes, of course I can. 9 ABRAMS: Among the residents of Wimbourne Road is Robin French, who is confined to a wheelchair for much of the time by an autoimmune disease. The state of his house is a catalogue of woes. FRENCH: Our houses are prefabs and so there are inherent problems with them. They move in the wind. That’s because the woodwork is rotten. The door frames were in poor repair, and there’s a skirt which runs around the edge of the house which gives the house some stability – that’s perished. The houses were only designed to be up for ten years after the war, and it’s now sixty years later and they’re still standing. There is damp throughout the property and there are problems with the foundation of the house itself. ABRAMS: Had you been pressing the council to repair it? FRENCH: Yes. When we moved here we did have several visits from inspectors, but the advice was not helpful and we were told to best get on with it yourself. ABRAMS: When canvassers turned up here in the autumn of 2001, introducing themselves as being from a firm called CMS Investigations, they seemed to be offering a lifeline. They promised to put Mr French in touch with a solicitor who would sue the council on his behalf for the overdue repairs. They’d win compensation, they’d get the work done and there’d be nothing to pay. It’s known as claims farming. FRENCH: They were essentially offering a no-win-no-fee service and they were suggesting to us that the landlords, who were the council, were in breach of the Housing Act as an errant landlord, and we would have a substantial claim against them for failure to keep our houses in good repair. We were led to believe that by signing with CMS, if our case was successful, we would at the very least have our repairs carried out. There was a potential for compensation, and it would be at no cost to ourselves. ABRAMS: So you decided to sign up? FRENCH: Yes. We felt on the balance of probabilities that it was a good deal, and we felt that this was the only route available to us. 10 ABRAMS: CMS put Mr French in touch with a solicitor, PD Associates of Liverpool. But then came the catch. The case would cost money. If Mr French lost, he could be liable for legal bills. So CMS offered to sell him an insurance policy so he could be sure there wouldn’t be anything to pay. And to cover the cost of the premium, he was asked to take out a loan with First National Bank, which is owned by Abbey National. FRENCH: We were told that the initial fee was £519, payable to First National Bank, and that was to pay for an insurance policy. ABRAMS: So you signed for a loan of £519, and when you had a statement three years later, how much money were you then owing? FRENCH: Approximately £2,600. ABRAMS: That’s more than five times the loan that you took out. FRENCH: Yes. It was a little startling when we opened the envelope and saw that. ABRAMS: So nobody had told you that your loan was going to increase in this way? FRENCH: No indeed, and in fact the paperwork does suggest that where the credit limit is reached, they will write to us and tell us that they are going to increase the credit limit. We haven’t had such a letter, and we are very concerned that the level of debt now accruing is beyond our capability to repay. ABRAMS: Would you have signed that credit agreement if you had known that it could escalate to this sort of amount? FRENCH: No. I know that legal costs are expensive, but not quite as expensive as this, and certainly the time it’s taken to get this far is just phenomenal. It’s shocking really that such a scheme can be allowed to happen. 11 ABRAMS: The reason the loan kept going up was because PDA had added charges without telling Mr French. Sums, including £430 for a housing report, £300 for a survey, and no less than £630 in interest have already been added to the account without notice. When we asked Abbey National why it hadn’t informed him, its spokesman said that was the solicitor’s responsibility. We contacted PDA. It said in a statement it couldn’t discuss the debts because of client confidentiality. This week Robin French had a letter from the firm, saying it no longer wished to pursue his claim against Bridgend Council. That’s left him very concerned, especially in the light of what’s happened to his neighbour, Lesley Pace. PACE: We used to have steel-framed windows. The wind used to come through the windows. In the bad weather we used to have condensation and it used to run down, a lot of damp. When there was frost on the ground, it used to be inside our windows. We’re just fed up of decorating all the time. ABRAMS: Lesley Pace’s home is of an identical style to Robin French’s, and like Robin French, Mrs Pace and her husband John received a visit from CMS. They signed up, took their case to court and won compensation. But they’ve never seen a penny of it. It was sent to First National Bank, which paid it into their account. But it didn’t come close to paying off their loan. PACE: I did have a letter to say that I had won my case, and then I received this letter saying that I owe £1,400. ABRAMS: So the letter that said you’d won your case, how much compensation did they say you’d got? PACE: £1,000. ABRAMS: So you won £1,000 compensation and then nine, ten months later you get a statement saying you still owe £1,400? PACE: Correct. ABRAMS: What was your reaction when you got that? 12 PACE: Well, I’d rather go to prison than