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RAF cash flow crisis

I get a lot of queries from clients, including clients with other attorneys as to the problems being experienced in RAF matters.  The biggest problem right now is the issue of the Road Accident Fund taking so long to make payments.  Some people struggle to believe that their attorneys are telling them the truth when they tell them that some cases can take as long as 8 or 9 months to be paid, and that is just the capital payment in a matter and not the party and party cost refund.  It is an issue that has been reported by the media, but perhaps not as widely as it could have been and it certainly helps clients if they are able to Google on search terms such as “RAF cash flow crisis” or “Road Accident Fund payment problems” and see articles about this themselves.  

The bottom line is that at the current time the Road Accident Fund has a deficit of approximately R9 billion and they estimate that it will grow to R11 billion by the end of February 2016.  It does not mean somebody must not do a claim, or that they will never be paid – it just means that when their case is finalised they have to be patient and understand that there is a limit to what their attorney can do.  It is easy for people to say that one should send in the Sheriff, but when one sends in the Sheriff the Road Accident Fund claims that their assets have already been attached by another attorney, and that their assets largely constitute computers which they need to make payments.  It certainly will not help anybody if an application is brought and ends up resulting in payments being suspended, and so it really requires patience by everybody involved in this work.  Personally I would like to see the CEO of the Road Accident Fund, Dr Eugene Watson, reconsidering his approach of paying the least injured and smallest cases first.  They focus on paying cases settled for R100 000,00 first and then delaying the bigger payments.  I am not sure what the purpose of that is, but I could speculate that that would get rid of probably 50% of the calls that they get complaining and by getting rid of all the smaller calls it might make it easier for them to deal with those complaints that they still get, but it is not fair to those who need the money the most and are the most severely injured in an accident and I really do think that they need to reconsider this approach.  

Posted by Michael de Broglio on Tuesday 24-Nov-15   |  Permalink   |  11 Comments  Comments
Studying law

This is going to be another negative article of mine about studying law, but I want to emphasise before I begin it, that there are exceptions to everything.  Somebody with a good brain and who is hard working and with excellent client liaison skills will always do well in any field, no matter how many challenges they face.  

One cannot however ignore that unfortunately law degrees have become far too popular, especially after they were made much easier to obtain when you no longer had to get an under-graduate, or first degree first, before studying a law degree. The advantage of having that first degree is that you have a chance to get an education, to study various other subjects and not just learn about a very narrow field of law.  Too many younger attorneys being admitted to the profession have a very little idea as to what is going on in the world and I think to be a good attorney, you do need to have an idea of what is going on in business, politics and the world you live in and be able to adapt to it.  Those who do not read newspapers or at least the news online, are very unlikely, in my opinion, to succeed, and I can say without exception that the successful attorneys as well as advocates that I know are equally conversant on the law as they are on what sport event took place on that day, what the latest in South African politics is, the world economy or other such issues.  There may be exceptions to that, but I have not come across them yet.  

The challenges that the legal profession face is a continuing stream of new entrants into the legal field, while so much work is being taken away from attorneys and other areas are under constant threat such as personal injury law.  Even when they are not under threat, they face the spectre of legal fees being reduced at the very same time that overheads are rising.  I don’t think it is too far away from the day when you go shopping at a Pick ‘n Pay Hypermarket for example, that there will be two or three attorneys sitting in the entrance who disburse a quick 15 minutes of advice to loyal shoppers, who have a membership card, on maintenance or various other issues.   I am bombarded with CV’s for people who wish to become either candidate attorneys or who have just been admitted as attorneys and would like a job with our firm.  Without exception they would obviously have a four year University degree and yet in training they seem to be earning an average salary of about R4 500,00 to R6 000,00 a month and as a beginner attorney, they are earning approximately R10 000,00 a month and a bit more if they are lucky enough to have started off at a busy and successful practice.  I am obviously not talking about the salaries at the big five or six major corporate law firms who take the cream of the talent from the law schools every year – only those with the very highest marks.  

I am talking about salaries being paid at average law firms all across the bigger cities like Johannesburg and Pretoria, which happen to pay far higher salaries than one would earn in Cape Town, Durban or smaller centres.  I think that that is all you need to know about the state of the legal profession – is it worth it to study for four years, then do one or two years of articles, write admission exams and once you have been through all of that, which could easily be 6 to 6 ½ years, to earn R10 000,00 a month?  The AMCU miners are after all demanding R12 500,00 a month and every law firm owner will tell you that he or she has a number of secretaries employed by him or her that earn more than attorneys.  All what these figures point to is a complete over-supply of people to a profession and we are producing far too many attorneys instead of engineers and possibly top policemen and policewomen/investigators who can reduce our crime and cut down our corruption.

