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I MAKE no apology for my assault on the legal profession last week.
For such a serious issue, it was actually quite fun.
As a Fin24 user pointed out in a comment on my article, I really only have a Bryanston High School education, I work in a little cubicle and my "job" (can we really call it that?) could be done by any lawyer over a lunch break.
So imagine my surprise when leading entrepreneurs, asset managers, lawyers, venture capitalists and shareholder activists responded to that column in support of what I was saying. Boy, did the horror stories come out!
Did you hear the one about the asset manager who paid a law firm R31 000 for a contract for what was basically a franchising agreement with a financial services business? It turned out to be a cut and paste job from a restaurant franchising agreement. How did he know, you may ask. Well, about halfway through the contract he found it was talking about kitchen utensils,crockery and tablecloths.
Or what about the one where a guy was charged R5 000 for a 15-minute "consultation", which the "client" thought was a casual cup of coffee?
You get what you pay for, was the standard defence from the legal profession last week. The above suggests otherwise.
Concerning listed companies, two other issues came up.
Firstly, a fair number of JSE-listed companies have lawyers as their chairperson, or acting as non-executive directors. Now, how many of these "independent" directors are also providing legal services through their firms to the companies on whose boards they sit?
Lawyers or advocates are not always independent; in fact, they will very often find themselves in a position of conflict.
Fairness and fees
Secondly, what recourse do shareholders have if they feel that the law firms employed by their management have prejudiced their rights? Many indicated they would be asking management some tough questions on whether the proffered advice was in shareholders' best interests.
There was a brilliant quote from one of the entrepreneurs, who remarked: "Before a case you are always on the winning side, before the trial date they always want you to settle."
So true.
One legal firm came back to me with some research its corporate clients had carried out when they compared the hourly rates of a spectrum of associates at various firms.
At some of the bigger name firms, people with half the post-qualification experience of their counterparts at smaller firms were effectively charging the same hourly rate as their more seasoned colleagues.
Asked why they continued to "overpay", the in-house legal teams responded that they were scared to rock the boat by employing smaller firms.
Maybe while we journos are slacking over December, in-house legal teams at various businesses should be doing a similar exercise and seeing how their current legal firms shape up relative to their peers.
Speaking of surveys, business author and entrepreneur Scott Cundill from Majestic - who also has some interesting views on the legal profession - helped Fin24 put together a survey which he has pushed out to 10 000 entrepreneurs and small business owners in South Africa.
It is still early days, but here are some of the findings so far:
- Do you believe South Africa is becoming an increasingly litigious society? Yes: 90%
- Have you ever elected not to stand up for yourself because of the costs of employing legal assistance? Yes: 72%
- Do you believe there is transparency in the way your law firm bills you? Yes: 42%
- If you have been in a scrap with a law firm, has the Law Society of South Africa proven to be a good adjudicator? Yes: 14%
Anyway, I am off on a cruise now - yup, I have finally saved up enough of my pittance of a journalist's salary to buy one of those nice package deals for me and the wife, so I won't be able to exchange pleasantries over the next few days.
If you do miss me though, please feel free to drop me an email and we'll continue this debate when I get back.
- Fin24
