How not to wipe the slate clean with your lawyers
Where I query the PO calling on a firm already instructed on PO Horizon matters to help with their compensation scheme
Imagine you are the CEO of a large, publicly owned corporate, with a stated commitment to “righting the wrongs of the past” and ensuring those, “affected by [those] historical issues… …receive fair and appropriate redress.”
Imagine those wrongs spread over twenty years, that they include unfair contracting, oppressive enforcement of those contracts based on your organisation’s central accounting and point of sale package, Horizon. Grumbles about the scheme have raged publicly for years with a mediation scheme that was aborted mired in controversy. Imagine too that the mediation scheme was discredited with claimants who then brought litigation which your organisation defended on the basis that the computer system was robust (which it was not); that it could not be accessed remotely (which it could); and, that some of the claimants you face are liars (which the judge said they were not in contrast to some of your witnesses).
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Imagine that the litigation ends with two judgments which criticise your colleagues for providing misleading, PR-focused, and otherwise flawed evidence; inappropriately adversarial tactics and misleading pleadings; and that ends in referrals of some lawyers by the judge for professional misconduct investigation. Some witnesses are referred for criminal investigation. Imagine too that a procedural low point of that trial is reached when a Court of Appeal judge criticises your organisation’s application to have the judge kicked off the case mid-trial (a recusal application) for, amongst other things, looking like an attempt to undermine judicial independence.
Now ask yourself this question. If I am going to genuinely right the wrongs of the past and ensure appropriate and fair redress who am I going to instruct as solicitors to help run a compensation scheme in the wake of the civil case? Am I, in particular, going to draw on any of the firms my predecessors involved in the litigation?
Now bear in mind you are quite new to the organisation. You were not invested in the litigation or its history. Put to one side, because you forgot or never knew, and perhaps no one in your organisation did the due diligence, that the firm under consideration was involved in the design of a similar scheme criticised by a High Court judge. Perhaps you were told, the firm did not have conduct of the Bates litigation (true) but was providing secondary advice (a question over how influential they were on the recusal application aside), or (less plausibly I hope) that messy as the case was you got a good result for PO out of the settlement which they negotiated. Or that, in spite of what the judge said in the GLO (group) litigation (Bates), the case was fairly run. Or it was all Fujitsu’s fault. And that actually the firm knows the background to the case now and has experience of running similar schemes. Etc etc. What would you do?
Would you instruct them or look elsewhere?
The firm I am talking about, lest anyone not know is Herbert Smith Freehills (HSF). The Post Office did decide to instruct them to assist with their Historical Shortfall Scheme. It’s not clear to me whether they were instructed on design (contrast this post from one of the claimant solicitors in 2020 who says he understands (presumably from HSF or PO) that Herbert Smith had no part in the design and the description here in the BEIS Select Committee report in 2022 which implies some engagement in design decisions perhaps). Either way Post Office decided to instruct HSF to run part of the HSS scheme (they review applications, collate evidence, and provide advice to an independent advisory panel on what the level of compensation should be for claimants under the scheme).
Things get complicated further and quickly: a criminal appeal shows PO (not involving HSF) brought unmerited prosecutions, engaged in inappropriately aggressive prosecution conduct, committed serious failures to disclose evidence during and after prosecutions, and were overall responsible for conduct sufficient egregious to merit special censure. It’s not surprising, someone in your organisation, possibly on advice from your lawyers (again not HSF) had not disclosed until very late in the day evidence of unreliable witnesses and the shredding of documents. The Court of Appeal flirts with saying legal failings are driven by bad faith.
Acquitted victims, as expected, start to advance claims for malicious prosecution. Claimants who settled under Bates (and had most of their compensation swallowed up in litigation funding and similar costs) start to agitate for their own settlements to be reopened. Under-compensation is the main argument, although there are also questions raised about the manner of, and communication about, the settlement itself (handled at the time by Freeths) and the concern that the settlement itself was procured by means of fraud (something PO vehemently deny).
