Govan Law Centre (GLC) has been investigating the regulatory and legal issues surrounding fees believed to have been paid in relation to equal pay awards on behalf of 16,000 women in Glasgow to Action 4 Equality Scotland (A4ES), trade unions and law firms in Scotland. The fees paid are understood to be approximately £38m, with further potential fees to be paid in 2021 on final equal pay awards. We are undertaking this work on a pro bono basis.
Earlier this month A4ES suspended all activities after it transpired that it was not authorised by the Financial Conduct Authority (FCA) to conduct business as a claims management company (CMCs). The Financial Conduct Authority (FCA) took over jurisdiction for all CMCs on 1 April 2019 in terms of the Financial Claims and Guidance Act 2018.
Mike Dailly Principal Solicitor and Solicitor Advocate at GLC said:
“So far, we have established that many women represented by trade unions were never told they would have to pay fees for their equal pay claims – some were explicitly told no fees were payable – and were never provided with terms of business letters from their solicitors setting out the need to pay fees or how these would be calculated. The position has become much more concerning as we now have partial explanations that are completely contradictory.”
“Following a client complaint, we have been advised by one law firm acting for a trade union as follows: “the Council had to find a way to pay the legal fees of the claimants whose fees were not being paid by their trade union. This was done by adding a percentage figure to the Settlement Sum of every claimant who accepted an offer … This amount was then ‘deducted’ from that Claimant and paid by the Council to the claimant-side representatives”. ”
“This assertion raises more questions that it answers. In the BBC Disclosure documentary in October 2019, Stefan Cross of A4ES explains that 6.9% of all awards went to pay his fees and that of other representatives. When asked whether this meant he was also receiving fees in relation to women who were not A4ES clients he said “We had this discussion with the trade unions, every single agreement includes a legal commitment to make that payment”.
“However, confusingly clause 3.2 of the settlement agreement fails to explain who fees are being paid to or how they are calculated. The agreement simply states that the employee accepts and agrees that a payment towards “legal fees and administrative expenses which has been distributed between all claimants to ensure that all claimants who receive a settlement from the Employer receive a settlement on the same basis (parity)”. Many trade union members were told no fees were payable”.
“Is it the case that Glasgow City Council has paid an extra £38m of taxpayers money on top of equal pay claims of over half a billion pounds to pay the legal fees of a private claims management company and others? Or is it the case the £38m has been deducted from the settlement figures of women? “
“Have legal fees been deducted from trade union members’ settlement awards to pay for A4ES? Have law firms obtained their clients’ consent for these arrangements, and acted in accordance with the Law Society of Scotland’s 2011 Code of Practice? Particularly, in relation clients who were told representation was free as a trade union member. How can A4ES have received millions of pounds in fees when it was not authorised by the FCA to act as a CMC in Scotland”.
“Too many questions remain unanswered. Women workers in Glasgow deserve answers. The public interest deserves answers and transparency and as a starting point Glasgow City Council has to clarify whether legal fees were paid by it as an additional sum, or whether these have been deducted from the women’s settlement awards”.