IT’S New Year resolution season and if lawyers and judges are, like the rest of us, contemplating what improvements to make in 2017, I have a suggestion.
Why doesn’t the South African legal community, from judges down, band together to ensure that over-reaching in contingency fee agreements comes to a dead stop this year? Imagine the advantages to poor litigants who would benefit properly from claims, not to mention the positive impact on the reputation of the profession and a resulting improvement in public confidence.
Exact transcript
Meanwhile, though, “rapacious and unconscionable conduct” associated with contingency fee litigation continues. Or at least it did, right up to the 2016 holiday season, when Judge Clive Plasket delivered his mid-December judgment in a shocker of a case.
Heard in the high court, Grahamstown, it involved a claim by Zama Mfengwana against the Road Accident Fund. Exactly what happened to Mfengwana isn’t clear as you can see from this exact transcription of the key paragraph in the particulars of claim put up by Mfengwana’s attorney: “ON OR ABOUT 12 SEPTEMBER 2014 near 113 Zone 3 at Ezibeleni coming from a meeting on our way to Taxi rank walking on the side of the road there came a vehicle on high speed with registration numbers and letters FYG 416 EC NISSAN BAKKIE colliding with us .plaintiff just head a sound as it crushed to another vehicle parking outside correctional services centre with my plaintiffs leg attached to that Bakkie , Lost consciousness and was taken by the Ambulance to KOMANI HOSPITAL where was treated for the injuries sustained.”
Settlement
Judge Plasket, who quoted this paragraph to illustrate that the quality of work by Mfengwana’s attorney, Bulelani Rubushe, “leaves much to be desired”, was not given much chance to sort out what happened in the accident as the two sides settled the case. All the judge was asked to do was to make this settlement an order of court.
However, when he heard that Mfengwana had a contingency fee agreement with his attorney, the judge said he had to see the contract as well as the affidavits from attorney and client required by law where a settlement is reached in a contingency fee matter. (When a matter is to be settled, the law requires both the lawyer and the client involved in a contingency fee agreement to sign affidavits giving certain crucial details as well as indicating the client has given informed consent to the settlement.)
Detecting serious problems with the contract, the judge then ordered Rubushe to show why the entire contingency agreement between him and Mfengwana should not be set aside. Again ordered to file the crucial affidavits, Rubushe has to date still not done so. Nor was any argument put up before the judge as to why the contingency fee agreement should not be scrapped.
Gross unfairness
Central to a valid contingency fee agreement is the question of how much the lawyer involved will be paid. If the client loses, the attorney is not entitled to any payment but in exchange for that risk he or she is entitled to charge higher than usual fees if the client wins. To prevent gross unfairness by way of legal fees that wipe out a client’s compensation, the law clearly stipulates how much may be charged: No more than double the normal fees charged by the attorney, but even this is not to be more 25 percent of the total amount awarded to the client.
If contingency fees charged do not comply with the provisions of the law the contract is invalid. As the judge commented, “Strict compliant with the Act is necessary to prevent abuses on the part of unscrupulous legal practitioners willing to take advantage of their clients – a phenomenon that is, in my experience, unfortunately all too common.”
Abuse was widespread, and in Grahamstown a local costs consultant was “so alarmed by the abuses he has come across in the course of his work that he wrote a detailed memorandum to the judges”. According to Judge Plasket, the judges have now set up a committee to consider the problem and how best to respond.
“This is all cause for grave concern and, if I am correct, a manifestation of endemic corruption in the attorneys’ profession.” He therefore arranged that a copy of the Mfengwana judgment would be sent to the Cape Law Society so that it, “as custodian of the ethical standards of the profession in the public interest, may consider ways and means of stopping the rot.”
Perfunctory
In this case Rubushe charged 25 percent of the R900 000 damages awarded, or, to be precise R226 222.30 However, the particulars of claim were just four pages long, with one page taken up by contact details. The plea itself was also just four pages, and again the fourth page consisted of just the formal details of the parties. Given this amount of work, and the quality of the work performed – illustrated by the bizarre and inadequate particulars of claim – the fee charged was grossly disproportionate and amounted to overreaching “on an outrageous scale.”
The law allows an attorney to charge no more than double the normal fee, and obviously very little time could have been spent on such a perfunctory set of documents. Thus Rubushe would have been entitled to far less than 25 percent of the award.
Having declared the original agreement invalid, what was the judge to do next? He was satisfied that the settlement was fair to Mfengwana, but what about the attorney’s fees? Since the contingency fee agreement was invalid the common law should apply, with Rubushe being entitled only to “a reasonable fee in relation to the work performed”. As to what would be “reasonable” under the circumstances, the judge ordered that the attorney’s fee be established by the high court taxing master.
The judge concluded, “This is yet another case in which an attorney – an officer of the court who is supposed to act with integrity and comply with the highest ethical standards – is guilty of an attempt to grossly overreach his client, or rapacious and unconscionable conduct. Unfortunately, in this jurisdiction, this is a problem that is all too common. That said, however, it seems to me that the problems in relation to contingency fee agreements that come to the attention of the courts are, in all likelihood, but the tip of the iceberg.”
Justice
Over-reaching, often coupled with shoddy work, has obviously become a serious problem, with unscrupulous attorneys using contingency fee agreements to fleece the public. So here’s my take on it: the Mfengwana judgment could be a turning point if the legal profession really wanted to gain control over “rapacious and unconscionable conduct” by some of their colleagues. Rubushe is likely to be awarded a fraction of what he originally expected in terms of his unlawful agreement with his client – a lesson to him and to other lawyers considering how best to rip off the public. The law society will be sent a copy of the Mfengwana decision; if it publishes the findings widely among its members and takes strong, well-publicised, action against Rubushe that will also help. It will be interesting to see what the Grahamstown judges’ special committee on the issue suggests. But meanwhile, corrupt high fliers in the legal profession will find their wings clipped if, at settlement in contingency fee cases, every judge in this country scrutinised the underlying agreements with the detail and passion for justice shown in the Mfengwana case.