The North Gauteng High Court has put a stop to lawyers taking more than their 25% share of the payout when acting on a contingency basis, a decision which personal injury lawyers say they will appeal against, notes a report in The Mercury. A full Bench of three judges confirmed any contingency fee agreements which did not comply with the Contingency Fees Act, would be invalid. In terms of the Act, when there is a ‘no win, no fee’ agreement and the claim is successful, the lawyer is only entitled to legal fees up to 25% of the total awarded.
This was the decision in two related judgments by Pretoria Judge President Dunstan Mlambo and Judges Hans Fabricius and Fayeeza Kathree-Setiloane. In the first judgment they ordered top Johannesburg personal injury lawyer Ronald Bobroff to return some of the fees charged to a Road Accident Fund (RAF) client after finding his agreement was invalid and the fees far exceeded the regulations of the Act. The report notes the RAF paid out R2 793 158 in respect of accident victim Juanne de la Guerre’s claim, but she only received R1 729 451. The total deducted by Bobroff, former chairman of the Law Society of the Northern Provinces, amounted to R1 063 707.
Bobroff was ordered to give her a fully itemised bill, supported by the necessary vouchers for reasonable fees incurred by him when he handled her case. She is also entitled to demand this bill to be subjected to tax by the tax master at the High Court who will scrutinise the bill to see whether it is fair. Bobroff has to pay her the difference between what he charged and the total of the taxed bill. The court also made a punitive costs order against him for the legal costs incurred by De la Guerre.
The SA Association of Personal Injury Lawyers, of which Bobroff is the founder member, was blasted in a second judgment. In this case the association asked that the Act be declared unconstitutional. This was turned down. It was argued in this case that legal practitioners should be able to conclude contingency fee agreements with clients without complying with the requirements of the Act, which they claimed discriminated against lawyers and their clients. However, Kathree-Setiloane said: ‘If the association’s contentions are upheld, a significant portion of funds earmarked for RAF victims would be claimed by their legal representatives…’.
According to a report in The Citizen, Kathree-Setiloane said it was necessary to impose certain limits on contingency fees in order to protect members of the public and ensure they benefited from litigation conducted on their behalf. Without such limits, the right of access to court for many litigants might be rendered meaningless, because even if they were able to get to court and succeed, they would derive little or no financial benefit from such court proceedings, she said. The meaning and effect of the Contingency Fee Act has created much controversy and debate in the legal profession, notes the report.
The Northern Provinces and Free State Law Societies made rulings permitting their members to conclude contingency fee agreements outside the prescripts of the Act, provided that certain criteria were met. However, a spate of recent court decisions on the subject of the legality of such agreements created uncertainty about whether so-called common-law contingency fee agreements could co-exist with the Act. Kathree-Setiloane said there could not be two systems of law regulation on the same subject matter.
The association had been seeking certainty on whether the Act exhaustively regulated the powers of legal practitioners to conclude contingency fee agreements with their clients, notes a report in Business Day. Its constitutional challenge was based on the argument that the Act was unconstitutional because it set limits on the fees that could be charged under such agreements. The association also argued that the Act capped fees at ‘too low a level’, but gave no indication of what the correct level should be. Kathree-Setiloane said that, in adopting limits to fees charged under contingency agreements, Parliament sought to give effect to the need for access to justice. ‘It recognised – correctly, in my view – that access to justice would not be promoted by unlimited contingency fees,’ she said in her judgment.
[Info from Shepstone &Wylie]