"Ill Disciplined" Lawyers?: Australian Examples...

Can lawyers "inadvertently" overcharge their clients? Lawyers in Australia have very explicit obligations when dealing with client money. There are also supposedly very explicit "rules" regarding how much clients can be reasonably billed and charged for legal work performed in the pursuit of justice or a claim. The biggest of these cases of recent infamy has been related to the work of Keddies Lawyers in Sydney. However, the issue is one that extends way beyond a solitary law firm.

Richard Ackland has written an excellent piece on this phenomenon, and I use the same examples here (with my own spin attached).

For example, a case involving the survivors of the Voyager disaster saw one victim receive a payout of just AUD 72,000. This seems fair enough until one learns that the government actually forked over an amount of AUD 412,000 to settle the claim. Yes, AUD 340,000 was eaten up in lawyers fees and disbursements. My math is not all that good, but by my reckoning the victim received just 17.5% of the compensation paid after fees and expenses.

An investigation of the fees billed and charged to the victim / client in this case found that the victim had been charged twice for the same work, that discounts provided from barristers for work on the case were not passed on, that this client was billed for work that was also billed to other clients, and that "work" on the case saw more than 24 hours billed in one day!

According to the Victorian Supreme Court this was not deliberate, but rather the consequence of a lack of attention to detail by the lawyer involved. Therefore, the inadvertent lack of attention to detail is just one of those things that happens? Doesn't the community expect that lawyers must be held to a higher duty of care when dealing with trust monies in their client accounts? And, isn't this expectation a reasonable one? The excuse that there was an inadvertent lack of attention to detail is akin to "But, Your Honour, I was drunk so I though her 'no' was really a 'yes'!" Perhaps an even more pressing question is "Your Honour, if the inadvertence is continual, then is this not a pattern that suggests there is an underlying intent to steal from client trust monies?"

Yet, the cases to date on lawyers over-charging their clients and mishandling client trust monies reads like a script of "how to protect your own". The NSW Court of Appeal found in a case against Leon Nikolaidis that the overcharging could not have been deliberate because his secretary sent out the letter of account. How convenient is that excuse? Seriously, if the lawyer signed off on that letter of account then the presumption must be that the lawyer read the letter and is therefore responsible and accountable for the content of the letter, right? Anyone else that signs a letter voluntarily yet fails to read its content would be held responsible for what that letter contains.

Why should it be different for lawyers?

The Keddies Bill

Here is part of the Keddies bill for services rendered. It can be found here in full. The head shot is that of the founding partner Russell Keddie.

Keddies -- The Saga Continues

You have to wonder about some lawyers who continuously take their clients to the cleaners and expect to never get found out. Keddies lawyer Philip Scroope has been accused of charging almost AUD 600 to travel less than 2 kilometres for a conference. Scroope is also accused of charging AUD 60 to write a welcome letter to a client who decided to use Keddies services. Scroope's then went on to charge AUD 49 to read an e-card thank you from the same client, and then a further AUD 49 to tell the client he was going on holiday and would be out of the office.

The icing on the cake for me is that the client was charged AUD 98 for a phone call he made from his own phone.

Keddies are undoubtedly going to claim that everything is above board and no over-charging has taken place. Nevertheless, this particular client has already had some of the fees and charges levied by Keddies refunded. Providing a refund is hardly commensurate with guilt however where there is a pattern forming of consistent refunds to clients then one wonders is this indicative of a firm culture that consistently over-charges and then refunds if there is a complaint? I guess this is something for the Legal Services Commissioner to work out.

I guess personal injury law is a very lucrative field based on the sort of money that Keddies has been able to charge over a long period of time.

Keddies Lawyers -- An Update

Today's Sydney Morning Herald is reporting that the allegations against Keddies Lawyers for professional misconduct, which includes falsifying documents and overcharging, is drawing many past clients out of the proverbial woodwork and many of these former clients consider themselves to be victims and have supporting evidence to "prove" their claims.

The claims of the clients will still have to go through the mill so to speak. It must be noted that none of the allegations are yet to be proven against Keddies. Nevertheless, the most recent former client to come out of the woodwork, Ms. Hsu Li Ching (photo), who has stated unequivocally that she was asked to sign forms that included blank spaces for compensation amounts to be claimed and paid as well as blank spaces for dates and other important information.

Ms. Hsu has received compensation cheques totalling some AUD 130,000 but she is unsure whether this represents the total amount awarded or it is the amount she receives after Keddies fees and expenses are deducted. I would be guessing this is the net amount after fees and other expenses have been deducted as a final bill was never sent to her with respect to the payout or the fees deducted.

The longer this goes on and the more digging that gets done the more horror stories emerge. Another former Keddies client received less than a third of her AUD 150,000 payout after Keddies fees and expenses were deducted. The client in this case was a Ms. Cissy Chen who after suffering her compensation claimable accident returned to Beijing. Keddies sent its then Chinese Liaison Officer to Beijing to get signatures on documents and Ms. Chen was one of the clients that were alleged to have signed documents.

It must be noted that the Chinese Liaison Officer in this instance is an Australian Citizen, Mr. Lee Sheng. Mr. Lee is now involved in a legal dispute with Keddies as he has since been dismissed from his Keddies employment. However, the signature of Mr. Lee appears on the forms supposedly signed by Ms. Chen but unfortunately when the dates signed are compared to Mr. Lee's passport one finds that Mr. Lee was not even in Beijing on those dates.

In conjunction with the earlier post it is clear that a pattern of overcharging is emerging. It is going to be interesting to see how Keddies justifies fees that are regularly taking upwards of 65% of the compensation payments awarded to Keddies clients.

I guess the Office of the Legal Services Commissioner still has some work to do yet in order to finalize the complaints against Keddies Lawyers and particularly the claim by Russell Keddie that his firm has never demanded that clients sign forms with blank spaces.

Watch this space...

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.