Solicitors who represented thousands of miners who paid millions of pounds to Arthur Scargill's union by way of an administration fee deducted from their awards have been ordered to pay compensation to two miners.

The firm advised miners to sign an agreement letting the NUM “fund” their legal claims — for chronic chest diseases and a crippling hand condition caused by their work underground — in return for paying part of their eventual compensation to the union.

The miners were not told that, in reality, the Government, not the NUM, was paying Raleys’ legal costs for successful claims. If the claim failed, the union paid nothing to the solicitors.

The union has been paid an estimated £10 million courtesy of the deductions made by Raleys from its clients’ awards.

Complaints made to the Law Society by two former miners brought a ruling by the society’s adjudication panel that Raleys should pay each man £300 compensation because it had failed fully to explain how their claims were to be funded.

The solicitors had refused to accept the decision.

One of the miners, Gale Roberts, from Worksop, Nottinghamshire, told the tribunal that when he first contacted Raleys he was told that he could proceed only if he signed a document agreeing to pay NUM contributions out of his compensation.

“I was under the impression that the NUM was paying for the claim to go through and that they were supporting me,” he said.

Geoffrey Williams, QC, for the Law Society, said that the solicitors should have advised the miners that the NUM was not paying any money to Raleys in support of their claims.

“There was complete failure to explain to these men at the outset why the arrangement with the union was either necessary, which it was not, or for their benefit. We say what Raleys did was to take it upon themselves to decide what was or was not in the best interests of their client.”

Raleys argued that the miners were fully aware of the deductions and had signed a contractual agreement for a fixed percentage of their award to be given to the NUM.

The tribunal’s decision to issue an enforcement order upholding the Law Society’s earlier ruling carries implications for thousands of miners yet to be paid back money deducted by Raleys.

Mr Williams said that the solicitors had already been found to have provided inadequate professional services in 11 similar cases, while “many others” were awaiting adjudication. In total more than 55,000 claims have been registered by Raleys.

A Law Society spokesman last night described the disciplinary tribunal’s ruling as “significant and welcome”.

The Times understands that a separate and more serious Law Society investigation is being conducted into Raleys’ conduct.

The nature of the allegations has not been revealed.

Nine other firms of solicitors face charges of professional misconduct in connection with the miners’ compensation scheme which, after revelations in The Times last year, is also the subject of a criminal inquiry by the Serious Fraud Office.

Explore Law

• Columnists

• Law Panel

• Law Reports

• Student Law

Times Recommends

• The best legal yarns this Christmas
• Legal school 'earned £1m by exploiting bar course'
• Axe may fall on 5,000 more City lawyers