With significant numbers of claimants suffering severe financial distress, illness, or being of advanced age, there is a clamour for interim payments. Interim payments are granted to most but not all of the acquitted SPMs. A decision to decline interim payments is something the Inquiry Chair has said, in preliminary form, they probably should not have taken themselves. The decision will, I think, be reversed. Other types of claimant start to ask for interim payments. You say you’ll think about it. Tick tock, the clock turns.
We arrive at the position that there are three sets of compensation claims: the HSS claimants (for all SPMs other than Bates complainants); those acquitted of crimes on appeal; and the Bates litigants (including those who were accused but not convicted of crimes). The Chair of the now statutory Inquiry becomes very concerned at the treatment of a key group, those who were prosecuted but won their cases or they were dropped. They seem to be falling between the three stools. Various issues have surfaced including the appropriateness of decisions on interim payments; whether to exclude late claims; the design of the HSS scheme; the late provision of relevant evidence by the Post Office; and payment for the provision of legal advice and assistance for claimants. In particular, on the latter, this is either by negotiation (in malicious prosecution cases) or by way of a fixed payment (£1400 or £400 in essence depending on whether the offer meets all of the claim or not) to review an offer under the HSS scheme rather than to advise on and bring a claim under the Scheme.
Issues, queries about the schemes, and especially big issues about who can claim for what, are not atypically dealt with in this way: the Post Office says they are considering it, and what they actually seem to mean is they await a Government minister to confirm they will stump up for any extra cost). The BEIS Minister says he’s terribly sympathetic and waits on the Treasury. The Inquiry raises the temperature and the Treasury eventually agrees. Last minute, perhaps not totally thgouth through announcements ensue. The result has been a large amount of confusion and a slow process.
It is against this background that Sam Stein QC (Counsel for one group of SPMs instructed by Howe & Co) queried why PO had decided to, “set about putting in place complicated schemes run by corporate lawyers to provide access to some compensation for some its victims.” And against trust issues he describes as “extreme”.
In essence, the HSS scheme, for that is the only one that appears currently to be a scheme, relies on complainants to put fill in an extensive form that does not explicitly ask about consequential loss (there is guidance though). Counsel to the Inquiry, Jason Beer QC puts the general difficulty of claiming like this (when considering whether there should be funding for legal advice provided when the claim is being made):
You may wish to consider whether this approach is adequate in circumstances where, firstly, the nature of the consequential losses claimed are in many instances likely to be complex; where the scheme, secondly, requires losses to be evidenced by a range of contemporaneous and other documentary material, material which a lay person may not be used to collecting, organizing and presenting; where, thirdly, the scheme self-evidently applies legal concepts such as remoteness, causation, mitigation, and quantum that may be unfamiliar to people; where, fourthly, further difficult issues may arise in claims that arise following bankruptcy, where the trustee-in-bankruptcy must be involved and the consequential losses that are properly recoverable may be complex; where, fifthly, tax advice it's likely to be necessary in relation to different elements of payments made under the scheme.
I don’t want to get too deep into the nitty gritty: suffice it to say the victims’ lawyers say the form used is inadequate or misleading and designed to limit claims whereas the PO says the form is designed so as to not confuse complainants. The form is, we are told, followed up by proactive and bespoke interventions from case workers who can ask claimants for further information (it is not clear to me if these are Post Office staff and whether HSF has a role here) before a final recommendation is made to an independent advisory panel (5 of whom are QCs).
The process depends on the proactivity of these case managers to spot and then correct for omissions in the claim form, it having been reviewed by someone from HSF. A ‘justice principle’ is applied, by the independent panel but presumably too by those advising them, to correct likely inadequacies in evidence or presentation that SPMs will have in trying to make claims. In essence, the justice principle says that the independent panel will take a view on what is fair in all the circumstances even in the absence of requisite evidence to ensure people get fair compensation. Issues of causation, mitigation, aggravation, whether an exemplary award for damages could be made, alongside the technical difficulties in proving future loss, loss of opportunity and so on can all be corrected by the IAA’s judgement and discretions to ask (but not direct) PO to seek further evidence at their own cost.
