Solicitors’ watchdog urged to examine Horizon scandal legal fees

A SUB-POSTMASTER is demanding an investigation into legal fees paid from the £58m fund meant to compensate workers wrongly convicted of fraud in the Post Office Horizon scandal.

The Solicitors Regulation Authority (SRA) is being urged to examine how the settlement was divided between lawyers, litigation funders and the 555 claimants who first exposed the IT failure.

In a letter to the SRA, Jim Diamond, the sub-postmaster’s lawyer, claims to have twice asked Freeths, a law firm which represented the claimants, to provide further information and copies of relevant documents.

However, Freeths allegedly denied this request, saying the matter is now closed and it did not wish to engage.

The regulator has been asked to confirm whether Freeths is required to hand over the documents to their former client.

The Post Office agreed to pay out £58m in 2019 to settle a group action brought by sub-postmasters whom it wrongly accused of theft and false accounting, for which its defective Horizon computer system was to blame.

However, the 555 sub-postmasters received only £12m between them once legal and funding costs were deducted – about £20,000 each on average.

Last year, the Government said it would fully compensate these sub-postmasters under a shortfall scheme initially open to only those who were criminally convicted in error because of Horizon flaws.

Mr Diamond also warned the SRA about a recent article by Neil Purslow, founder and chief investment officer at Therium Capital Management, a specialist litigation funder which backed the compensation claim.

Writing in the The Times earlier this month, the financier challenged reports that Therium’s fee for funding the High Court case against the Post Office was £46m, equal to 80pc of the final settlement.

Mr Purslow said that Therium’s funding fee was actually “slightly less than £24m” – an amount broadly similar to the total legal costs, insurance premiums and expert fees which also had to be deducted from the sub-postmasters’ compensation.

The former City lawyer said that the sub-postmasters were only able to resist the Post Office’s “scorched earth litigation tactics” because Therium increased funds more than three times from what it originally budgeted for.

Mr Purslow said: “This was not a no-win, no-fee deal – the costs were bankrolled by Therium with repayment only if the case succeeded. It is therefore difficult to argue that the funder’s fee was excessive: Therium’s investment was sizeable and high risk. Other funders declined to take that risk.”

However, in a letter to the SRA, the sub-postmaster’s lawyer claimed this breakdown of costs is “private and confidential” and should not have been made public.

The Solicitors Regulation Authority, Freeths and Therium were contacted for comment.