Lawyers have taken the Road Accident Fund to the office of the public protector over irregular expenditure, reportedly estimated at R2-billion.
The office of the public protector on Thursday confirmed it is investigating complaints from lawyers who work as motor vehicle accident practitioners against the Road Accident Fund (RAF) for irregular expenditure relating to the appointment of a new panel of attorneys.
The matter – which was reported to the public protector in April this year – is under preliminary investigation. In response to questions from the Mail & Guardian, the public protector’s office said that it had already requested and received documentation from the RAF to determine whether a “full investigation into the matter would be warranted”.
Victims of road accidents have had their claims for compensation delayed by the fight for RAF millions between the fund and lawyers.
The process to hand over road accident victims’ files to the new panel of attorneys that the RAF has appointed has seen some lawyers resisting the fund’s demands, while those who are willing to return the files claim the RAF will unnecessarily spend in excess of R2-billion on the handover process.
A group of lawyers who are also unhappy that the fund is in effect taking jobs away from them has warned that the money would result in wasteful and fruitless expenditure.
The RAF will end up paying two sets of attorneys – the old panel for work already done on the files – as well as the new panel, for making copies for perusing, studying the files and taking off where the old panel stopped working.
In addition, some lawyers have issued warrants of attachments to the RAF for monies owed to their firms, which the fund is struggling to pay.
RAF: there is a need for change
RAF chief executive Dr Eugene Watson said the fund has maintained the same panel of attorneys for far too long – more than 10 years – and that there was a need for change. “It is necessary to encourage competition, promote BBBEE [broad-based black economic empowerment] and ensure that effective services are rendered,” he told the M&G this week.
Watson disputed the estimated R2-billion for handover costs because he said the bulk of the claim files that need to be handed over are not trial ready, and that most of the costs would be absorbed by the new panel. Many files also have “a low paper count”, he said.
“The estimated file count of 5 000 to 9 000 per panelist is only attributable to those law firms that have been servicing the RAF for 10 years or more, and we anticipate the handover will address any problems emanating from possession of such high numbers of files,” Watson said.
Four lawyers that the M&G spoke to insisted the figure would be about R2-billion.
“If it’s a 1 000-page file at R47 per page, it means new attorneys will be paid R47 000 just to read the file. Old attorneys could have charged between R6 and R13 a page, about R20 000,” said one lawyer who is part of the old panel. “Now the RAF will pay a total of R67 000, and you are no closer to finalising the case,” he said.
Watson would not share information on costs estimates that were approved by the board for the handover process, saying “board deliberations are confidential”.
’Malicious intent, anger and politics’
Ernest Makokga of Makokga Sebei Attorneys in Kempton Park said it would have made sense for the RAF to allow lawyers to complete cases that they have already started working on, and rather stop giving them new work. “Those costs [R2-billion] are only for copies, we are not yet talking professional work,” Makokga said.
The battle for the claim files has seen some law firms refusing to hand over the files. Watson said 13 law firms have agreed to participate in the handover process while another 20 were digging in their heels.
Makgoka said the old panel of attorneys did not have a problem with the introduction of a new team “but there seems to be some malicious intent, anger and politics in this whole thing”.
Criticism of the new system
The RAF is migrating to the new Road Accident Benefit Scheme (RABS) – the result of a 2010 ANC national general council where it was proposed that government reform the RAF – which encourages people to claim directly from the fund instead of using lawyers.
Under the new scheme, payments will be made directly to claimants, medical and healthcare service providers, Watson said.
Several lawyers however have criticised RABS, with one calling it a “knee jerk reaction to the failure by RAF to do its work”.
“With this new scheme victims will be forced to go to state hospitals and you are paid far less than you would have been paid before,” a Pretoria-based lawyer said.
Cash flow problems
Another attorney said the RAF had been paying law firms in “dribs and drabs” since June. Once attorneys have issued warrants of payment, the RAF is required to pay the debt with 15.5% interest, plus sheriff costs.
Watson admitted to cash flow problems at the RAF, saying the full extent of the RAF fuel levy requested from Treasury was seldom granted, but the fund has found ways of managing the cash flow challenge.
“There are some [lawyers] who demand immediate payment and warrants or WRITS would be issued,” Watson said. “Having utilised cash reserves to fund improved claims, the fund is now reliant on the monthly fuel levy income of R1.7-billion.”
The RAF is also trying to cut legal costs. Watson said the RAF and its predecessors had created a “micro-economy of service providers” such as attorneys, advocates, assessors, accident reconstruction and medical experts who derive a livelihood from the fund. The undesired result of this culture, he said, is that the RAF spends about R4.6-billion [21% of its overall expenditure] per financial year on legal costs.
A lawyer with 12 years’ experience of working with the RAF said the reason the RAF was spending too much on legal costs was because the fund is not doing its job.
“Before 1996, the RAF would work on the files and by the time they handed them over to lawyers a lot of work would have been done. Now there is too much work the RAF is not doing, to an extent that they are almost outsourcing their core responsibility,” the lawyer said.
“RAF gives cases to attorneys that ideally should have been settled by the fund.”