Legal firms ripping off state - Ngoepe

Tax ombud Judge Bernard Ngoepe. (Pic: Gallo Images)
Tax ombud Judge Bernard Ngoepe. (Pic: Gallo Images)

Johannesburg - Retired judge Bernard Ngoepe has raised concerns about the exorbitant fees charged by legal firms when dealing with the state.

Ngoepe, who is also the country’s tax ombudsman, said in an interview recently that there was seemingly a concerning tendency of firms charging high prices for legal services rendered to government departments.

Government allegedly spent R1 billion on legal fees in the past financial year.

Having served the country’s legal fraternity with distinction for almost five decades, Ngoepe was at pains to point out two major issues that seem to plague the profession.

READ: SA's first tax ombud 'a true servant of the people'

“I must register publicly my concern about the seemingly – and I use the word seemingly – exorbitant fees charged by legal firms, especially when they are being asked by government to conduct forensic investigations.

“Secondly, I am concerned some of the expensive legal opinions given to government departments are not as good as they should be,” he said, tapping on the table in a bid to emphasise the point.

“They are just not good enough, they appear to be inaccurate and that concerns me,” he said, citing a 40-page legal opinion worth millions of rands.

He further pointed out that he hoped the country would achieve a balanced jurisprudence.

“In other words, balanced judgments that will lead us to the right direction and that can be achieved by a realistic, pragmatic interpretation and application of the Constitution,” said the soft-spoken judge, denying that he meant there was not enough sober judgement.

“No, I am not saying [that there are not sufficient sober-minded decisions in our courts], I am just saying we must always strive to interpret and apply our Constitution in a pragmatic and balanced way. I am saying we should continue to do that,” he said.

Government spend on litigation has been a major concern, with most prominent legal opinions paid for by the state not being acted upon and most cases that head to court being unsuccessful when challenged.

Government has allegedly spent almost R1 billion in legal services and that amount excludes that spent by parastatals.

Eskom, which has had almost 10 major investigations in as many years, said it spent R46 million on forensic investigations using 22 firms in the past financial year.

“Eskom appointed 35 law firms from its panel of attorneys against a spend of about R72.3 million across both civil litigation and legal opinions, with the former receiving more fees owing to Eskom having to defend its interest during the previous financial year.

“Eskom’s legal cost as a percentage of revenue falls in the 50th percentile of the global peer group and is relatively comparable to the local peer group,” Eskom’s media desk said.

Another major parastatal, the Passenger Rail Agency of SA (Prasa), paid R184 million in legal costs and a further R152 million on forensic investigations.

However, one of Prasa’s most recent forensic investigations, conducted by Werksmans Attorneys, cost the company more than R130 million.

The investigation was a major bone of contention between the board and the transport minister and is yet to yield a single significant conviction.

Despite numerous requests, the department of justice did not provide any figures.

White men still earn more

A recent report by the Law Society of SA (LSSA) has revealed how the lion’s share of money is still earned by white male advocates – even though they do not get the most work. 

The report revealed that state departments mostly give their work to black and white male advocates, while coloured female advocates get the least work in almost all categories. 

While state-owned enterprises (SOEs) give work to black male junior advocates and certain white male senior advocates, white male senior advocates are paid the most. 

All female advocates, with the exception of black female advocates, receive less work or no work from both government departments and SOEs. 

The LSSA commissioned the study to investigate the distribution of legal work between January 2015 and February 2016 by national government departments and SOEs. Of the 80 firms approached, only 20 responded. 

The study probed how government departments and SOEs distribute their legal work in terms of race and gender as well as the amount paid. 

Among the SOEs, the value of work given to white male advocates was almost three times more than that of Indian males, while black male junior advocates earned four times less than their white male counterparts. 

Professor Tsili Phooko, who conducted the research, said the report overall showed that even though white firms and white males get less work, they earn the lion’s share of the money. 

The report recommended that a body responsible for reporting be established and that it must ensure work is consistently distributed to all law firms and across all the races. 

It also recommended that a similar study be conducted in the private sector to “ensure that the distribution of legal work in all sectors of society is made known to the general public and monitored”. 

A multistakeholder action group, which includes representatives of the LSSA, General Council of the Bar, Advocates for Transformation, and the department of justice and constitutional development, was formed during last year’s summit on briefing patterns and has drafted an industry procurement protocol that is set to be signed later this month.

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