Personal injury lawyers Ronald Bobroff & Partners (RBP) received another blow last week when the Johannesburg High Court found again that the firm’s contingency fee agreement was unlawful and made a punitive costs order against it.
Gauteng road accident victim Adrian Wong last year sued RBP, alleging that it short-paid him nearly ten years ago.
This is the eighth judgment against RBP – considered by some 20 judges in every level of the judiciary – in under three years that found that the firm’s controversial contingency fee agreements are unlawful and that the firm has had to refund its former clients millions of rands. There are a further ten court cases in various stages of the litigation process brought by 13 former clients.
In a seminal judgment last week, Judge Basheer Vally set out the circumstances when an attorney cannot raise a defence of prescription, or that the right to claim has lapsed, to a claim brought by an aggrieved former client. The Prescription Act stipulates that a former client has three years from the time he/she has knowledge of the facts from which the debt arises to sue the attorney.
Common law contingency fee agreement
In April 2004 Wong was involved in a road accident. RBP director Darren Bobroff approached him in the Milpark Hospital where Wong signed a mandate for the firm to claim against the Road Accident Fund (RAF) on his behalf. He understood that he would be charged 30% plus VAT of whatever RBP succeeded in obtaining for him. In addition to this, Wong would be liable for the fees of the advocate retained by RBP to work on his matter, as well as the costs of the various medico-legal experts.
Contingency Fees Act
The Contingency Fees Act (CFA) and Regulations came into operation in April 1999 in order to make justice accessible to the indigent. The Act provides that lawyers may charge up to double their ordinary fee on a contingency basis.
This double-up is capped at 25% (including VAT) and includes advocates fees. The agreement has to be signed before the lawyers commence working on the case.
Wong’s allegations against RBP
Wong stated in court papers that in 2007 his matter was settled the day before it was scheduled to go to court. In terms of the settlement the RAF paid RBP a capital sum of R984 056 and a contribution of R171 000 towards legal costs.
Wong alleged that after RBP paid him only 37% of the capital amount, he requested a detailed accounting of the legal fees. Based on the hours that RBP actually worked on his claim, he has calculated that RBP charged him between R10 606 and R15 271 per hour. Wong asked the court to declare his fee agreement with RBP to be illegal because it failed to comply with the CFA and, furthermore, that RBP be ordered to provide him with a full account of the money it had received and paid out.
Has Wong’s case prescribed?
RBP put forward two preliminary defences to Wong’s claim. Darren Bobroff told the court that Wong had not demonstrated that RBP had been unjustifiably enriched by the unlawful agreement and, secondly, that his claim had prescribed or lapsed. RBP made the last payment to Wong in 2006, but he had only formally approached the Law Society of the Northern Provinces (LSNP) in 2011 with a complaint. The LSNP failed to act on his complaint.
Bobroff told the court that Wong should have known by 2011 at the latest that the firm’s fee agreement was illegal and that his right to claim from RBP was for a period of three years from then. He also told the court that it should not find in Wong’s favour because RBP had used an LSNP compliant contingency fee agreement and that RBP only had legal certainty regarding the illegality of this agreement for the very first time in February 2014 when the Constitutional Court had ruled against it in the de la Guerre matter.
Read Darren Bobroff’s affidavit here.
The judge pointed out that since the Bobroffs’ evidence was that there was no certainty concerning RBP’s fee agreement until the De la Guerre judgment in February 2014, then “Wong, a simple lay person, must be correct when he says that at that time he was not aware that the Contingency Fee Agreement was unlawful and of no force and effect.”
The court declared Wong’s agreement with RBP to be invalid. RBP was ordered to hand his attorneys a fully itemised and detailed accounting by the end of this month and immediately pay R337 000 to him pending a debate of RBP’s account. This means that Wong will have to refund RBP only if it can justify its fees.
RBP and the Bobroffs were also ordered to pay Wong’s costs on a punitive scale.
Wong’s attorney, Anthony Millar, told Moneyweb: “It is unprofessional and disgraceful when attorneys use feigned ignorance of the law in an attempt to avoid being accountable to their clients.”
In response to a request for comment, RBP’s attorney, Rael Zimerman of Taitz & Skikne told Moneyweb: “I have advised my clients to apply for leave to appeal the judgment, which will be done in due course, and they have no further comments at this stage.”
The application by Matthew and Jennifer Graham to have Ronald and Darren Bobroff suspended from the Roll of Attorneys pending an investigation into the business practices of RBP will be argued in the Pretoria High Court on March 14 , 15 and 16.