Day of accounting looms for fee factory

Overcharging - how gross ... Keddie hearing next April ... Judge Jim Curtis carefully exposes overbilling regime at Keddies ... The leveraging of time and money 

Slowly, one of the legal profession's most appalling and flagrant episodes of industrial scale overcharging is coming to a head. 

Russell Keddie: rolled over
The fact that it has taken over two and a half years to get a hearing date in the ADT for the Keddies' scandal is proof, if we need it, that the legal profession is not a marvellous self-regulator and the tools available to the Bureau de Spank are tired and blunt. 

The bureau's case against Russell Keddie and his employed solicitor Philip Scroope is set to commence in the ADT on April 30 and has been set down for two weeks. 

The allegations relate to the way the firm handled and charged for Shuang Ying Meng's personal injury case, in which $800,000 was charges for fees and costs from a settlement of $3.5 million. 

On October 20, 2010, six days before the takeover of Keddies by Slater & Gordon was announced, Russell wrote to Mrs Meng's solicitor, Stephen Firth:

''I wish to give you my sincere apology for what has occurred in your claim. As you may know, I [am] presently before the ADT regarding our legal costs and disbursements which were charged by my firm on the successful completion of your case. Although the sum of $180,000 was paid back to you previously, if the ADT decides that there is a different figure I have given my undertaking to the tribunal and I give my undertaking to you to refund this amount immediately with interest from December 21, 2005. I apologise for any inconvenience, stress and anxiety this whole episode may have caused you.'' 

Complaints against the other two former Keddies' partners Scott Roulston and Tony Barakat have been withdrawn by the LSC, Steve Mark, after Russ rolled over and took the blame for gouging Mrs Meng. 

Despite the joint liability of partnerships Roulstone and Barakat have been give a home free ticket. 

It's incredible that out of the mass of allegations against the firm the only people to end-up in the dock are the principal who took the rap in order for the partnership to trouser a few million and a  patsy employee.  

The hearing concerning Keddie will be about penalty, but that is only if a set of agreed facts can be hammered out. If not, the hearing will also require factual analysis and determination. 

In the last two and a half years there have been a couple of interlocutory hearings, dealing with applications for joinder and Scroope's application for access to documents produced by the LSC's expert witness, for which privilege was claimed. 

Scroop's application was partially successful. 

There were another two hearings seeking leave to withdraw the proceedings against Roulstone and Barakat. 

Now we are able to glimpse the scale of Keddies' fee factory by means of Judge Jim Curtis' reasons in Eileen Liu v Barakat, Keddie and Roulstone. 

Keddies got Liu to drop her discliplinary complaint by offering her an extra $15,000 after letting the client keep $50,000 of a $140,000 settlement for a car accident, in which liability had been admitted. 

However, she claimed damages for breach of contract and under the Fair Trading Act. 

Judge Curtis only listed about 17 instances of overcharging in a fee ledger of 383 items of "attendance" or work. Apparently, there were many more. 

For example, three line letters that would take a few seconds to read were billed for 12 minutes of time at a senior litigation lawyer rate of $435 an hour (a charge of $87). 

A five line letter was billed at $184 for "perusal" - at a time charge of 24 minutes. There was a charge of 18 minutes at the rate of $460 an hour for sending a four sentence email to the Motor Accident Authority. 

The reply from the MAA simply said "Rcvd" and it cost the client $130,50 for a solicitor to read it. 

Secretaries in the firm were being billed out at partners' rates of $460 an hour charging for "perusing and considering" two line letters. 

There was a charge of $435 for "drafting" the professional costs agreement, which would taken about six minutes to prepare by typing Ms Liu's name into the pro forma template. 

Indeed, most of the responses and form filling was pro forma, yet the work was billed as through the documents were created from scratch. 

Ms Liu's case is only one of about 100 against Keddies in the District Court at the moment, mostly being run by solicitor Stephen Firth. 

You can read the whole sordid story about Ms Liu's bill here.   

*   *   *

The Sydney Morning Herald, which broke the story in June 2008 about Keddies' rorts, got hold of an email from Russell asking his solicitors and clerks to add ...  

"12 units at partners' rates for 'analysis and considering strategy' to all those matters that a partner responds to you and adds an issue or two. 

Thanks ... we should be rewarded for the brainstorming." 

Steve Mark's view is that he has limited powers in cases of gross overcharging, thanks to some curious reasoning by the NSW Court of Appeal. 

 

Meanwhile, the NSW Supreme Court's inquiry into the costs assessment regime chugs along.  

This of course will not directly affect the way fees are billed, but possibly the way they are taxed by the court. 

A court spokesmodel tells us that more than 30 submissions have been made to the costs assessment inquiry. 

"A diverse array of interested parties have made submissions, including peak professional bodies, current and retired costs assessors, costs consultants, commercial and government lawyers, and self-represented litigants."

Justice Paul Brereton has been drafted by Bathurst CJ to prepare a report containing "recommendations for the scheme's operations". 

This will be done in conjunction with the usual suspects: NSW Bar Association, Law Society of NSW, and the Office of the Legal Services Commissioner.