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Vodacom asked to withhold ‘Please call me’ settlement money

Creator of phone service in dispute with financiers over cut.

Vodafone Group’s South African unit has been told to delay full payment to a former employee credited with the idea for a popular calling service, pending the outcome of a dispute between the person and the company that helped fund his eight-year legal battle.

Sterling Rand, which found financial backers for Kenneth Makate as he pursued Vodacom Group for compensation for “Please Call Me”, has told the Johannesburg-based wireless operator to withhold at least 50% of any settlement, a letter sent on behalf of Sterling Rand by lawyers Fairbridges Wertheim Becker shows. Sterling Rand is concerned that Makate and his lawyers, Stemela & Lubbe, will agree to a deal that excludes the company. Makate didn’t respond to messages on Facebook and Twitter seeking comment.

“We can confirm we have received this request,” Vodacom spokesman Byron Kennedy said by e-mail on Thursday. “However, our focus is on compliance with the order of the Constitutional Court which requires us to negotiate in good faith with Mr Makate.”

The dispute comes a month after South Africa’s highest court ruled that Vodacom must compensate Makate for the “Please Call Me” idea, which allows customers with no balance on their mobile phones to alert someone with a free text message. Vodacom’s former CEO Alan Knott-Craig had been wrongly credited with the innovation, the Constitutional Court ruling showed.

Makate may be entitled to as much as R10.5 billion ($672 million), with Sterling Rand due half the amount for taking on the funding risk, South Africa’s Mail & Guardian newspaper reported earlier this month, citing Makate’s legal counsel.

According to the letter, Makate had agreed that the litigation financiers must give written consent to any settlement reached, unless it exceeded R650 million. The dispute surrounds whether or not Makate validly canceled this agreement with Sterling Rand. 

If Vodacom does not agree to the request, an urgent application will be asked for by the courts, according to the letter dated May 23.

© 2016 Bloomberg

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Requesting 50% of the Settlement amount is ridiculous and almost tantamount to extortion. The international norm is about 20% to 25% with 28% being the outer extreme of the fee.

It is not good when lawyers get too greedy, it discourages people from seeking justice. These terms would have been agreed up front, but even with that I have never heard of a lawyer seeking 50% as if he now invented half of the thing (‘please call me’). Sure they must be compensated, but R5 billion is extortion, plain and simple. R1 billion would be a shocker (even MTN is not willing to pay that much in Nigeria!!!, and that is MTN not Makate). Be reasonable people.

End of comments.

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