A group of more than 40 law firms has taken the Road Accident Fund (RAF) to court, claiming that it is on the verge of cancelling their billion-rand contracts.
For the past five years, 103 law firms have been making billions of rands out of litigating road accident fund claims.
The fund wants to change this. But the lawyers want the high court sitting in Pretoria to compel the fund to continue with a tender to appoint law firms like them — and to withdraw the notice that all the law firms should return incomplete cases.
In papers filed 10 days ago at the high court, the first applicant, Pritzman Mabunda, stated that the RAF’s decision to cancel a tender process for the appointment of a new panel of lawyers was irrational and could cause substantial harm to the administration of justice and the public purse.
But the acting chief executive officer of the fund, Collins Letsoalo, has told the Mail & Guardian that the entity is in a dire financial situation, and this has necessitated a review of its operating model, which has resulted in the conclusion that there is no need to have the panel of attorneys.
The RAF has been technically insolvent for more than a decade, with liabilities amounting to more than R262‑billion by late last year, making it the second-largest contingent liability for the government after Eskom.
With more money being pumped into the entity, the chief executive said he wants to change things around — and that includes doing away with the billion-rand panel of lawyers.
“Consequently, the RAF no longer requires the services which were specified in the [tender] invitation. The RAF’s model, including its litigation strategy, needs a review if not an overhaul,” said Letsoalo.
He said the RAF’s litigation costs are now more than R10-billion each year, up from R941-million in 2005. This is despite the number of claims finalised decreasing from 185 773 in 2005 to less than 100 000 currently.
“This is also despite the fact that on average, about 99% of the matters are settled without the need for appearance before a judge. Most are settlement agreements made into court orders,” said Letsoalo.
Meanwhile, in the court papers, Mabunda claims that just before the law firms’ five-year contracts expired in November last year, they were approached by the fund to extend them until May.
“The respondent sought to coerce the panel attorneys to accept unlawful terms and conditions introduced by the addendum [to the extension contract] by threatening that if they did not sign by November 22 2019, they would be required to return the files,” said Mabunda.
He claims that the panel of lawyers was put under duress to sign the unlawful terms of the new contract. Then in February, the RAF requested all the law firms to hand over all the claimant files within the next few months.
But Mabunda said this request for a handover was unlawful and irrational, and so was the cancellation of the tender which was due to be “announced at any moment”.
He also admitted that if the panel of law firms closed, about 3 000 people from the law firms would be out of work.
“The respondent did not put in place mitigating measures which would ensure that the administration of justice will not be hampered. It is a matter of public record that the majority of RAF matters litigated in all courts involve poor people… they are entirely reliant on the finalisation of their matters in the courts against the RAF,” said Mabunda.
But the RAF is disputing this. Letsoalo told the M&G that in the past six months it had reviewed its operational model, and based on research and data, the fund concluded that it was not in the interests of the RAF or the claimant to pursue this litigation strategy.
Now the fund will increase its internal capacity to finalise the matter in less than 120 days.
Letsoalo added that, although there are 6 714 matters on the trial roll from June 1 2020 to December 2021, the RAF will block settling the matters.
“Hence the directive for panel attorneys to return the files due for trial post their contract expiry period. It is in the interest of the claimants and justice that these claims are settled early rather than waiting to settle on the trial date,” he said.
According to Letsoalo, the “RAF cannot enrich legal practitioners at the expense of claimants without acting unconstitutionally”.