Subpostmaster calls for investigation into legal fees paid by £58m Horizon fund

Regulator is urged to look into how much money went to lawyers and litigation funders

A subpostmaster 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, the subpostmaster’s lawyer Jim Diamond claims to have asked Freeths, a law firm which represented the subpostmasters, twice 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 subpostmasters it wrongly accused of theft and false accounting, which was actually caused by its defective Horizon computer system.
However, the 555 subpostmasters only received £12m once legal and funding costs were deducted – around £20,000 each on average.
Last year, the Government said it would fully compensate these subpostmasters under a shortfall scheme initially open to only subpostmasters who were wrongfully criminally convicted because of Horizon errors.
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 subpostmasters’ compensation.
The former City lawyer said that subpostmasters 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 subpostmaster’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.