Wind­ing up of law firm prompts call for claims

For­mer clients of dis­graced per­sonal in­jury lawyers Ron­ald and Dar­ren Bobroff should, if they sus­pect they were over­charged, not waste time check­ing if they have a claim, writes THE NUB OF THE BOBROFF CASE

Weekend Argus (Saturday Edition) - - GOODPUZZLES -

The cu­ra­tor of Ron­ald Bobroff & Part­ners is work­ing to­wards wind­ing up the prac­tice af­ter the firm’s two key di­rec­tors were found to be over­charg­ing road ac­ci­dent vic­tims for claims against the Road Ac­ci­dent Fund (RAF). They now stand ac­cused of fraud and money laun­der­ing.

Clients of the prac­tice who have been awarded money by the RAF will be paid their set­tle­ments and may have their le­gal fees re­duced. In light of this, for­mer clients who sus­pect they may have been over­charged in the past need to as­cer­tain whether they have a claim against the firm and lodge it be­fore it is wound up.

Jo­han van Staden, the head of mem­ber af­fairs at the Law So­ci­ety of the North­ern Prov­inces, was ap­pointed cu­ra­tor of Ron­ald Bobroff & Part­ners soon af­ter the founder, Ron­ald Bobroff, and his son Dar­ren, both di­rec­tors of the firm, left the coun­try. The pair fled to Aus­tralia in March af­ter be­ing in­formed by the Direc­torate for Pri­or­ity Crime In­ves­ti­ga­tion (the Hawks) that they should present them­selves for ar­rest on charges of fraud and money laun­der­ing and pos­si­ble theft of money that should have been held in trust.

The state is set to in­sti­tute ex­tra­di­tion pro­ceed­ings against the Bo­broffs. Re­cently, fraud and money laun­der­ing charges against Ron­ald Bobroff ’s wife, Elaine, were dropped.

The Hawks’ de­ci­sion to charge the Bo­broffs fol­lowed a court ap­pli­ca­tion to have the fa­ther and son struck off the roll of at­tor­neys by for­mer clients who al­leged they had been over­charged af­ter the Bo­broffs rep­re­sented them in a claim against the RAF.

As a re­sult of the ac­tion in the Pre­to­ria High Court, the Law So­ci­ety of the North­ern Prov­inces in­spected the Bo­broffs’ firm, and its in­spec­tors found con­tra­ven­tions of the In­come Tax Act, the VAT Act, the Com­pa­nies Act, the At­tor­neys Act and the Rules of the Law So­ci­ety.

The Law So­ci­ety then launched its own ap­pli­ca­tion to have the Bo­broffs struck off the roll of at­tor­neys, but asked the court to sus­pend them first to al­low them to de­fend the ap­pli­ca­tion.

In April, the Pre­to­ria High Court sus­pended the pair, pend­ing the hear­ing of the Law So­ci­ety’s ap­pli­ca­tion to strike them per­ma­nently from the roll.

Van Staden says that as part of the wind­ing up process, he is as­sess­ing what the firm earned in le­gal fees and in­ves­ti­gat­ing all claims against the prac­tice to de­ter­mine whether there is suf­fi­cient Many claims against the Road Ac­ci­dent Fund (RAF) are lodged by per­sonal in­jury at­tor­neys act­ing on a no-win, no-fee ba­sis.

The Con­tin­gency Fees Act pro­vides for an at­tor­ney work­ing on this ba­sis to charge dou­ble his or her nor­mal fee based on the time spent on the case, or 25 per­cent of the set­tle­ment, which­ever is lower.

When rep­re­sent­ing clients claim­ing from the RAF, Ron­ald Bobroff & Part­ners charged more than the Act al­lowed and claimed that they were en­ti­tled to do so be­cause their fee agree­ments were com­mon-law ones.

How­ever, in 2013, three High Court judges ruled in an ap­pli­ca­tion brought by the South African As­so­ci­a­tion of Per­sonal In­jury Lawyers, un­der Ron­ald Bobroff’s pres­i­dency, that lawyers may not en­ter into agree­ments with their clients that do not com­ply with the Con­tin­gency Fees Act. Ap­peals against the judg­ment were de­nied.

Bobroff & Part­ners were then found to have con­tra­vened the Con­tin­gency Fees Act in a num­ber of cases brought by Jo­han­nes­burg at­tor­ney An­thony Mil­lar.

The courts that heard those cases or­dered the lawyers to draw up in­voices based on the time spent on the cases and re­im­burse their for­mer clients the dif­fer­ence be­tween these costs and the le­gal fees they charged.

Ron­ald and Dar­ren Bobroff al­ways main­tained that they be­lieved they were al­lowed to charge more than the Con­tin­gency Fees Act, be­cause the Law So­ci­ety of the North­ern Prov­inces had sought le­gal opin­ion and given them to money to meet the firm’s li­a­bil­i­ties. He says ini­tial indi­ca­tions are that there are suf­fi­cient funds to meet the claims, but a pos­si­ble liq­ui­da­tion of the firm by its cred­i­tors, as fur­ther claims arise, can­not yet be ruled out, he says.

Al­though one of the firm’s di­rec­tors, Stephen Bezuiden­hout, is still able to prac­tice, he, too, has been charged with fraud, and the Law So­ci­ety is seek­ing to have him also struck off the roll. Van Staden says Bezuiden­hout has in­di­cated that he does not want to con­tinue the prac­tice, but is as­sist­ing Van Staden with its wind­ing up.

