The City firm receiving millions in taxpayer funds for advising the Post Office on compensation has denied the accusation that it is profiting from people’s suffering. The House of Commons business and trade committee heard this week that Herbert Smith Freehills had received £163.3m in fees from the Post Office up to March this year.
Work on the Horizon Shortfall Scheme, which aims to resolve past issues for current and former postmasters accused of running up a shortfall based on Horizon IT data, has been worth £51m alone to HSF.
Disputes partner Alan Watts appeared before the committee on Tuesday and faced questions about how the legal costs have been accumulated.
Watts acknowledged that the HSS scheme ‘is not running fast enough at the moment’ and that the £51m was a ‘very large sum of money’. He pointed out the firm has been working on the scheme for five years and the instruction has involved 370,000 hours of work, 80% of which have been done out of the low-cost centre in Belfast.
Watts said the average hourly rate of £137 ‘compares relatively favourably’ with claimant lawyers representing sub-postmasters.
Committee chair Liam Byrne pointed out that 2,454 cases had been resolved, meaning that HSF was receiving around £21,000 for every case that was settled. He added that most postmasters would be ‘frankly horrified’ to hear that such sums were being spent.
‘Despite all the set-up costs, is £21,000 a case a reasonable number for the taxpayers to pay?’ asked Byrne.
Watts replied: ‘Taking into account all the work that was done, then yes.’
The rest of the HSF fees are taken up by £13m for work on the group litigation order and then disbursements, VAT and work on the ongoing public inquiry. He denied there were billing targets for Post Office work.
Byrne said: ‘We have got the biggest miscarriage of justice in British legal history, we’ve got redress schemes that are running so slowly that people are dying before they get compensation. Each one of you has said the schemes are running too slowly. We’ve got legal costs of something like £53m. The blunt question the committee has got to ask is: are you not profiting from sub-postmasters’ misery?’
Watts responded: ‘No. It is helpful to dive into the detail in relation to what’s involved.’
The HSF partner said the number of new inquiries for the HSS scheme was around 25 a month, but in the three months following the ITV drama about the Post Office scandal the firm received between 1,100 and 1,200 new cases.
It is expected there will be around 450 cases where the fixed sum offer of £75,000 will not be accepted, but Watts confirmed that offers will not all be made on those cases until March next year.
Watts also rejected the committee’s suggestion that there was any conflict with HSF being involved in both the group litigation – which the Post Office comprehensively lost – and the subsequent compensation scheme for victims.
He added: ‘I understand the comments that have been made but I think partly it is based on a misunderstanding of what our role was on the group litigation. Womble Bond Dickinson fought that litigation, we were asked to advise on a strategic level in April 2019 how to bring that litigation to an end.’
