THIS STORY IS SUBJECT TO A LEGAL COMPLAINT

Britain’s highest-earning solicitor acted dishonestly and with “conscious impropriety” in dealings with a mining union that led to his firm handling thousands of industrial disease compensation claims, a tribunal heard yesterday.

Jim Beresford agreed to a “dubious” deal that “raises the suspicion” that hundreds of thousands of pounds were diverted from the Union of Democratic Mineworkers (UDM) into the hands of a union employee.

The agreement, signed in 2002, is said to have smoothed the path for his law firm to grow rich. Among those who lost part of their compensation were sick and dying miners, their widows and families.

Details of the secret deal with senior union officials were outlined when Mr Beresford, 58, and Douglas Smith, 51, partners in Beresfords, a South Yorkshire firm of solicitors, appeared before the Solicitors Disciplinary Tribunal to face 11 charges of serious professional misconduct.

The two men are accused of “conduct unbecoming a solicitor” by failing to act in the best interests of their clients, misleading the Government, breaching referral rules and entering into “sham arrangements” with the UDM and Clare Walker, an employee of the union. Both deny any wrongdoing.

Many of the allegations they face were first reported by The Times in 2005 and are linked to a criminal inquiry into the union that the Serious Fraud Office has been conducting for the past three years.

Timothy Dutton, QC, appearing for the Solicitors Regulation Authority, told the tribunal that Beresfords “expanded remarkably” after the Government set up a compensation scheme for former coal miners whose health had been irreparably damaged by working underground.

In 1998, when the former British Coal was found liable in the High Court for two conditions – vibration white finger (VWF), caused by the use of vibrating tools, and chronic lung disease from coal dust – the Doncaster law firm had ten employees. The firm’s total fee income in 1999 was £684,000.

By 2006, Beresfords’ gross annual profit was £36.2 million, of which the share paid personally to Mr Beresford and Mr Smith was £23.2 million. By then the firm was employing 244 staff.

Mr Dutton said that 80 per cent of the firm’s income came from the coal health scheme. In total, Beresfords registered 97,500 claims under what has become the world’s largest personal injury compensation scheme. When the final award has been paid, it will have cost the Government £6.9 billion, of which £1.3 billion will have gone to solicitors used by miners or their families.

Mr Dutton told the tribunal that, at the start of the scheme, a comprehensive framework for its operation was set in place under which, in successful cases, solicitors’ fees and costs would be paid by the Government. The success rate was very high. About 750,000 claims were registered. Of those settled by December 2005, damages were awarded in 94 per cent of lung disease claims and 86 per cent of VWF claims.

Claims settled by Beresfords have earned the firm £141 million in fees, but Mr Dutton said that it had, in addition, sliced £718,000 from miners’ compensation by charging a “success fee” amounting to 25 per cent of the damages awarded.

The firm ended its no-win, no-fee agreements for coal claims in 2002 and subsequently refunded the money. Mr Dutton said that success fees were only taken from claimants whose cases had not been passed to Beresfords by the UDM.

The hearing was told that there was no evidence that the firm’s clients were informed, as they should have been, that the Government had agreed to pay the solicitors’ fees and that many other law firms were not charging success fees.

Mr Beresford and Mr Smith are accused of misconduct in relation to thousands of UDM claims, which came to the firm via Vendside, a claims handling firm wholly owned by the union. Before UDM clients received compensation, Beresford made a deduction of up to £300 plus VAT, which was given to Vendside “to cover the cost of pursuing the claim”. Mr Dutton said there was no evidence about what the union or Vendside actually did, in relation to the handling of individual claims, to justify such a deduction.

The tribunal heard that Beresfords also paid a similar sum from its own bank account to Vendside. This was described as a “marketing/administration/investigative fee”, but Mr Dutton said that this was merely an attempt to disguise what was, in reality, a referral fee.

At a meeting in January 2002 between Mr Beresford, Mr Smith, Miss Walker and Mick Stevens, the vice-president of the UDM, it was agreed that the money should in future go to a company owned by Miss Walker. Beresfords’ agreement to continue sending the money – now to the new company instead of to the UDM/Vendside – was, Mr Dutton said, an arrangement which “an honest solicitor would not go near”. The new destination of the money, and an instruction that all correspondence relating to the subject should be sent to Miss Walker’s home address and not to the union offices, suggested “fertile ground for impropriety”.

“All of this would create grave concern in the mind of an honest solicitor,” Mr Dutton said. “If that solicitor then carries on with the arrangement, knowing or suspecting that it is not proper . . . then that solicitor has fallen into the definition of dishonesty.”

He said that Miss Walker’s company, which had been set up one day before the January 2002 meeting, received payments from Beresfords totalling £736,000.

The hearing continues.

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