pay it. ABRAMS: Were you surprised to find that you owed money? PACE: Very surprised. I can’t afford to pay it. My husband is on long term sick. ABRAMS: Had anyone ever told you that you could end up owing money? PACE: No. They said we’d have the money, we’d be better off not owing owt. ABRAMS: But it isn’t just individuals like Robin French and Lesley Pace who have been left out of pocket. Local authorities all over the country have been left feeling bruised by the process. Tony Garthwaite, head of housing for Bridgend County Borough Council, says it had already devised a plan to deal with the repairs backlog. It’d hand over its stock to a housing association, which could raise money to pay for the work. But when it faced a flood of more than two hundred claims, that put the whole scheme in jeopardy. GARTHWAITE: Our housing strategy was one where we decided to transfer our houses to a new company called Valleys to Coast Housing. This enabled Valleys to Coast to borrow money in a way the council couldn’t – in this case something like £300 million. When it borrows that money, it borrows it from building societies, banks and other parts of the financial market, and those building societies and banks want to be assured they are not taking on major liabilities. Obviously a major claims backlog would have been such a liability, therefore if we couldn’t get rid of the liability, we could have put our whole housing strategy at risk and not been able to free our tenants from the kind of repairs backlog that they’d suffered for many years. ABRAMS: So the implications could have been very serious indeed? GARTHWAITE: Very serious, and hence the very robust approach we took as a council to dealing with it. 13 ABRAMS: The council never disputed the work needed doing, that’s why it was happy to pay compensation to the Paces. And indeed the work has now been done. But it did challenge the legal bills, which in some cases amounted to more than £9,000. PDA charged up to £165 an hour for its services. The judge excused the council from paying most of the bills. He ruled PDA had given bad legal advice and levied disproportionate fees. READER IN STUDIO: By their failures, the solicitors have steered these claimants into litigation which has caused them and the council to incur unnecessary and unreasonable expenses. The solicitors knew – or should have known – that the funding method they provided to their clients would be disadvantageous to them, that this litigation would be run in a disproportionate way, and that some of the costs to be claimed in this litigation would be improper. ABRAMS: PDA told us many other councils against which it’s claimed haven’t objected to its fees. The firm is now taking the Bridgend case to appeal. But PDA’s also been under fire from other directions. We understand it’s been subject to no fewer than eight county court judgements since January last year. There have also been complaints to the Law Society, some of them dating back at least two years. Among those who’ve complained is a surveyor who did work for the firm and who became increasingly concerned about its practices. He asked us not to name him. SURVEYOR: It became clear that their main goal was to take on as many cases as possible and just run them as quickly as they possibly can to get a very quick result on it, and then to move onto the next file. We felt that our reports weren’t being dealt with promptly with them, ie by sending them to the tenants for their thoughts and their approval to our reports and also sending them on to the landlords, and it did concern me that the tenants had been promised one thing, but there again it didn’t appear to be happening. ABRAMS: The surveyor stopped doing business with PDA, but the firm still owed him a large sum of money for work he’d already done. He thought the solicitors’ professional body might help him recover it. SURVEYOR: We wrote to the Law Society on several occasions, middle of 2002, and we got very little back from them. 14 ABRAMS: What was the Law Society’s response? SURVEYOR: Well, I should make it clear, we were not only just concerned about payment of our fees. We were also concerned about their course of actions in dealing with these claims. We wrote to them on several occasions and all the response back we got was, we acknowledge receipt of your complaint, however if I wanted to recover my costs I’d have to consider taking civil action. I wrote back saying, well that’s all well and good, but are you aware of the other aspects of my letter, where I was voicing my concerns on their professional conduct. Again I got a standard letter back. I gave up on them. My view of the Law Society is that it’s a toothless tiger. ABRAMS: If you ring the Law Society to enquire about PDA, you won’t be told of these concerns. We know of other complaints about the firm, but the Society won’t say whether they were upheld or not. It says the law doesn’t allow it even to reveal the outcomes of cases in which a solicitor has been found to have acted wrongly. It only makes cases public if they have been before an independent disciplinary tribunal. And the Society’s Chief Executive, Janet Paraskeva, makes great play of the fact that one of PDA’s partners was recently disciplined by a tribunal. PARASKEVA: As a result of our action, they were taken before the Solicitors’ Disciplinary Tribunal. Now if we find that a solicitor or a firm of