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Ronald Bobroff silenced by the Constitutional Court

In a landmark ruling by the highest court in South Africa, the Constitutional Court has finally laid the issue of contingency fees to rest when they ruled against Ronald Bobroff & Partners and the South African Association of Personal Injury Lawyers (Saapil) on 20 February 2014.

The issue

Contingency fees are regulated by the Contingency Fees Act of 1999 (The Act). The Act points out that, if a client is successful in claiming money back from the RAF, the attorney representing the client will be entitled to a fee that is either equal to, or higher than his/her nominal fee.

This entitlement comes with the provision that it will be awarded as long as the fee is not more than double the attorney’s nominal fee or 25% of the amount claimed from the RAF, depending on which is the smaller amount of the two.

Certain attorneys, of whom Bobroff was one of the guilty parties, have been entering into what they label as common law contingency fee agreements where the fees agreed to exceed the parameters governed by The Act. These attorneys claim that they are entering into these agreements under the premise that the Law Society of Northern Provinces has given them permission to do so, provided that the fees agreed upon were fair and reasonable.

It must be pointed out that Bobroff is a past President of the Law Society of Northern Province and is the current President of Saapil.

Effects on the medical schemes industry

When a person is successful in claiming money back from the RAF, their medical scheme is entitled to a certain percentage of that payment in order to cover the medical expenses incurred by it during any hospitalisation or subsequent treatment.

Discovery Health tried to recover such money from a policyholder after the policyholder did not reimburse the money that was owed. The policyholder was a client of Ronald Bobroff & Partners and Discovery was alerted to the fact that Bobroff may be charging his clients excessive contingency fees.

Discovery investigated the allegations surrounding Bobroff and found that he was charging excessive fees. It then paid for the legal fees of the Graham case in order that they can recover the excessive fees from Bobroff.

Discovery Health CEO, Dr Jonathan Broomberg, says that the Constitutional Court ruling has significant ramifications for the industry. "Discovery Health will endeavour to identify and contact all Discovery Health members who may be affected by this ruling. We would also encourage all brokers to contact any of their clients who may have claimed from the RAF following a motor vehicle accident and who may potentially be affected by the Constitutional Court rulings."

The ruling means that Ronald Bobroff & Partners may be liable to pay back all monies illegally misappropriated by the company through common law contingency agreements. The statement of intent by Discovery Health, if followed through, will result in Bobroff being liable to pay back what Broomberg describes as hundreds of millions of rands.

For the full version of the article and readers’ comments, please visit our website at www.fanews.co.za.