Taken from the BBC
BRITISH BROADCASTING CORPORATION RADIO 4
TRANSCRIPT OF ďFILE ON 4Ē
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
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.
ďFILE ON 4Ē
Transmission: Tuesday 22nd June 2004
Repeat: Sunday 27th June 2004
Producer: Gregor Stewart
Reporter: Fran Abrams
Editor: David Ross
WOMAN: The latest letter Iíve had now is to say that I owe £1,400. I
canít afford to pay it. My husbandís on long term sick.
ABRAMS: This womanís just found out sheís deeply in debt, and she
blames her solicitor.
WOMAN: Solicitors are supposed to be higher people. Theyíre
supposed to help you. Who else can you trust? Iíd 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 weíve 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. Theyíve
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?
HAMILTON: I knew it was coming, you know. It was just this years and
years of living with the threat anyway, and I didnít realise when people say that itís like
somebodyís hit you, it does actually feel like that. You feel like youíve 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 husbandís
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 couldnít have left the country.
HAMILTON: It wasnít 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 didnít have a passport? On the off chance I rang Newport Passport Agency and I
asked them, surely any passports couldnít be issued, and then they said to me that yes, they issued
a passport to my husband a month before, in June.
ABRAMS: Mrs Hamiltonís 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 didnít ask for it to be renewed. Despite years of fighting, sheís
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 thatís 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 canít
understand what they were thinking, and I just think itís terrible because they were there to protect
my sons from abduction. They would just probably say, ĎOh it was just a mistake,í but then weíre
not a family anymore. For me itís my whole life.
ACTUALITY AT CONSUMER COMPLAINTS SERVICE
MAN ON TELEPHONE: Good afternoon. Youíre 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. Itís the complaints division of the Law
Society, the professionís 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
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 havenít
responded to your complaint or they havenít resolved the complaint in a satisfactory term, then
ABRAMS: But the one thing they donít deal with in Leamington is
cases like Pam Hamiltonís. 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
wonít help you. Itíll 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 consumerís perspective, many consumers see
negligence as a poor professional service that theyíve 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 isnít repeatedly asked to go back to another solicitor and back to the
courts Ė 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,
thatís 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 theyíre not
currently being addressed, and how then improvements are being made to the service that are
being provided to the consumers.
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 weíve spoken to several senior negligence lawyers, and they say this causes a problem. It
doesnít allow the society to pick up on patterns of behaviour which may require disciplinary
action. But Janet Paraskeva, the Societyís 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 donít come back to you to deal with the professional conduct issues that might have arisen.
PARASKEVA: Itís 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 Societyís complaints service
arenít all attributable to gaps in the regulatory system. Itís also faced complaints that on some
occasion itís been guilty of failing to act on matters it really should have addressed.
ACTUALITY OF NEWS REPORT
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 Ö.
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,
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. Donít
know how he worked down there, fourteen, fifteen year old, on his hands and knees, pick and
shovel. Thatís 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
didnít complain. My dad were like that. Never wanted us to think he was ill. So we used to take
him to the doctorís if he got a really bad cough, and the doctor used to just reply by, ĎCanít expect
to be a miner all your life and not have chest problems.í
ABRAMS: Linda Courtís father died of lung cancer, even though he
was never a smoker. It didnít 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 Colemanís 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 didnít 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 Colemanís, decided to take
ABRAMS cont: fees out of clientsí compensation, on top of what they were
already receiving. It was only when Linda saw local publicity about this that she realised she had
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, theyíve been paid twice. Theyíd
got their money off the DTI and then theyíd 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 shouldnít have done
ABRAMS: Did they tell you you had a choice, that you could go
COURT: No. No. I think thatís how we got them in the end. They
didnít tell us that. They didnít 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, Colemanís 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
Ďaccepted by the Law Society as legitimateí Ė and it was right. But according to Mr Barron, thatís
only because the Law Society didnít act when he first asked it to.
BARRON: I wrote to the Law Society back in 1999. They said
basically, ĎWell, this is allowed under the no-win-no-fee regulations.í Now I donít 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.
ABRAMS: The Law Societyís 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 Colemanís 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 couldnít 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 werenít involved in it,
and therefore we had no powers to intervene at that stage, and therefore we didnít 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 doesnít 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.
BARRON: We cannot have a situation where thereís still delays in
paying money back where people have complained, but I have got no faith that people who
havenít complained are getting their money back. What about those probably thousands of
constituents who have never written to me? I havenít sent every case that Iíve 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 Ė 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, itís done little to
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.
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. Thatís because the woodwork is rotten. The door frames
were in poor repair, and thereís a skirt which runs around the edge of the house which gives the
house some stability Ė thatís perished. The houses were only designed to be up for ten years after
the war, and itís now sixty years later and theyíre 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. Theyíd win compensation, theyíd get the work done
and thereíd be nothing to pay. Itís 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.