A law degree is certainly very useful in business and more and more often it leads to attorneys, after a year or two in practice, joining corporate firms for a small increase over what they are earning in a law firm with the guarantee of benefits, etc.  That is a personal choice but I never studied law and obtained three University degrees just so that I could become a legal officer, consultant or compliance assistance in a corporate entity.  That is not what law is about to me and unfortunately there too, apart from those really brilliant individuals who have stepped into companies at senior positions, most of those going into that particular field, while initially getting a higher increase, will never be able to achieve what they could have, being a practicing attorney in a law firm .  That may to appear to contradict what I have just written – but it does not.  I began this article by saying that is that anybody who has ability and is hard working will get ahead despite the terrible challenges facing the profession.  But law schools and parents should really start trying to steer their children in a different direction at the moment and not putting them all into the same field!

Posted by Michael de Broglio on Tuesday 08-Apr-14   |  Permalink   |  6 Comments  Comments
RAF doing claims themselves

I think that most attorneys know about the dangers of the Road Accident Fund doing claims themselves. Not a week goes by when we do not receive some or other complaint about somebody who was represented by the Road Accident Fund and whose claim was either under-settled or was told that they had not issued a summons in time.  Another common complaint is that as a result of the advertising by the Road Accident Fund complainants approach the Road Accident Fund only to be told they don’t have a claim unless they are above 30% on the AMA Guidelines.  In some of those instances the people do not have claims but in many in fact they do.  

An article on IOL News recently caught my interest and you can read the article here:    http://www.iol.co.za/news/crime-courts/man-finally-gets-r1-5m-from-road-fund-1.1638299#.UvPCjPmSx8E
The matter involves a man who approached the Road Accident Fund directly and had his case settled for R38 000,00.  He eventually heard of other settlements from other people and approached a firm of attorneys which led to them suing the Road Accident Fund.  The Road Accident Fund tried to defend the matter on the basis that a summons had not been issued in the case – which of course is ludicrous, because when they are representing the client against themselves the onus is obviously on them to issue a summons on behalf of the client against themselves to stop prescription.  If that sounds ridiculous, then it is, because the whole thought of the Road Accident Fund doing cases other than, let’s say the smallest cases for refunds of past medical expenses and undertakings, is ludicrous.  In any event, he is quoted in the article saying that he genuinely believed that the Road Accident Fund would have his best interests at heart, as this was part of his mandate and ultimately the attorneys who took over the case, and this is not a case my firm was involved with in any way, succeeded in getting him R1,5 million.

Posted by Michael de Broglio on Friday 07-Feb-14   |  Permalink   |  11 Comments  Comments
Barristers in the UK to conduct litigation

It has been reported recently that, with effect from January 2014, barristers in the UK will be able to conduct litigation and share business premises with non-barristers. They will be able to take briefs from the client directly, without having to go through a solicitor first and the Bar Standards Board said, by their chairlady, that, “Superfluous rules have been stripped away and others modernised.” No doubt this will have some implications for legal practice in South Africa and one might see the referral rule dropping away for advocates in South Africa without an attorney being required. Whether most of the advocates would be prepared to practice like this is however quite debatable and it is unlikely that they would be interested in the nitty-gritty and often tiresome aspects of the day to day handling of somebody’s matter.

Posted by Michael de Broglio on Monday 19-Aug-13   |  Permalink   |  3 Comments  Comments
Contingency fees

Contingency fees are always in the news, and there has been steady a steady stream of judgments, some contradicting others, that to a large extent appear to be sounding the death knoll of common law contingency unless the Constitutional Court agrees with the Law Society. The Contingency Fees Act agreement is workable, but only if some of the recent judgments in that regard are not upheld later, because again they also differ and some of them are really based on erroneous assumptions, such as the recent judgment which referred to party and party costs in a typical High Court matter being only R15 000,00. Right now this is a terribly confusing field, which makes a speech that I have been asked to give at the Law Society’s AGM on Saturday, 10 November 2012, even more difficult to do, but I am going to give it my best shot and advise the 500 plus members that are expected to attend as to the latest developments.

