Tuesday, November 17, 2009

How lawyers overcharge clients

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2 comments:

C H Yak said...

How lawyers overcharge their client is somehow supported by our legal process and system in Singapore and can be very unfair to a poor and weak individual who is on the right side of the Law.

I share this involving a relative's accident court case.

Some how corporate lawyers will induce the other party into a court fight so that they can collect more fees.

(i) Filing interlocutory agreement and judgment.

In an accident case involving a motorist and a pedestrian, with the motorist as the major party at fault, their lawyer (representing the Insurer) could rush to file an interlocutory judgment, say to agree on a certain percentage split of responsibility for settlement. Say motorist 70% and pedestrian 30% for contributory negligence. This 70% is actually lower than what the lawyer knew is fair compensation based on precedence. (say a judge had awarded 80% in a previous similar case). If the Plaintiff challenges this interlocutory judgment and cannot win a percentage higher than this split for whatever reasons, he ends up paying costs to the Defendant, the costs from the time he filed his writ till the hearing and judgment of this interlocutory application.

This is a common tactic by lawyers, because the victim sues on his own accord while the motorist is represented by the Insurer's lawyer. Commercially it is one way to cut costs for the Insurer while forcing the weak plaintiff to accept a lower award in terms of percentage.

Our Singapore legal system supports such "victimisation" of an accident victim, unless the victim risks a costly hearing. And although the legal process allows an appeal, it carries greater cost implications and more cost risks for the accident victim. I shall highlight on "nonsensical cross-appeal" and their hidden costs and overcharges later on.

After the victim has won the case and the split in percentage is applied, the Defendant's Insurer will have to pay 70% party-and-party costs (excluding disbursements). The victim's lawyer also charges another 10~15% over and above these party and party costs. These party-and-party costs could be agreed between the 2 opposing lawyers or the victim (plaintiff) can ask for the Court to decide through "taxation of bills".

(ii) Appeal

After the damages & costs are awarded by an "Assistant Registrar"[AR] there could be an appeal from either side before a Judge. This "step" is even more vulnerable for both sides in terms of costs and overcharges. But a victim suffers even more.

Say the Plaintiff is unhappy with the award by the AR. He appeals. At the same time he apply for "leave from the Court" to file some additional evidence. [The legal process is a hasty process, and a natural trap, it is not easy to get all evidences adduced at one go. There is cost for one appeal and also cost for application of “leave” to file additional documents. 1 set of costs for each.

Quite often the Defendant lawyer (Insurer's) will also "cross-appeal". This is the tricky part where most of the hidden costs and charges are and are officially condoned by our legal system in my opinion. So from same appeal above, the costs becomes double.

The following costs are applicable for the Plaintiff

(a) Plaintiff's appeal : 1 X appeal cost

(b) Application for "leave" to file new documents : 1 X application cost

(c) Cross appeal by Defendant : 1 x appeal cost

(d) Defendant contest "leave" application : 1 X application cost

Theoretically, whoever loses the appeal pays the cost to the other party. But it is not so simple because a Judge may not "give any order on costs" or “she would just award a very small sum".

...con'td...

November 17, 2009 3:32 PM
C H Yak said...

In my relative's case, the High Court judge award just awarded only $2,000 for a small part of the appeal won. She dismissed the application to file "leave" and awarded $500 to the other party. The Defendant's lawyer filed an across appeal the last minute and another affidavit to contest our application for "leave" last before Chinese New Year and after office hour. Their appeal and affidavit were accepted electronically.

The hearing was on the 4th day of Chinese Year. For unknown reason, the hearing date was changed from End December to the 4th day of Chinese New Year. Due to the CNY, no clear instructions were given to the lawyer. Certain judgments were based on the Judge's own assumptions (Note: Hearsay evidence cannot be accepted in Court, but a Judge can make decisions based on her wrong assumptions).

At the end, she dismissed the application for leave and awarded the other party $500. She also dismissed the Defendant's cross appeal and awarded the Plaintiff $500.

But the actual bill for the plaintiff is 2 X Appeal Costs despite the judge dismissing the one sentence cross appeal and the small costs she awarded plus the $2,000 she awarded partially for winning part of the plaintiff's appeal.

(a) Plaintiff's appeal : $6,000

(b) Application for "leave" to file new documents : $1,500

(c) Cross appeal by Defendant : $6,000

(d) Defendant contest "leave" application : $1,500

Total Payable to Plaintiff’s Lawyer : S$15,000. (Excluding disbursements)
Costs awarded by Judge S$2500 - 500 = $2,000 (include disbursement)

The above costs are for the Plaintiff's lawyer. As a simple estimate, the Defendant's lawyer would charge the same to the Insurer for contesting this appeal. There is actually duplication in the costs charges above. Because both lawyers are fighting over the same $X of award. One is claiming higher and the other claiming it should be lower. Documents, data, etc are all the same set.

I called this a "Nonsensical Cross Appeal", it is all set up by the opposing lawyers to overcharge (even if legal). And the legal process condones and supports it.

To make matter worse, as it was an accident case, the final damages and costs had to go through the Public Trustee Office (PTO). The PTO is supposed to protect the interest of the accident victim (plaintiff), but it went on to approve the legal costs applied by the Plaintiff's lawyer, and he is able to take the first cut which is his costs.

If this is not accepted the case could be taken up to the Court of Appeal. And the lawyer’s fee is $30,000.00 per appeal excluding disbursements. And say if there is a cross-appeal to the Court of Appeal, I believe the lawyer will claim two sets of costs again. And again our legal process and system, and also the PTO; will support it, unless an application is made to the Court for “taxation” of bills.

Because it is so costly, the legal process should provide very efficient service at a reasonable cost which is fair to individuals such as victims of accidents. It should solve immediate problem rather than leave loose ends. By leaving loose ends, costs are escalated or the victim will not be treated unfairly. Judges should practise what they preached themselves. If Judges can award ridiculous low costs, how can the system then allow lawyers to claim from their clients.

November 17, 2009 3:33 PM

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