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Winding up of law firm prompts call for claims

Personal Finance

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.

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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 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.

The curator is contacting the practice’s clients to give them the opportunity to 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.

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.

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.

THE NUB OF THE CASE

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 believe that they could enter into common-law 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.

TIMELINE

2011

• Accident victim Juanne de la Guerre asks the Pretoria High Court to declare the fees she paid Bobroff & Partners for assistance with her claim against the Road Accident Fund (RAF) illegal.

• Accident victim Matthew Graham and his wife, Jennifer, lay a complaint with the Law Society of the Northern Provinces against Ronald and Darren Bobroff for overcharging when they deducted their fees from Matthew Graham’s RAF settlement.

2012

• The South African Association of Personal Injury Lawyers applies to the Pretoria High Court to have common-law contingency fee agreements that do not comply with the Contingency Fees Act declared lawful.

• The Grahams ask the Pretoria High Court to suspend the Bobroffs as attorneys and take over the disciplinary hearing against the Bobroffs, because the Law Society had not yet concluded it. Their legal representation is funded by Discovery, the administrator of their medical scheme, which had sought to recover Matthew Graham’s medical costs from his settlement.

2013

• Three High Court judges concur that lawyers may not enter into agreements with their clients that do not comply with the Contingency Fees Act. They also order Bobroff & Partners to draw up a bill of costs for De la Guerre and refund her the difference between this bill and what she was charged. Subsequent attempts by the Bobroffs to appeal to the Supreme Court of Appeal and the Constitutional Court failed.

2014

• The Pretoria High Court orders the Law Society to carry out an urgent inspection of Bobroff & Partners’ accounts and to report back within 30 days.

• Bobroff & Partners are ordered to repay R2.1 million to a former client, paraplegic Anthony de Pontes, who was overcharged for his claim against the RAF.

2016

• The Law Society’s investigation finds evidence that the Bobroffs failed to keep proper accounting records, overcharged their clients, did not properly put clients’ fees through a business account, employed various tactics to reduce their income tax and VAT liabilities unlawfully, and delayed payments to clients. It also found that Darren Bobroff had forged a business cheque in favour of client in order to pay it into his own bank account. The Law Society then launched its own counter application to Matthew Graham’s case to have the Bobroffs struck from the roll of attorneys, first giving the Bobroffs the opportunity to respond to the case against them.

• The Pretoria High Court orders the Bobroffs’ suspension from the roll of attorneys pending the Law Society’s application to have them struck from the roll and orders the sale of the Bobroffs’ practice to be stopped.

• Ronald and Darren Bobroff and Darren’s wife, Lisa, flee to Australia after being informed by the Directorate for Priority Crime Investigation 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.

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