Lawyers suit up
The firm’s legal insurance subsidiary’s failure to pay clients has forced Namibia’s financial regulator and law society to get involved
Namibian investment company Trustco is causing some consternation among the legal fraternity in that country.
Correspondence seen by the Financial Mail shows a desperate effort by a group of legal firms to secure payment from Trustco subsidiary Legal Shield for services rendered to policyholders.
Legal Shield — which offers affordable legal insurance to clients — is a large cog in Trustco’s operational structure.
Trustco announced late last year that it would sell 20% of Legal Shield to Us-based fund manager Riskowitz Value Fund for R1.2bn. That would imply a value of R6bn for Legal Shield when Trustco’s market capitalisation on the JSE is about R7.4bn.
ISG Risk Services executive Eben de Klerk, who represents a group of legal firms, says his clients have been unable to get full payment from Legal Shield Namibia for many months now.
“When inquiries are made for long overdue payments, the legal practitioners are simply informed that their mandates [on behalf of insured clients] are terminated often mid-trial.”
De Klerk says complaints have been lodged with the Namibia Financial Institutions Supervisory Authority (Namfisa) and the Law Society of Namibia.
In correspondence, De Klerk has urged Namfisa to do more than “engage” Legal Shield. “The allegations are that Legal Shield fails to comply with its contractual [and], more importantly, statutory duties, and a diligent investigation may very possibly find criminal conduct on the part of the insurer.”
He maintains that a proper forensic investigation should be conducted, including obtaining full details of all affected policyholders. He believes the number of policyholders whose legal fees are not being paid is in the hundreds. . . .
Trustco has countered that payment has not been made due to unethical conduct by certain legal practitioners. The company says: “[The insurance division] flushed out those lawyers trying to game their claims, and established stronger relationships with ethical lawyers, improving our service by a magnitude.”
But the Law Society, in a letter addressed to Trustco CEO Quinton van Rooyen, calls the company’s bluff by asking for evidence to be presented of legal practitioners acting unethically.
De Klerk says the Law Society has not received a reply, even with an extended deadline. The society has indicated that it will issue a press statement dismissing Trustco’s allegations if evidence is not presented shortly.