The Post Office paid out a quarter of a billion pounds in legal fees in relation to the Horizon IT scandal, The Lawyer can reveal.
A Freedom of Information request made by The Lawyer to the Post Office has revealed £256.9m was paid to 15 law firms and two barristers’ chambers between September 2014 and March 2024.
The figure is nearly equal to the total paid out to victims of the Horizon scandal so far, which was £261m as of July 2024 according to UK Government statistics.
The work covered under the FOI request relates to the group litigation, the subsequent establishment of the compensation schemes, legal advice relating to compliance with the Horizon issues judgment and the representation at the Post Office Horizon IT inquiry between September 2014 and March 2024.
Not all of the costs revealed in these figures will have been revenue for the firms themselves. Payments to firms also include other law firm costs, such as external counsel or other external advice or services provided.
By far the lion’s share of the costs went to Herbert Smith Freehills (HSF), which received a total of £163.56m from the Post Office for its work.
HSF took over the Bates v Post Office litigation late in the process, although the exact point at which it replaced Womble Bond Dickinson is not clear. It has continued to advise the Post Office on the Historic Shortfall compensation scheme and the Historic Overturned Convictions scheme, and advised the Post Office on the Horizon IT inquiry until last June, when it was replaced by Burges Salmon and Fieldfisher.
A statement from HSF said: “Herbert Smith Freehills’ work has been complex and wide-ranging, involving hundreds of our staff over a number of years, and working with millions of documents in relation to the inquiry. As a firm, we have immense sympathy for the postmasters affected by the Horizon IT system, and what they and their families have endured. As one of several advisers on the compensation schemes, we will continue to support the Post Office in its efforts to deliver fair compensation as swiftly as possible.”
In second place, taking £43.34m in legal fees from the Post Office, is Peters & Peters. That firm advised the Post Office from 2020 on matters regarding disclosure in sub-postmasters’ appeals against their convictions through the Horizon scandal. The firm has also been instructed for criminal aspects of the Horizon IT inquiry. However, The Lawyer understands that a considerable portion of Peters’ fees were consequently disbursed to counsel, and as such the firm did not collect the full amount as revenue.
Surprisingly, Womble Bond Dickinson (WBD), which handled the bulk of the Bates litigation, received a smaller amount than Peters & Peters and a comparative fraction of the sum received by HSF. It took £24.748m in legal fees from the Post Office for its role in the litigation. The firm was criticised in the inquiry for the extent to which it became involved with internal decision making and an “attrition” strategy in litigation.
A spokesperson for WBD said: “The firm has great sympathy for all those affected by the issues being investigated by the Horizon public inquiry and recognises the very real personal impact these have had on sub-postmasters and sub-postmistresses. As the FOI response notes, it is important to clarify that the £24.7m figure quoted includes third party costs, such as barristers’ fees, which were paid via disbursements, rather than directly by Post Office.”
Since its appointment to advise the Post Office on the inquiry in June 2023, Burges Salmon has received £19.9m in legal fees. This represents the bulk of a £22.5m contract handed to the firm for work on the inquiry, due to last until 2026.
A spokesperson for Burges Salmon said: “Burges Salmon, assisted by a team from Fieldfisher, were appointed from a Government Legal panel to act for Post Office, in particular on phases five, six and seven of the Post Office Horizon IT inquiry. Our appointment started in May 2023. We had no involvement in, and did not advise on matters prior to that date, and are not instructed in relation to matters relating to the compensation schemes.”
The other firms named to have taken over £1m in legal fees are: Norton Rose Fulbright (£1.41m); DAC Beachcroft (£1.33m); and Linklaters (£1.19m).
A spokesperson for DAC Beachcroft said: “The vast majority of DACB’s fees relate to a number of secondees they provided to the Post Office for their in-house teams from late 2020 onwards.”
On Linklaters’ involvement, a spokesperson said: “The Post Office set up a ‘mediation scheme’ in 2013, prior to our involvement. In early 2014, Linklaters was asked to provide some high-level advice to the Post Office in the context of the mediation scheme, which had around 150 applicants. That advice did not focus on the merits of individual claims. The firm’s involvement ceased in August 2014.”
Other recipients of fees relating to Horizon paid under £1m are (in descending order): Cartwright King, Pinsent Masons, Innovo Law, Brodies, Kennedys Law, 4 Pump Court, 1 Crown Office Row, Farrer & Co and Ashfords.
Horizon Scandal expert and professor of law and professional ethics at the University of Exeter, Richard Moorhead, told The Lawyer: “To the general public, and the sub-postmasters, these will look like wild sums of money to spend on failed litigation, a settlement that fell apart, a flawed compensation scheme, and troubled dealings with the public inquiry. While the PO had more to do than others, the sums were spent on a series of expensive failures.
“There’s a big question about how a Government-owned body can spend like this.
“Over a quarter of a billion spent so far to add to the bill for compensation which is predicted to hit £1bn. That’s quite a bill for something partly, and arguably mainly, driven by lawyer mistakes and misdeeds.”
On the figures, a Post Office spokesperson said: “Today’s Post Office is focused on paying redress to those affected as quickly as possible and supporting the inquiry to establish the truth. The Post Office and the Government have so far paid £260m to 2,800 postmasters. We are truly sorry for the suffering caused by Post Office’s past actions and the amount of money spent with legal firms reflects the huge scale of the scandal.
“The inquiry has brought to light the scale of Post Office’s past failings and their devastating consequences. We are doing all we can to help victims get answers and to put things right, as far as that can ever be possible. Fees are in relation to the group litigation, the subsequent establishment of the compensation schemes, legal advice relating to compliance with the Horizon issues judgment and Post Office representation at the Horizon IT inquiry.”
