Wednesday, December 11, 2019

Further Questions

And the winner is... in the red corner?
When the Post Office announced its settlement with the Justice for Subpostmasters Alliance at 9am this morning, the expressions of relief and joy were something to behold.

"This is the best news I have ever heard," said one correspondent. "Still in disbelief that they would actually acknowledge let alone apologise for their behaviour."

"This has just given me the biggest lift!!!" emailed another.

For the hardened hacks calling round, the question boiled down to two words: "How much?"

No one on the claimants' side would tell me, which was a bad sign.

It was left to the Post Office press office to gleefully inform the great Karl Flinders from Computer Weekly they had settled for nearly £58m, all in.
Within five minutes of Karl posting his scoop on twitter I received a call from someone who knows a lot about this story. "I hope to Christ that figure is wrong," he said.

I called the Post Office press office to see exactly what the £58m settlement was meant to cover. A nice man called Karim told me as far as the Post Office were concerned it was everything. It was the final sum they have agreed to give the claimants to make them drop their action.

I asked Karim several versions of the same question in order to make sure and he was unequivocal. The £58m is not just to cover litigation costs and the funder's success fee. It is the final total sum that the claimants are going to get out of this litigation.

And I wouldn't be surprised if part of the settlement was an agreement never to raise a claim against the Post Office again.

There's no doubt £58m is a lot of money. But how far does it go?

Costs

It's fair to guesstimate the total amount the claimants have spent on getting this far is £22m. That's based on the assumption they are burning through cash at the same rate as the Post Office.

The Post Office's last two annual reports admit they have spent a total of £23m in the two years up to the end of March 2019.

It is reasonable to assume they have spent a further £5m this financial year on finishing the second trial, attempting to recuse the judge, attempting to appeal their failure to recuse the judge, attempting to appeal the first trial judgment, preparation for the third trial and mediation.

Part of the £23m already spent includes the £6m they were ordered to pay the claimants in costs for the first trial.

So if the claimants have been setting fire to £50 notes at the same rate, they have torched through £22m in legal fees to date, but have received £6m back already from the Post Office, making the outstanding total on the claimants' side £16m.

This outstanding sum will be taken out of the £58m, bringing the claimants' pot down to £42m.

But... the claimants' case was paid for by litigation funder Therium, which took a serious risk in paying for the claim. For taking that risk, they will be entitled to a fee. This, according to law.com, is how it works:

"Success fees are often expressed as a multiple of the investment, a percentage of damages, or the greater of the two. Terms vary significantly."

And securing a win in the High Court is hella tricky, as the "The Law Reviews" website notes:
"England and Wales, which is effectively London for these purposes, is the most expensive and the riskiest litigation market in the world."
For exposing themselves to a potential loss of at least £22m, Therium will want a big success fee. This could be 60% of the remainder of the pot. I suspect it will be much less, but let's say for the sake of argument it matches their outstanding costs - a return of £16m.

Which means the pot remaining for Subpostmasters is £42m - £16m = £26m.

Still a good chunk of cash, but when you divide it by the 552 claimants Subpostmasters you get an average of £47,101 each.

Obviously those who suffered and lost more will get more, those who suffered and lost less will get less. And, of course, my figures are guesstimates. The average per claimant could well be higher. It could also be lower.

Let's assume the very best - that the claimants' outstanding costs are no more than £10m and Therium only wants £5m on top of that, leaving £43m to the claimants. That's £78K each.

Hardly a life-changing sum. Shortly after the £58m figure had been released by the Post Office I received an email from a former Subpostmaster, who had obviously crunched the numbers himself. He concluded:
"This is nothing but a great win for the Post Office. My losses alone came to £200,000. This compensation will not cover the fraudulent claims that the Post Office took from me. I am 75 and still work to live and pay my mortgage. There will be no celebrating this decision."
It is possible, of course, that Karim was (unwittingly) passing on the wrong information. It wouldn't be the first time the Post Office press office has told journalists something which subsequently turns out to be untrue.

Maybe there are more sums which the claimants can unlock or access. I asked for clarity from the claimants' legal representatives Freeths, but came there none.

So why settle?

On 15 March, flushed by their stunning success at the first trial, James Hartley - a litigation partner at Freeths - said that if Bates v Post Office continued to go in the claimants' favour, the Post Office could end up paying "tens of millions or hundreds of millions of pounds" in damages.

And he was right. But given the settlement offer appears to be at the lower end of his estimate, why bite?

It could be that Therium saw the opportunity to double its investment and run. Plausible and understandable. It might be that Alan Bates looked into the whites of Nick Read's eyes and was smitten by his apparent willingness to accept the Post Office had been a bit naughty in the past, but was now willing to behave much better. Certainly the strength of the apology was mild and the acknowledgment of past wrongdoings was so vague as to be meaningless.

It might also be that Mr Read gave a number of other assurances. Before mediation, Alan Bates was very keen that Subpostmasters whose cases are before the Criminal Cases Review Commission would not get left behind. Maybe, as part of the settlement, the Post Office has agreed to suggest to the CCRC or the Court of Appeal that some or all of those convictions might be unsafe.

Who knows? I suspect more information will come out over the next few days, but right now, if I were a Post Office director, I would have a great big beaming smile on my face. And I'd be patting my team on the back for getting the press release out on a day when TV news editors were were only ever likely to take a fleeting interest.

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