Posted by Michael de Broglio on Wednesday 24-Oct-12   |  Permalink   |  2 Comments  Comments
DA issue a press release on the RAF “debt”

I saw that the DA, in the name of Greg Krumbock, issued a press release about the Road Accident Fund’s deficit which did not get much coverage, but seems to have gone out on 11 October 2012. The DA wants to improve the speed of payments to injured persons by allowing them to submit all their claims electronically at hospitals, which seems to ignore the entire process of obtaining medico legal reports and investigating how the injuries affect somebody’s life differently and in different circumstances.

They want to introduce a “different management model for this Fund” which pretty much sounds like most of Mitt Romney’s plans for America – anything that Obama has done is incorrect, but he is not going to be mentioning what the plan is and likewise the DA is not advising what their actual plan is. The one thing that they have picked up on is that they say, “Output per staff member has gone down and the claims processing has slowed.” This is something that attorneys have been saying for years, and much of the Road Accident Fund’s work is now “outsourced” by them to their own attorneys. Certainly, if they started using tenders and offers, particularly with suppliers’ claims, from the minute they are lodged with the RAF, they could reduce their costs considerably, but if the DA or anybody else wants to assist the Road Accident Fund I would imagine that the best way to do so is to tackle the problem of the suppliers’ claims, and to ensure that costs don’t get out of hand by making offers in matters sooner than they are now. In that regard I would bring in a specialised legal team, involving perhaps attorneys or even advocates on a contractual basis who have experience in this field of law and let them advise the Road Accident Fund on generous and quick tenders in matters so that legal costs do not have to be incurred, as they are now. The vast majority of the Road Accident Fund’s expenses could be reduced if only the Road Accident Fund got back to its job of actually settling cases quickly.

Posted by Michael de Broglio on Tuesday 23-Oct-12   |  Permalink   |  0 Comments  Comments
Delays in processing RAF claims

I see the Road Accident Fund is at it again, having meetings with people and explaining to them how they can do their claim directly. The theme of the reports in the media on the meetings is always about attorneys who either take all the money, take years to settle the claim or cheat the people in some or other way. I have no doubt that there are such attorneys, and unfortunately they seem to be more prevalent in outlying areas, perhaps because more urbanised clients simply don’t put up with the nonsense that you read about in some of these allegations, but the Law Society does deal vigorously and very aggressively with attorneys who don’t follow the rules.

On the other hand, I come across complaints all the time and comments on my blog at www.debroglio.co.za from people who have tried to do claims themselves with the Road Accident Fund and the general theme of those complaints is that: People who do have claims in terms of the new Act are told that their injury is too minor and that they don’t have a claim; people are not sent to all the experts that they should be to quantify their case properly; people’s cases are not settled by the Road Accident Fund in time or at all and lastly, when they are settled, they are settled for a fraction of what the case is actually worth. In other words, in my experience, somebody is far better off going to attorneys and be able to report their attorney to the Law Society if something goes wrong than going to the Road Accident Fund directly and not being able to report the Road Accident Fund to anybody at all! I believe that you will get better service and a better result by using an attorney but obviously if you have concerns about the attorney make sure, from their website and from doing proper research, that they are an established firm with a history of expertise in this field – and there really are many firms that fit that category.

Posted by Michael de Broglio on Wednesday 22-Aug-12   |  Permalink   |  4 Comments  Comments
Legal newsletter

I am very impressed with the growth of my legal newsletter over the years, which took over the Road Accident Fund newsletter which I used to write for the Johannesburg Attorneys Association. Moving it to legal newsletter allowed me to control when the newsletter was sent out, although it was largely autonomous when I was with the Johannesburg Attorneys Association in any event. The growth initially was of course quite high, and then it steadied off, but the membership has now just gone over 500 active registered users, which is not bad considering that I have removed a number of non-attorneys from the list. Attorneys who are interested in personal injury work can always join up at www.legalnewsletter.co.za.

Posted by Michael de Broglio on Tuesday 07-Feb-12   |  Permalink   |  2 Comments  Comments
Annual instalments from 1 March 2012

I came across an article with some horror from a tax partner of Grant Thornton on the Moneyweb tax site. The article, written by Neville Sweidan, can be read here, but essentially he advises attorneys that there are important amendment proposals coming in the Income Tax Act, with effect from 1 March 2012. The National Treasury proposes that compensation currently paid as a lump sum by the Road Accident Fund to victims should where possible be paid in periodic amounts spread out over several payments. I have drawn the attention of the LSSA to this and various other organisations and hopefully it will be put forward. In some blurb, they are trying to make it sound exciting, saying that in future the Road Accident Fund payments will be tax free and, “this periodic method of payment over an extended period spares victims from the risk of mismanagement of lump sum payments so as to cover victims and their families over long periods of hardship.”

