Russell Keddie admits he grossly overcharged
Hellfire Club • Tuesday, May 1, 2012 A long and torturous road ... Three years after proceedings by LSC commenced, Russell Keddie and employed solicitor Philip Scroope make admissions in agreed statements of facts to the Administrative Decisions Tribunal ... Gross overcharging by 46 percent ... Penalties pending
Russell Keddie: after three years a modest agreement with Legal Services Commissioner
Russell Keddie has admitted overcharging a client more than $200,000 and accepts that this amounts to professional misconduct on his part.
The one time high flying king pin of the personal injury caper made the admissions in an agreed statement of facts tendered yesterday (April 30) at the NSW Administrative Appeals Tribunal.
Keddie faces a professional misconduct charge arising out of his firm's handling of Ms Shauang Ying Meng's accident case. In 2002 she was injured in a South Australian bus accident and is now a paraplegic.
The hearing was expected to take a fortnight, but the compromise with the Legal Services Commissioner has shortened proceedings considerably. The tribunal has now reserved its decision on Russell's penalty.
Former partner Scott Roulstone took Ms Meng's initial instructions when she was in hospital in Adelaide and he delegated day-to-day conduct of the case to solicitor Philip Scroope.
The costs agreement with Ms Meng was dated March 7, 2003 and allowed for charges of $390 an hour for partners ($39 per six minute unit) down to $160 an hour for administrative staff ($16 per six minute unit) - for a successful outcome.
There was also provision for a 25 percent premium on costs and the same for disbursements.
Keddies also acted for Ms Meng's injured husband and son, John Weng and Zeng Yong Wang.
They too signed onto the same costs agreement.
There was no liability issue and the Meng-Weng cases all settled on December 21, 2005 - Ms Meng's case for $3,525,000 and the other two for $25,000 each, inclusive of costs.
Scroope presented Ms Meng with a narrative bill, with charges totalling $819,694.77.
- Professional costs: $507,119.84 (which included costs of $47,629.27 transferred from her husband's and son's matters)
- GST: $50,711.98
- Professional costs including GST: $557,831.82
- Disbursements, including GST: $254,992.48
- Interest on disbursements (to date) incl GST: $6,610.47
- Additional disbursements for Zeng Wang: $330.00
- Total disbursements: $261,862.95
- Total: $819,694.77
The statement of agreed facts said that the narrative bill did not identify the amounts charged, by rate or time spent, for the individual items of work, or the people who did the work.
The bill contained mistakes, errors and duplications. Russell Keddie said, and the Legal Services Commissioner accepted, that he did not know how the bill was prepared and was not present in the office at the time.
Scroope said he followed the firm's practice of having his secretary prepare the bill.
Twenty five percent was added to the amount recorded in the time-cost ledger.
The recononciliation statement showed the following deductions taken from the settlement:
- Costs & disbursements: $819,694.77
- 10% HIC advance payment: $352,500
- Ernst Group (nursing services): $8,521.26
- Treatment accounts: $11,783.97
- Advance payment: $10,000
- Net due to Ms Meng: $2,322,600.00
By October 2006 Ms Meng had withdrawn her instructions to Keddies (now Slater & Gordon) and gone to a new firm, Margiotta. An itemised bill in taxable form was requested.
Between December 2006 to March 2007 Scroope reviewed the file and made additional entries in the time records, attributable to leakage.
Kerrie-Ann Rosati, the costs expert engaged by the Legal Services Commissioner produced a report critical of the way the Meng case had been billed.
For his part Keddie favoured the report prepared by costs man Gordon Salier.
Keddie, Roulstone and the other partner, Tony Barakat assisted Scroope in the preparation of an amended tax invoice. "Duplications, mistakes and errors" in the costs charged were identified in this process.
Some items were reduced, or not pressed, some were acknowledged to be duplications, and there were additional items not included in the narrative bill.
Russell Keddie agreed with the LSC that Ms Meng was charged grossly excessive costs.
Both the narrative bill and the amended tax invoice referred to work done by a Mr Lee and Ms Hong Liu as employees of Keddies, and external interpreting services provided by "Helena", which were invoiced to Mr Lee's company, Baiyi Language Services.
Professional costs attributed to Hong Liu were charged even before her employment with the firm commenced.
On many occasions a corresponding disbursement charge was made in favour of Baiyi.
Other charges were either over-inflated or had no supporting invoices.
Over $85,000 was billed for items that were not contemplated in the costs agreement.
It was "agreed" that a fair and reasonable professional cost for the Meng matter, including the 25 uplift, ex-GST, would be $273,595.63 - not the $507,119.84 ex-GST actually billed.
Even $273,595 seems too high, as other costs experts have estimated the bill was ten times what was reasonable.
Fair and reasonable costs for both John and Zeng Wang's cases would have been just over $18,000.
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As for Philip Scroope, he too made admissions and an agreed statement of facts was presented to the tribunal.
It included this statement:
"Other staff made entries [in the time costing system] without Mr Scroope's knowledge or direction. Some of those entries were attributed to PJS (Mr Scroope's designation) though they did not relate to work done by him and the entries were not made at his direction."
Scroope also said he was not aware of the employment status of Mr Lee, Ms Liu or of Mr Lee's position with Baiyi.
"Significant professional costs are attributed to Hong Liu and Mr Lee as fee earners in the period before their employment is stated to have commenced."
Again it was agreed that the costs charges for Ms Meng's matter were 46 percent above what was fair and reasonable.
Scroope accepts that Ms Meng was "overcharged and that the bill was "excessive" and that he must accept "a significant level of responsibility for that having occurred".
Russell, on the other hand, accepted that the charges were "grossly excessive".
"[Scroope] accepts that he gave inadequate attention to the detail of the bill and that there should have been closer checking."
Scroope admits that his conduct amounted to unsatisfactory professional conduct.
Then hearing on Scroope's penalty will take place on May 10.
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So Russell, who has retired from the law business, kindly takes the big fall, while the employed solicitor is served-up as the bunny.
The other two partners, Roulstone and Barakat, are off the hook. The LSC dropped the complaints about them once Keddie took the rap.
This happened just after the $36 million deal with Slater & Gordon.
Keddie told the LSC in late 2010 that he would fall on his sword. The intervening time has been taken-up with various distracting excursions to the ADT and hammering out the agreed statement of facts.
The Sydney Morning Herald broke the story about Keddies' rampant overcharging in June 2008. The proceedings in the ADT were launched in May 2009 - now three years later we're on the way to an outcome.
It's the first admission of gross overcharging made by a lawyer in living memory.
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