CUR­RENT CLIENTS

The cu­ra­tor is con­tact­ing the prac­tice’s clients to give them the op­por­tu­nity to be­lieve that they could en­ter into com­mon­law fee agree­ments. Ron­ald Bobroff served as a coun­cil­lor of the Law So­ci­ety when it formed this view and was pre­vi­ously its pres­i­dent.

Many other per­sonal in­jury at­tor­neys also en­tered into com­mon-law fee agree­ments rather than com­ply­ing with the Con­tin­gency Fees Act, be­cause this was less ad­min­is­tra­tively bur­den­some. If they charged more than 25 per­cent of the set­tle­ment, the fees would have con­tra­vened the Act, but if they charged 25 per­cent of the set­tle­ment, the amount may be re­garded as un­law­ful if it was more than twice their nor­mal fees. This is more likely where large set­tle­ments were awarded.

Mil­lar is now the pres­i­dent of the Law So­ci­ety in the North­ern Prov­inces.

Asked if the Law So­ci­ety would take any ac­tion to seek out mem­bers’ clients who may have been over­charged, Mil­lar said there are 250 000 RAF set­tle­ments a year and Law So­ci­ety did not have the abil­ity to go through these set­tle­ments to check how much ac­ci­dent vic­tims were charged by their lawyers.

He urges any­one who be­lieves they may have been over­charged by their at­tor­ney to ap­proach a new at­tor­ney for as­sis­tance quickly, be­cause claims for fee re­funds could pre­scribe in Fe­bru­ary next year, three years af­ter the Bo­broffs ex­hausted their ap­peals in court cases on the law­ful­ness of fee agree­ments be­yond the Con­tin­gency Fees Act. ap­point new at­tor­neys. He says many of them are choos­ing to ap­point Taitz & Skikne At­tor­neys, the le­gal firm to which Bobroff and his son at­tempted to sell the prac­tice when they faced be­ing struck off the roll. The Pre­to­ria High Court, when it heard the ap­pli­ca­tion by the Law So­ci­ety, or­dered Taitz & Skikne not to pro­ceed with the sale and or­dered that any trans­ac­tions that had al­ready taken place be set aside.

The High Court’s or­der does not pre­vent you, as a for­mer client of Bobroff & Part­ners, from ap­point­ing Taitz & Skikne as your new at­tor­neys.

SET­TLED CASES

Van Staden will en­sure that clients of Ron­ald Bobroff & Part­ners whose cases against the RAF were set­tled but who have not yet been paid, will be paid out. The set­tle­ments are safe, he says, be­cause these funds are kept in trust, sep­a­rate from the fi­nances of the firm and un­af­fected by claims against the prac­tice.

When he fi­nalises pay­ments to clients who are owed the pro­ceeds of a set­tle­ment, Van Staden says he will as­sess any le­gal fees owed to Ron­ald Bobroff & Part­ners to en­sure the charges are ap­pro­pri­ate and to ad­just them if nec­es­sary.

Jo­han­nes­burg at­tor­ney An­thony Mil­lar, of Nor­man Berger & Part­ners, says he in­sti­tuted about 20 cases of over­charg­ing against Bobroff & Part­ners and ob­tained court or­ders in all of them. When the Bo­broffs were still in South Africa, they fought ev­ery case, but Van Staden has since set­tled a num­ber of cases, he says.

The amounts in­volved in many of the cases still need to be quan­ti­fied, Mil­lar says.

Van Staden has promised to “ap­ply his mind to the cor­rect fees that should be charged” and is us­ing a cost con­sul­tant to ver­ify es­ti­mates of the time spent on cases by the Bo­broffs. Clients will be ad­vised of their rights, he says.

FOR­MER CLIENTS

Van Staden says he is in no po­si­tion to de­ter­mine to what ex­tent Ron­ald Bobroff & Part­ners may be li­able for over­charg­ing other for­mer clients who have not yet in­sti­tuted cases. He ad­vises for­mer clients who be­lieve they have paid too much in le­gal fees to de­cide whether to con­tact his of­fice or ap­proach an at­tor­ney for in­de­pen­dent le­gal ad­vice.

Where mat­ters are older than three years, he says there may not be sup­port­ing doc­u­ments, be­cause the Bo­broffs de­stroyed the older files. Trust ac­count records and in­voices should have been re­tained for five years, but records of the time spent on cases may have been de­stroyed, he says.

Mil­lar says for­mer clients of Bobroff & Part­ners are still ap­proach­ing him.

If Bobroff & Part­ners does not have the money to pay all the claims against it, for­mer clients who have been over­charged may con­sider claim­ing from the At­tor­neys’ Fi­delity Fund.

The chief ex­ec­u­tive of the At­tor­neys’ Fi­delity Fund, Mot­latsi Molefe, says the fund does not en­vis­age be­ing held li­able for any claims aris­ing from the con­duct of the Bo­broffs.

How­ever, any party who be­lieves he or she has been short-changed or the vic­tim of theft is free to lodge a claim against the fund. Claims will be as­sessed in­di­vid­u­ally to es­tab­lish whether theft was com­mit­ted or not. If a loss as re­sult of theft is es­tab­lished, the fund will be li­able, he says.

As is re­quired by the law gov­ern­ing the fund, a claim will be en­ter­tained only if at­tempts to re­cover the loss from all other par­ties who are li­able in law have taken place, Molefe says.

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