Lawyer paid R18m has not fully accounted for the money — Samwu

The South African Municipal Workers Union (Samwu) has lodged a billing complaint against a Johannesburg law firm that represented it for five years — but the firm says the main problem is that the union is virtually bankrupt.

Samwu lodged its complaint against Ndou Attorneys and its chair Phumudzo Ndou with the Legal Practice Council (LPC) last month, alleging among other things that the firm had failed to provide full documentation for about R18m in fees.

The firm has until the middle of next month to file a response with the council, but Ndou this week disputed Samwu’s version and said it still owed his firm more than R18m.

The complaint, which the Sunday Times has seen, accuses Ndou and his firm of failing to submit invoices and statements, refusing to withdraw as attorneys of record in union matters and opting to remove itself from the union’s panel of attorneys instead of accounting for the more than R18m the union had paid it.

Kabelo Letebele, spokesperson of the council, said: “As part of the process, the legal practitioner concerned has now been given an opportunity to respond to the LPC regarding the complaint, which is expected by mid-January.”

Ndou told the Sunday Times the union was in financial trouble. His firm had been regularly submitting invoices and “payments were made based on these invoices”.

He produced statements of accounts and invoices dated November 29 2019 sent to Samwu for various matters in which Ndou Attorneys represented the union.

Samwu still owes us substantial legal fees. We have initiated proceedings in the high court to recover the outstanding amounts

—  Ndou Attorneys chair Phumudzo Ndou

“The issue primarily arose due to Samwu’s ongoing financial difficulties and their inability to settle the invoices as they became due. Samwu has been technically insolvent and illiquid,” Ndou said.

He said despite being aware of its financial challenges, Ndou Attorneys agreed to a payment arrangement at the start of the contract, which was adjusted periodically based on the work completed and amounts invoiced.

“To date, despite receiving R18m in payments, Samwu still owes us substantial legal fees. We have initiated proceedings in the high court to recover the outstanding amounts,” Ndou said.

He said the union “continues to face significant financial challenges. For instance, they were barely able to afford staff increases this year.”

Ndou said the firm had filed several notices to withdraw as the union’s attorneys of record, but “due to the complexity and volume of the cases Samwu instructed us on, the formal withdrawal process is still ongoing”.

On the overcharging claims, Ndou said: “The rate of R3,000 per hour was mutually agreed between Ndou Attorneys and Samwu in 2020.”

He also shared a document that appears to show Samwu and his firm agreed on a R3,000 hourly rate for “any necessary attendances”. 

Ndou said the firm only left the union’s panel of attorneys after the union failed to make an outstanding payment.

“As of now, Samwu still owes us over R18m in unpaid legal fees,” Ndou said.

He said if Samwu really believed it had been overcharged, “they have the option to raise the issue during the taxation process”.

Samwu deputy secretary Nkhetheni Muthavhi laid the complaint with the LPC, accusing Ndou Attorneys of refusing to “provide a close-out report on all they were handling as of the date of their withdrawal from the union’s panel”.

“Despite consistent payments from the union since their appointment in 2019, they refuse to hand over all the union’s files. They refuse to withdraw as the attorney of record from union cases or provide notices of withdrawals so that the union can trace all files,” stated Muthavhi.

Approached for comment, Muthavhi declined to discuss the matter because he did not want to “muddy the waters”. “We would like to allow due processes to unfold.”

However a spreadsheet annexure submitted as part of the supporting documents appears to show Ndou Attorneys was paid 81 times between August 11 2019 and March 15 this year, with payments ranging between R17,150 and R425,000.

“Samwu [then] outlined the handover process, specifically indicating that all the invoices and statements must be submitted,” Muthavhi said in the complaint.

Samwu also alleges that 26 bills sent by Ndou Attorneys on June 27 included duplications.

Ndou indicated in an e-mail dated June 4, which was attached in the complaint, that it would take five months to prepare the invoices and statements the union wanted.

Among other things, the union accuses Ndou Attorneys of overcharging it.

“The respondent [Ndou] bills a total of R1.84m for fees, applying an inflated rate of R3,000 per hour. Samwu opposes the bill and taxes of R1.65m ... thus reducing the respondent’s fees to R188,942,” Muthavhi said in the complaint.

One item cited by Samwu was a fee of R100,000 for four days of legal research.