13 June 2008

Law Firms and Overcharging

If you ever wondered why lawyers and law firms have a bad reputation then it is cases like this one that provide the bad rap! NSW's largest specialized personal injury law firm is fighting allegations that it has overcharged clients and falsified documents to claim larger portions of any compensation payments awarded to their clients.

The firm is Keddies Lawyers. I used to have to walk passed them to get to my office at the Sydney Regional Aboriginal Corporate Legal Service. Maybe they have moved to bigger premises or something. It seems that they could afford it.

I am not against lawyers making money but they need to do it fair and square like everyone else. However, it must be noted that so far that Keddies has not been found guilty of any breaches to date but within the last 18 months there have been some 25 claims placed with the legal regulator by unhappy Keddies clients and some of these are still pending.

Allegations and claims are flying thick and fast from all sides. A respected NSW Barrister, Geoffrey Watson SC, says it is one of "the worst allegations of overcharging I have ever heard." It is his view that legal fees should not regularly exceed compensation by a factor of two or more. If legal fees do exceed compensation in this way on a regular basis then there is something inherently wrong in the way fees are levied.

Some of the allegations include Keddies charging some AUD 800,000 in fees on an AUD 3.5 million payout. Other allegations include fees of AUD 215,000 on a payout of just AUD 300,000, meaning that Keddies charged almost 72% of the payout in fees. However, the case that resulted in the raft of allegations was the case involving Gu Xi Liang. He claims to have been talked into agreeing to settle his case for AUD 50,000 in 2006. However, he was later to find out that Keddies had settled on hos behalf for AUD 300,000 and then claimed AUD 250,000 in fees and expenses. This means that the victim here received just 20% of the payout.

Strangely, Keddies has started repaying former clients who have lodged complaints with the Office of the Legal Services Commissioner. To date some AUD 500,000 has been paid including payments of AUD 40,000 and AUD 60,000 to the daughter of Gu. Russel Keddie, the Managing Partner, does not accept that these payments are in any way an admission of wrong doing but rather they are simply a good will gesture to a particularly unhappy number of clients. The above photo is of Russell Keddie and Mr. Gu.

Keddies are maintaining that they have acted ethically at all times and I guess the investigation process will determine the validity of that claim. However, one of the allegations includes a time sheet where the relevant lawyer, David Marocchi, has billed 22 hours of his time on one day and billed fees of some AUD 9,500 for those hours. Marocchi has denied that he has falsified documents and palmed of the allegations as typing errors and duplicate entries. Sounds like a deer caught in the headlights to me. The classic example of the kid caught with his hand in the cookie jar.

Whether Keddies is guilty or not of any breach of the law is in someways secondary to the investigation process. The investigation must be above board and let the cards fall where they may. The reality is that the only way to restore confidence in the profession is to see that the rules are applied and wrong-doing is punished.

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