solicitors is not giving out proper advice, then we will take action and we do take action, but we have to make absolutely sure of our ground first. ABRAMS: You say you’ve taken action against that firm. One of its partners was brought before the Tribunal for not answering a letter. She was fined £1,000 – that’s a day’s pay on the rates that she charges. If I asked you what was there to know about this firm – are they okay, I’m thinking about working with them – that’s all I could know. Surely that’s not adequate? PARASKEVA: If you came to the Law Society to ask about a particular firm, where only one solicitor had been affected in relation to a Tribunal proceedings, and that was all that was in the public domain, that would be all that we could tell you, because that is all by law that we can tell you. Whether or not people should have more access to information about complaints that are made that we are investigating, I think is actually an interesting question, but 15 PARASKEVA cont: really a very difficult question. There are certainly human rights issues to be considered if one is looking at the behaviour of a firm following allegations, and we undertake our investigation work very very carefully, because to do otherwise would be to be putting people’s livelihood at risk. ABRAMS: The Legal Services Ombudsman, Zahida Manzoor, has just been given new powers to oversee the Law Society’s complaints service. She says she’s often come across other cases where there’s a long record of complaints, but where the public know little or nothing about them. MANZOOR: I’ve seen this happening on quite a number of occasions where there are serious complaints against particular firms. I think the Law Society should make the public aware where there are solicitors or firms that are failing to provide the level of service that consumers should expect. There should be greater transparency with their complaint handling process, but also the outcomes of decisions. So, for instance, if a solicitor has had fifty or sixty complaints made against its firm, then if you’re a member of the public, I think you’re entitled to know. ABRAMS: Have you raised that with the Law Society, and if so, what was their response? MANZOOR: The issue of making the process transparent, that is an issue for the Law Society itself. It is not something that I can direct the Law Society to do. ABRAMS: Not even in your role as legal services complaints commissioner? MANZOOR: It is an area that we will be discussing and looking at, certainly. What comes to mind is the sort of rating, star rating that hospitals get – something that gives consumers greater confidence in their solicitors would be a good thing. ABRAMS: The Law Society did take action on one issue connected with claims farming recently. It had a rule which said solicitors mustn’t pay introducers to bring them work. But it emerged this rule was routinely being broken by solicitors who were paying 16 ABRAMS cont: such referral fees to door-knockers or their agents. So the Society decided it had to act. It changed the rules to legitimise the paying of the fees. ACTUALITY AT TRENT AND DOVE HOUSING ABRAMS: But some solicitors aren’t just paying fees to the claims farmers. Some are much more deeply involved. Here, at the headquarters of Trent and Dove Housing in Burton-upon-Trent, they’ve also had problems with CMS door-knockers. Last year the association’s director of housing, John Magness, received a large batch of claims. He was intrigued to find the same name cropped up on all of them. MAGNESS: In April 2003 we received a notification of some potential housing disrepair claims, and there were nineteen of those. ABRAMS: What was unusual about those claims? MAGNESS: The fact that we received them simultaneously and the fact that they were all being handled by one firm of solicitors, which was Tim Schools and Co. ABRAMS: Mr Magness decided to investigate and discovered something else. Mr Schools wasn’t just the solicitor in the case. He was also linked to a number of companies that were profiting from it. MAGNESS: Mr Schools was also associated with two other firms – CMS Investigations. We felt that they were the cause of the problem, and Mr Schools was also associated with the insurer, so it was a three-pronged thing. Firstly the insurance indemnity which supported the claim, then the firm that actually knocked on the door to identify the claim, and then the first that actually prosecuted the claim on behalf of the tenant. ABRAMS: Did you expect a solicitor to be so closely linked with a claims farming company? MAGNESS: No, not at all. I mean, the legislation was intended to protect individuals from unscrupulous landlords. It wasn’t intended to create a fee earning structure for firms like Schools and Co. 17 ABRAMS: Trent and Dove Housing complained to the Law Society about Mr Schools, but there was nothing in its rules at the time of the claims to suggest he was doing anything wrong. The Society’s Chief Executive, Janet Paraskeva, says his directorships are none of its business, particularly as tenants were informed he had links with the companies that arranged the insurance and the surveyors’ reports. PARASKEVA: You can’t stop solicitors from working, as it were, in the back room for these people. The claims companies themselves will have to employ some solicitors to do the legal work. It is all of the behaviour around the legal