Posted by Michael de Broglio on Monday 17-Oct-11   |  Permalink   |  0 Comments  Comments
Serious injury

The October De Rebus has a very interesting article by Professor Hennie Klopper on the issue of serious injuries. Professor Klopper argues in his article that you do not have to lodge the serious injury form, within the same time frame as you have to lodge a claim. He says that prescription of claims against the Road Accident Fund is governed solely by section 23 for identified claims and regulation 2 for hit and run claims. Section 23(3) and regulation 2(1)(c) do not mention any other forms – such as the serious injury form as having to be lodged within the time frame. He says that regulation 3(3)(b)(ii) is in conflict with sections 23 and 24 as the (ii) regulation implies that one would have to lodge it within the normal time frames, whereas regulation 3(3)(b)(i) implies that it can be lodged at any time before a claim has prescribed as provided for in the RAF Act which would then get to the longer time frame that one gets after having successfully lodged the initial claim. He says that the apparent conflict has to be interpreted in the least onerous effect which would then allow for lodgement of the RAF Form 4 before the extended prescription periods of five years from the date of the accident. Essentially he is saying that the required lodgement of an RAF Form 4 is not a new claim, called a “serious injury” but it just amends the original claim if it did not contain general damages. In other words, if you put an amount in your original claim for general damages, his argument is that the lodging of the RAF Form 4 merely constitutes substantiation of the claim in a similar manner to lodging medico legal reports in a case later. He does say that one should be cautious and adopt the approach of the Attorneys Fidelity Fund and the Attorneys Insurance Indemnity Fund and lodge within the three-year period (or two years for hit and runs) just to be careful but if you are out of time, you should nevertheless proceed to lodge a claim, because the points he makes may well be upheld by a Court later. 

As an aside, I noted that in one of my own matters, where we lodged the serious injury form with only one month to go, in terms of the normal period, that the Road Accident Fund raised an objection that MMI had not been reached and the form had been prematurely obtained. In other words, some 35 months after the accident, they are saying that we are lodging the form too early, and one must assume that standard letters of theirs in this regard could also be put before a Court as it may well indicate, to some extent, that they also support this view of Professor Klopper. Obviously, until there is some certainty on this issue, it would be prudent, as the Law Society recommends, to still try and lodge within the normal time frame.
 

Posted by Michael de Broglio on Monday 10-Oct-11   |  Permalink   |  0 Comments  Comments
Jacob Modise leaves the Road Accident Fund

As I reported in my legal newsletter, which you can sign up for at www.legalnewsletter.co.za, Jacob Modise left the Road Accident Fund rather suddenly, some 5 months ahead of when his contract expired. There is still no word on why he left and what possible disagreement, at the very least, took place, but when somebody leaves essentially immediately, and the communications manager is instantly appointed as the CEO, you can rest assured that there is a lot more to the story. Hopefully, in time it will come out and we will all be able to know what exactly lies behind the board publicly announcing, some 5 months before it was time to renew the contract, that they were not doing so and that the next day would be his very last at work.

Posted by Michael de Broglio on Saturday 06-Aug-11   |  Permalink   |  5 Comments  Comments
Sheriffs and lack of competition

The second there is any lack of competition, services drop. You can see it with Embassies, who have to grant visas, and have a could not care attitude, you can see it with state run entities such as Telkom, who repeatedly mess up my ADSL lines and could not be bothered to fix them up straightaway. Recently, I have discovered, for example with the Sheriffs, who have sole franchises essentially for each area, that when you give then a warrant of execution, in some cases they serve it two months later with the Road Accident Fund and still charge for it – even though they cannot collect any money because the Road Accident Fund rightfully say they have paid us in those intervening two months. It is astounding that somebody can try and charge for a service that they have rendered so late, that it no longer serves a purpose and it only happens when there is no competition and no alternative or choice for an attorney. It is about time that perhaps we have competing Sheriffs in different areas so that if the service of one is terrible, you can choose another.

Posted by Michael de Broglio on Friday 15-Jul-11   |  Permalink   |  2 Comments  Comments




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