NEW-Further trouble for Djanogly and PM?

[jman]

Guardian has new article on main page today 20.09.11 on issues allegedly involving Djanogly and alleged conflicts of interest

" Legal aid reforms minister has £250,000 invested in firms with insurance interestsJonathan Djanogly is piloting controversial proposals which could net insurance industry £1bn a year

Randeep Ramesh, social affairs editor
guardian.co.uk, Tuesday 20 September 2011 17.49 BST Article history

Jonathan Djanogly, the justice minister piloting controversial plans to cut legal aid and curb payouts, which could benefit the insurance industry to the tune of £1bn a year, has stockmarket investments worth at least £250,000 in companies with insurance arms.

He is also weighing up proposals which may have a profound effect on his brother-in-law's business which advertises compensation claims for accidents.

Labour wrote to the cabinet secretary, Sir Gus O'Donnell, on Monday night to demand an investigation following the Guardian's inquiry.

Djanogly, a Conservative MP the legal services minister, is pushing a bill through parliament which will attempt to slash the budget for legal aid by £350m as well as shifting part of the costs of bringing cases on a "no-win, no-fee" basis from losing defendants to winning claimants.

This reduces the costs liabilities of companies and their insurers if they unsuccessfully defend a claim as it will force claimants to pay out of any awarded damages their lawyers' success fees and insurance policies that cover court costs.

Last week the Guardian revealed that the minister could personally profit from the changes. In the past three years Djanogly has been entitled to an average annual payout of £41,000 from being a "minority partner" in his family's firm of insurance underwriters, The Djanogly Family LLP.

The 46-year-old, considered to be one of the 10 richest MPs, is heir to a £300m family fortune and has amassed a sizeable personal stake in the insurance industry.

In the most recent declaration of MPs interests he continues to hold shareholdings of worth at least £195,000 in three banks with insurance arms – Barclays, HSBC and Lloyds TSB. He also has at least another £65,000 in Amlin insurance stock.

Djanogly also declares in the ministerial register of interests that his "brother-in-law owns 'Going Legal Ltd' and 'Legal Link Introductory Services Ltd'". Both are claims management companies, which advertise "no-win, no-fee" compensation claims for accidents and charge a referral fee for passing on potential cases to lawyers and insurance firms.

According to company accounts, Ben Silk, Djanogly's brother in law, saw a combined profit from the two firms last year of £130,000.

Going Legal, according to its website, deals with employment cases and Legal Link asks: "Suffer an injury caused by someone else?" on its homepage. Both offer 0800 telephone numbers for people to call.

The regulation of the claims management industry is part of Djanogly's ministerial duties. Last week, after pressure from former Labour justice secretary Jack Straw, he announced that "rising insurance costs will be tackled by a ban on referral fees" while admitting there was "no universally recognised definition of 'referral fees'."

Labour's justice spokesman, Andy Slaughter, has written to cabinet secretary Gus O'Donnell calling for an investigation into Djanogly. Slaughter points out a slew of conflict of interests claims given that the minister has neither resigned or removed himself from discussions from which he could personally profit.

The letter argues that the minister's assertion that his financial interests are in "blind trust/blind management arrangement" does not bear scrutiny as the "minister's holdings are concentrated into financial services companies with exposure to the insurance market and The Djanogly Family LLP is explicitly set up to act in the insurance and reinsurance market".

Slaughter argues that as Djanogly "did not resign from the LLP and dispose of his interests (he has a) fiduciary duty to promote the interests of The Djanogly Family LLP".

This, says Slaughter, is in conflict with "his duty as a minister to promote the public interest".

Slaughter says "his shareholdings, weighted towards financial services companies and those with insurance interests, are incompatible" with being a minister adding that Djanogly "holds stocks in Lloyds and Tesco, both of which responded to consultation" backing the Jackson changes.

The Labour MP adds that "given the minister's role as regulator of claims management companies and his brother-in-law's ownership of two claims management companies, it is reasonable to perceive a conflict of interest".

"Given the sums of money involved, the multiple ways in which the minister would benefit from this legislation, this would appear to be a severe breach of the code."

Slaughter says that if the MoJ's permanent secretary, Sir Suma Chakrabarti, was informed of these arrangements it calls into question his judgment.

In some cases when particularly complicated issues surrounding a minister's investments prove too difficult for his or her own department to resolve the matter is sent to Downing Street. Slaughter notes: "In the event the prime minister was consulted, as per clause 7.9 of the Code, this poses serious questions as to the judgment of the prime minister."..........................."


Rest at link below

www.guardian.co.uk/politics/2011/sep/20/justice-minister-companies-shares-legal-aid

[jman]

Here's a link to Legal Link Introductory Services Limited, the second company referred to in the Guardian's article, trading as Justice Direct. This is a company regulated by the Ministry of Justice according to its site. According to their site they also cover employment claims. If clients can no longer access Legal Help and legal aid, these are the sort of companies that will be expected to be after their business indeed the MOJ in its Green Paper made big play of the no win fee sector covering such claims. It would be interesting to know which Minister at the MOJ actually took the decision to cut legal aid out of the scope of social welfare legal aid.

A search at Companies House into the employment and PI claims company Legal Link Introductory Services Limited reveals from the annual return of 10/06/10 the following shareholdings included "200 Ordinary B Shares Name : Elizabeth Djanogly" "200 Ordinary B Shares held as at 10/06/10 Name : Joseph Djanogly".