On available data levels of representation or legal assistance in the HSS claim process appear very low. The initial advice on all this comes from HSF and it goes to the PO and its independent panel.
The imbalance of representation aside, it’s all rather woolly and discretionary in approach. PO hold, and release late (when making the offer), the evidence, they or their panel have that is relevant all the decisions and a claimant then decides to accept or enter a dispute resolution process.
Lurking in the background, alongside the justice principle discretion, is the reliance on legal principles which are supposed to shape but do not finally determine offers (if I have understood it right). I direct interested readers to Kate Gallefant QCs (for the Post Office) oral submissions (p. 46 or thereabouts) on exemplary damages for an example of how this might work in practice: to paraphrase, a claim for exemplary damages is considered in the round but likely to be rejected on a basis that any non-legally qualified claimant would find baffling. This is my interpretation because she does not say so in a straightforward way (the judge describes her approach, I note, as “elegant” before encouraging her to be clearer). There is something of Schrodinger’s Cat about the argument. There is discretion to go beyond the law but the law may lead to a head of claim being excluded. Which is it? The answer seems to be it depends or trust the panel and the process it will be ok. Or perhaps, it is excluded but we do not want to say so because that might appear unfair.
To a non-lawyer I am going to suggest that argument looks, rightly or wrongly, like the card player’s equivalent of a stacked-deck.
This brings me back to my central point: trust. As CEO you want to wipe the slate clean redress wrongs and provide fair and appropriate redress. I take the latter to mean fair levels of compensation through a process that is fair. The process does not appear to be experienced as fair and the Schrodinger’s Cat explanation gives us a sense of why: why would victims of historical wrongs of the Post Office be comforted by a process which says, trust us we have discretion.
PO’s answer is that the Panel is independent but the process leading to the offer recommendation is not independent and it is run, or contributed substantially to, by a firm with a history in the history. Putting aside whether they have an actual or potential conflict of interest (some claimants may be seek payments partly exacerbated by the Bates litigation where HSF had a role) it strikes me as a significant misjudgement by the Post Office to have them administering any elements of the compensation scheme. Their involvement in Bates, I surmise, kills trust dead for the claimants.
If the Post Office genuinely wanted to run a scheme perceived as fair by the claimants (especially one which depended to a degree on them accepting sensible offers) then why would one instruct a firm with prior involvement? Justice needs not only to be done but seen to be done and all that.
Instead Post Office have mired themselves in a scheme riddled with problems now to be picked over in detail by the Inquiry and likely, I surmise, to be subject to some criticism. I doubt the point about HSF will be picked up by the Inquiry, although some submissions have raised concerns. The Chair will (I guess here) concentrate on the specifics of the scheme, the delays, perhaps the absence of criteria and explanation, the elegant paradox of the justice principle and legal legal rules intertwining, and the imbalances of representation when claims are or can be very complex. The nightmare scenario for the Post Office, is that might lead to them having to reopen in some way the cases they have offered and settled. I expect Williams will be a bit more circumspect than that and require more alacrity, clarity and fairness from this point on, but we will see.
Maybe instructing someone other than HSF would have led to a similarly problematic scheme: the shaping of the scheme strikes me as conventionally unfair rather than extraordinarily so. Taking a risk on the conventionally unfair might seem extraordinary given PO’s history. Running the HSS this way has not now met with the stated objective, at least if righting wrongs in a fair manner is really an objective. It was always going to be a tough ask persuading the PO vicitms of fairness, but in my view, to have any chance of wiping the slate clean the decks should also have been cleared of those involved. Placing a key firm in the Bates saga in the redress scheme(s), particularly where discretion and justice are in play, is a bizarre mistake. PO have got a slate with more writing on it, over a longer time, and at great expense.
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