Bobroffs hit with massive interest bill

Ruling opens the doors for other ex-clients to claim from law firm.

Personal injury law firm Ronald Bobroff and Partners (RBP) repaid nearly R1 million in accrued interest to several former clients last week, after the Supreme Court of Appeal (SCA) rejected a petition by the law firm to limit the interest payments it was liable for.

These interest payments were calculated on the amounts RBP overcharged its clients in terms of its illegal common law contingency fee agreements. This decision now opens the door for many other former RBP clients, who may also have been overcharged by RBP, to claim for refunds and interest on these overcharged amounts.

Start date of the interest calculation

The SCA ruling followed several cases in which RBP’s common law contingency fee agreements were found to be unlawful. The SCA has specific reference to Anthony de Pontes, who was left quadriplegic in 2007 after a vehicle accident. RBP claimed on behalf of De Pontes from the RAF but in April last year Judge Haseena Mayat of the High Court in Johannesburg ordered RBP to repay an overcharged amount of R2.1 million plus interest stretching back to the date when RBP had received payment from the RAF on behalf of De Pontes.

Read Bobroff ordered to repay quadriplegic R2,1m

During the case RBP contended that it should only pay De Pontes interest on the overcharged fees from February last year when the Constitutional Court declared RBP’s fee regime to have been illegal and not from the time when it owed De Pontes the money. 

Judge Mayat refused RBP leave to appeal to the SCA and the firm then petitioned it. This petition was also rejected and RBP had to repay the interest.

Consequently, RBP last week repaid R533 100 to Anthony de Pontes, R270 000 to Juanné de la Guerre and nearly R50 000 to Ursha Fourie.

The payment to De la Guerre followed a Constitutional Court ruling in February last year that RBP overcharged her by R508 420.

Read Bobroff’s contingency regime unlawful

The payment to Fourie followed an accident in 2005, following which RBP claimed from the RAF. RBP finalised her claim and paid Fourie, but never rendered an account of the costs she had to pay. She asked her own attorney to investigate and only then RBP realised that it had short paid Fourie by R240 000 and paid it to her immediately.  The interest that RBP has now paid was calculated on the short payment.

Floodgates

The SCA’s decision opens the floodgates for massive claims against RBP and other attorneys who had used these unlawful fee agreements.

In court papers before the High Court in Pretoria early last year in which former RBP clients, Jennifer and Matthew Graham, sued RBP, the RAF asked to be admitted to the proceedings as an amicus curiae (friend of the court).

Gilbert Marcus SC, appearing for the RAF, told presiding Judge Billy Mothle that the RAF’s records showed that RBP had processed over R1 billion in RAF claims during the preceding ten years.

Law firm Norman Berger & Partners (NBP) is also currently acting on behalf of eight former RBP clients who have claimed a total of R9 million plus interest from RBP. 

RBP’s common law contingency fee agreements typically charged clients approximately 30% to 40% of the RAF payouts. The Contingency Fees Act prescribes that a law firm may charge clients the lesser amount of the normal attorney-client fee or 25% of the settlement amount.

If the fees and interest recovered in the De la Guerre and De Pontes matters are an indication of the extent of the overreaching by RBP, the claims against the firm and its four directors could run into hundreds of millions of rands. 

Claims against lawyers who have overreached clients do not prescribe (lapse) until such time as the client becomes aware that they were overcharged.

Read Another bitter pill for the Bobroffs

Ronald Bobroff failed to respond to Moneyweb’s request for comment.

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