Also on the shareholding among others are C.Silk, Christine Silk, Kelly Silk, Tara Silk, T. Silk, B.L. Silk, K.Silk and B.L.Silk. among others. Wikipedia says Djanogly is married to Rebecca Jane Silk so the question is who are all these Silks and who in particular are the 2 listed Djanoglys?



justicedirect.co.uk/index.htm

[nickd]

Oh, I wonder if the Guardian has picked this up?


From Law Society Gazette..


Andrew Michael Tilbury
Thursday 19 March 2009

Application 9880-2008
Admitted 1997
Hearing 14 October 2008
Reasons 8 January 2009

The SDT ordered that the respondent, of Sunderland, Tyne and Wear, should pay a fine of £5,000. Contrary to rule 1 of the Solicitors Practice Rules 1990, the respondent had done things in the course of acting as a solicitor which had compromised or impaired or had been likely to compromise or impair his independence or integrity, a person’s freedom to instruct a solicitor of his or her own choice, his duty to act in the best interests of clients and his good repute and the good repute of the solicitors’ profession; he had acted and/or continued to act in circumstances where there had been a conflict and/or a significant risk of conflict of interest between the interest of the clients and his own interests; and he had accepted introductions and referrals of business from other persons in breach of and otherwise than in compliance with the Solicitors Introduction and Referral Code 1990, contrary to rule 3 of the rules. The SDT was satisfied that by entering into an agreement with Justice Direct, the respondent had effectively disabled himself from advising his clients as to the desirability of the client becoming liable to pay 25% of any recoverable damages to Justice Direct in return for an introduction to the solicitor. The benefits to the client of entering into the purchase order were claimed to be some initial screening of the claim and introduction of a suitably qualified solicitor. Neither, in the SDT’s view, could justify the payment to Justice Direct of so disproportionate a share of the damages awarded to the client, and the SDT considered that no competent solicitor rendering advice in the best interests of the client could recommend the client to enter into such an agreement. By entering into arrangements with Justice Direct, the solicitor was facilitating the imposition on the client of an agreement which, absent such arrangements, the solicitor would not, except perhaps in exceptional circumstances, recommend to a client. By so doing the solicitor’s independence and integrity were impaired and the best interests of the client were not served. The form of agreement before the SDT also, in the SDT’s view, limited the freedom of a client to instruct a solicitor of his or her own choice by requiring the client to pay an introduction fee. The arrangements with Justice Direct were, in the SDT’s view, damaging to the reputation of solicitors generally because the contingency amount recovered by Justice Direct increased disproportionately the cost to the client of a successful claim without any regard to the complexity or difficulty of the claim. Facilitation of such arrangements by solicitors would be seen as not being in the best interests of the client. The SDT found that the respondent was in a position of conflict between his contractual obligations to Justice Direct and his duties to give independent advice to his client. Although it accepted the respondent’s evidence that he would expect to give priority to his duty to his client, the SDT found that that was not sufficient since his obligation was not to put himself in a position where his duties or interest might conflict. However, the SDT had some sympathy for the respondent. It found him to be a straightforward and honest man who sought to do his best for clients. It accepted that he had not been motivated by greed, but he had failed to appreciate that the perception of the public would be that a substantial percentage of a client’s compensation did not reach the client as it was deducted by his or her solicitor. The fact that the solicitor in fact was paid at a modest level and the bulk of the deduction was paid elsewhere was likely not to be readily apparent or understood. The SDT accepted that the respondent had acted in error and had not been in deliberate or flagrant breach. He had handled the clients’ work entirely properly. Although on the face of it the breaches had been serious, those factors and the background relating to the funding of such claims in general had been taken into account. The respondent was ordered to pay £15,000 costs.


www.lawgazette.co.uk/in-practice/sdt-decisions/andrew-michael-tilbury

[nickd]

As they say, there's more...

Article by Guise Solicitors

Referral Fees — first the bad news

The case of Tilbury (SDT reference 9980 of 2008, Findings dated 08.01.09) explains why
accepting referrals from claims management companies can be so dangerous.
Mr Tilbury is a High Street practitioner. In 2005 he was approached by a claims management
company called Justice Direct to undertake employment related claims. Mr Tilbury was rightly
cautious about entering into such arrangements without firstly carrying out due diligence on the referrer. He visited their Manchester offices to ensure they were not being run from a “back bedroom”, saw their call centre and reviewed carefully their draft agreements including an opinion of Leading Counsel with which he had been provided confirming that their scheme did not offend any legal principle including maintenance and champerty. Mr Tilbury recognised that competitors of his were taking part in the scheme and concluded that Justice Direct was a scheme that he could properly join.

Justice Direct targeted a wide range of clients with problems such as personal injuries and
employment. The clients would enter into a “Purchase Order” in which the client would agree:

• To pay a “broker fee” of 12.5% of any amount recovered plus VAT for Justice Direct’s role in
supplying clients with details of a solicitor. It was made clear that Justice Direct would do
nothing else (apart from some basic screening of claims as to time limits etc)

• That the broker fee may be deducted by the solicitor from the compensation received

• The client acknowledged he or she had complete freedom to instruct a solicitor of his or her
own choice

• The solicitor may discuss any aspect of the case with the referrer The Purchase Order did not make clear that:

• What fee was payable to the solicitor (25% of the compensation recovered)

• Part of the solicitor’s fee (12% plus VAT) was payable to Justice Direct

Mr Tilbury accepted that he had not informed the referred clients that he was paying the referrer and that his firm’s fee was in fact 13% plus VAT with 12% going to Justice Direct.
2 of Mr Tilbury’s clients complained. Their cases worked out as follows:

The Brief
June 20

More here...

www.guisesolicitors.co.uk/referralfeesbadnews.pdf