Sticky fingers leave legal fund in peril

2013-03-03 10:00

The multibillion-rand fund that is supposed to protect the public from thieving lawyers is in trouble.

In a shock submission to Parliament last week, the chief executive of the Attorneys Fidelity Fund, Motlatsi Molefe, revealed that a record R117 million was claimed from the fund last year.

Molefe said that just 23% of the fund went towards its core purpose, settling claims.

The bulk of the money, 60% of the fund’s expenditure, went to funding law societies that govern the profession.

Claims against the fund have spiked since 2008, when just R32?million was paid out.

Molefe told the parliamentary portfolio committee on justice that those who insisted attorneys should remain in control of the R3.7 billion fund were arguing for “the fox religiously, righteously asserting its right to guard the henhouse”.

City Press understands that a recording of Molefe’s speech, made during his submission on the Legal Practice Bill last week, was distributed by email among members of the fund’s board.

The leaders of South Africa’s law societies, including the Black Lawyers Association and the National Association of Democratic Lawyers, are also understood to have received it.

Legal sources say that leaders of the Law Society of SA, also present in Parliament, were shocked by Molefe’s speech. A meeting between the law society and the fund’s board has been called to discuss the matter.

In line with the Attorneys Act, the board consists of lawyers who are nominated by the various law societies that govern the profession.

The Legal Practice Bill envisions a new, five-person board in which two members would be appointed by the justice minister.

But in his speech on the bill, Molefe called for the new laws to make provision for more members of the public to serve on the fund’s board and for its greater independence.

He said: “It boggles the mind why, if these are public funds, members of the public are not going to be party to the decisions regulating the funds.”

The fund, as currently constituted, receives its money from contributions made by the profession and from interest earned on money held on behalf of clients in attorney trust accounts.

Citing the fund’s forensic reports, Molefe raised concerns in Parliament that if the escalation in claims against attorneys continued at the current rate, the fund would not be viable in the next five to 10 years.

He also asked for the size of claims to be capped, because a single massive claim could wipe out the fund entirely.

“If a big mergers-and-acquisition transaction takes place that runs into billions, and the attorney dealing with it in South Africa decides it’s time he took his pension fund in billions and goes to the Cayman Islands, the fund will be wiped out,” said Molefe.

He has argued for more independence for the fund, saying it “should never be held hostage to the consent of the law societies”.

In an earlier submission on behalf of the National Association of Democratic Lawyers, Max Boqwana, the association’s vice-president, admitted that disciplinary steps taken by law societies against members who had stolen money were “quite slow”.

“We’ll lay a complaint against a member and the member might be dilatory in responding to that complaint and raise all sorts of technical issues,” Boqwana told Parliament.

But Molefe said law societies were soft on members because there was a “feeling of collegiality” among them. He said he had received complaints from victims of theft by attorneys that their cases were not being addressed.

“I then have to phone a particular society to find out what they’re doing about this and you’ll often find (the claim) runs into millions. It’s not chump change,” he said.

Black Lawyers Association president Busani Mabunda confirmed that a meeting about Molefe’s submission would be held next Friday, but declined to comment further.

Molefe declined to be interviewed.

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