action which has actually put consumers at risk. Our concern is first of all that consumers are put at risk, and secondly, of course, that they believe that this is the fault of the solicitor, when it hasn’t been. ABRAMS: You say that it’s okay for solicitors to work with firms of claims farmers, but what if they are more closely involved? What about a solicitor who is actually a director of a claims farming company? Is that within your rules? PARASKEVA: All we can regulate is the solicitor and the solicitor’s behaviour. We can’t regulate the activity of the company, because that’s outside our powers. ABRAMS: So that solicitor can be a director of the claims farming company, or he can be a director of associated companies, but so long as he doesn’t knock on the doors himself, you can’t do anything about it? PARASKEVA: The set of circumstances that you describe certainly are the kinds of circumstances that we would want to investigate in relation to our disciplinary machine. If the solicitor is a director of a company that is delivering other services to clients and those services are not wholly in the client’s interest, then we could investigate whether or not the solicitor was acting … the terms of reference for a solicitor. ABRAMS: Mr Schools defended his actions in a letter to us, arguing CMS was actually working through a marketing company and that therefore he hadn’t taken work directly from anyone who cold-called. He said he had now resigned his directorship of CMS because it didn’t sit easily with his professional responsibilities as a solicitor. But the government is increasingly concerned about the activities of such companies. The Constitutional Affairs Minister, David Lammy, says they must change their methods or face extinction. 18 LAMMY: I fully understand the concerns that have been expressed by people about claims management companies - their forceful advertising, their aggressive ways and, to some extent, the reminiscence of ambulance chasers in the US. ABRAMS: What potentially can you do if the industry fails to clean up its own act? LAMMY: We can legislate to change the arrangements, that’s clear. One of the options available to the government would be to act in legislation, to alter, ban, end this arrangement. But we’re in effect giving the industry a chance to clean up its act. But if necessary then we’ll have to act further. ABRAMS: It’s not just claims farming. The whole catalogue of complaints and delay has led the government to consider stripping the Law Society of its right to self-regulation. It’s appointed Sir David Clementi, the former deputy governor of the Bank of England, to review the whole system of legal regulation. He isn’t talking about his views at the moment. But many of the key players have told him theirs. And those who represent consumers are quite clear: they think self-regulation should go. Among them is the Legal Service Ombudsman, Zahida Manzoor. In her latest report she says there have been far too many false dawns at the Law Society. She’s sceptical of its latest protestations that this time it’s turned a corner. MANZOOR: From where I sit, as Legal Services Ombudsman, and I’ve viewed the last ten, fifteen years of performance of the Law Society, and I have to say that it’s not an impressive track record. ABRAMS: What would you like to see happen? MANZOOR: I would like to see an independent over-arching regulator that sets standards for legal services. I would also like to see an independent complaint-handling organisation. I would say that the consumers’ view has driven the issue and hence we have currently the Clementi Review that is looking at the regulatory framework that currently exists in England. I think that’s right and appropriate. There is a tremendous amount of consumer dissatisfaction, and there is a perception certainly, and there is a lot of anecdotal evidence 19 MANZOOR cont: available that suggests that consumers have lost confidence, certainly in complaint-handling, because of the conflict of interest that arises from the Law Society both being a trade union and a regulator. ABRAMS: The government won’t give its views till this August. The review won’t be complete till the end of the year, and it’ll probably be much longer before any new system is put in place. On the other side of the argument, the Law Society and some other bodies which represent solicitors would like the new regulatory system to leave them with control of the complaints process. Janet Paraskeva admits though the Society has to change. PARASKEVA: There are times when, if you’re trying to both represent the profession’s interest and make sure that you are regulating in the public interest, that there could be conflict. It isn’t something that the Society is trying to duck. We are taking it head-on. We are trying to recognise what the difficulties are and form structures that will minimise that kind of conflict of interest. ABRAMS: It’s last chance saloon time though, isn’t it? I mean, we’ve already got a review going on. Isn’t it a bit late? PARASKEVA: It is absolutely not last chance territory. The Law Society might look quite different in a few years time. But that won’t be because we’re afraid to change. That will be because we want to embrace that change and make things better for the consumer on the one hand, and for the profession, so that it can deliver a better service to the public. SIGNATURE TUNE
|