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
wouldnít 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: Thatís 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 havenít 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 itís taken to get this far is just phenomenal. Itís shocking
really that such a scheme can be allowed to happen.
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 hadnít informed him, its spokesman said that was the
solicitorís responsibility. We contacted PDA. It said in a statement it couldnít 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. Thatís left him very concerned,
especially in the light of whatís 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.
Weíre just fed up of decorating all the time.
ABRAMS: Lesley Paceís home is of an identical style to
Robin Frenchís, 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 theyíve never seen a
penny of it. It was sent to First National Bank, which paid it into their account. But it didnít
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 youíd won your case, how much
compensation did they say youíd got?
ABRAMS: So you won £1,000 compensation and then nine, ten months
later you get a statement saying you still owe £1,400?
ABRAMS: What was your reaction when you got that?
PACE: Well, Iíd rather go to prison than pay it.
ABRAMS: Were you surprised to find that you owed money?
PACE: Very surprised. I canít afford to pay it. My husband is on
long term sick.
ABRAMS: Had anyone ever told you that you could end up owing
PACE: No. They said weíd have the money, weíd be better off not
ABRAMS: But it isnít 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. Itíd 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 couldnít Ė 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
couldnít 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 theyíd 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.
ABRAMS: The council never disputed the work needed doing, thatís
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 Ė or should have known Ė 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
ABRAMS: PDA told us many other councils against which itís claimed
havenít objected to its fees. The firm is now taking the Bridgend case to appeal. But PDAís also
been under fire from other directions. We understand itís 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 whoíve 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 werenít 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 didnít 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 heíd already done. He thought the solicitorsí
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.
ABRAMS: What was the Law Societyís 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 Iíd
have to consider taking civil action. I wrote back saying, well thatís 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 itís a toothless tiger.
ABRAMS: If you ring the Law Society to enquire about PDA, you
wonít be told of these concerns. We know of other complaints about the firm, but the Society
wonít say whether they were upheld or not. It says the law doesnít 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 Societyís Chief
Executive, Janet Paraskeva, makes great play of the fact that one of PDAís partners was recently
disciplined by a tribunal.
PARASKEVA: As a result of our action, they were taken before the
Solicitorsí 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 youíve taken action against that firm. One of its
partners was brought before the Tribunal for not answering a letter. She was fined £1,000 Ė thatís
a dayís pay on the rates that she charges. If I asked you what was there to know about this firm Ė
are they okay, Iím thinking about working with them Ė thatís all I could know. Surely thatís not
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
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 peopleís livelihood at risk.
ABRAMS: The Legal Services Ombudsman, Zahida Manzoor, has just
been given new powers to oversee the Law Societyís complaints service. She says sheís often
come across other cases where thereís a long record of complaints, but where the public know
little or nothing about them.
MANZOOR: Iíve 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 youíre a member of the public, I think youíre
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
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 Ė 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 mustnít pay introducers to bring
them work. But it emerged this rule was routinely being broken by solicitors who were paying
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 arenít 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, theyíve also had problems with CMS door-knockers. Last year
the associationís 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 wasnít 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 Ė 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 wasnít intended to create a fee earning structure for
firms like Schools and Co.
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 Societyís 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 surveyorsí reports.
PARASKEVA: You canít 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 hasnít been.
ABRAMS: You say that itís 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 solicitorís
behaviour. We canít regulate the activity of the company, because thatís 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 doesnít knock on the
doors himself, you canít 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 clientís interest, then we could investigate whether or not the
solicitor was acting Ö 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 hadnít taken work
directly from anyone who cold-called. He said he had now resigned his directorship of CMS
because it didnít 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.
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, thatís clear.
One of the options available to the government would be to act in legislation, to alter, ban, end
this arrangement. But weíre in effect giving the industry a chance to clean up its act. But if
necessary then weíll have to act further.
ABRAMS: Itís 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. Itís appointed Sir David Clementi, the former deputy governor of the Bank of
England, to review the whole system of legal regulation. He isnít 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. Sheís sceptical of its latest protestations that this time itís turned a
MANZOOR: From where I sit, as Legal Services Ombudsman, and Iíve
viewed the last ten, fifteen years of performance of the Law Society, and I have to say that itís 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 consumersí 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 thatís 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
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 wonít give its views till this August. The
review wonít be complete till the end of the year, and itíll 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 youíre trying to both represent the
professionís interest and make sure that you are regulating in the public interest, that there could
be conflict. It isnít 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: Itís last chance saloon time though, isnít it? I mean, weíve
already got a review going on. Isnít 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 wonít be because weíre 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.