Court refers lawyer for disciplinary inquiry over firm’s ‘excessive’ $370,000 bill

A lawyer who handled a lawsuit for the parents of a 31-year-old man over their son’s suicide is facing a disciplinary inquiry after a court said it had “grave concerns” that he had overcharged the couple.

Mr V.K. Rai of Arbiters Inc Law Corporation was one of two lawyers who represented Mr Steven Joseph Arokiasamy and Madam Tan Kin Tee in a medical negligence suit that sought $3.3 million in damages.

Mr Steven, 69, and Madam Tan, 68, later dropped both lawyers, and personally settled the case for $330,000 with the Institute of Mental Health (IMH) and Dr Nelson Lee, a psychiatrist in private practice.

After the settlement, Arbiters sued the couple to press for payment of bills amounting to about $370,000.

The sum comprised $363,000 in professional fees and about $7,400 in disbursements, which are out-of-pocket expenses. The dispute was mainly over the fees.

In January, a High Court judge slashed the total sum to $60,000, saying that the fees were “excessive”.

The firm appealed.

The Appellate Division of the High Court similarly said the fees were excessive and amounted to overcharging, but adjusted the sum from $60,000 to $87,000.

The three-judge court also said it was referring Mr Rai’s conduct to the Law Society of Singapore for an inquiry.

In written grounds of decision issued on Dec 5, the court set out its reasons for finding the bill excessive and its concerns over various aspects of Mr Rai’s conduct.

Mr Steven and Madam Tan had engaged Mr Anil Balchandani of law firm Red Lion Circle in 2020 to sue IMH and two doctors for alleged negligence.

They blamed the defendants for the suicide of their son, Mr Salvin Foster Steven, on Sept 7, 2017.

After the suit was filed, the couple also engaged Mr Rai in November 2020.

It was later decided that the couple would be separately represented.

In April 2021, Mr Steven engaged Mr Rai to act for him. Madam Tan remained represented by Mr Balchandani.

On Dec 3, 2021, the couple dropped their claim against one defendant, Dr Gomathinayagam Kandasami from IMH.

A year later, IMH and Dr Lee offered to settle the case for $200,000. After the couple counter-offered with $450,000, the defendants raised their offer to $270,000, but no deal was reached.

Meanwhile, Mr Rai was supposed to file the affidavit of an expert witness by Oct 25, 2022, but did not do so.

On Jan 12, 2023, which was to be the first day of the trial, Mr Rai applied to file the affidavit, and the trial was adjourned to September that year.

On July 17 that year, the defendants increased their offer to $330,000. Mr Rai claimed that the couple would not settle for less than $2 million, plus full coverage of their legal fees.

Later that month, on July 26, the couple discharged both lawyers. They then contacted the defendants, who agreed to pay them $330,000 without admission of liability.

A day after he was discharged, Mr Rai issued a bill to Mr Steven including $341,410.75 for fees and disbursements, which was not paid.

Mr Rai had earlier issued bills for work done from November 2020 to April 2021. The couple paid $56,065, leaving $29,006.68 unpaid.

Mr Balchandani separately issued a bill for $145,061.55, part of which has been paid.

On Aug 2, 2023, Mr Rai tried to get a court order to ensure that the settlement money is held by the court until legal fees are paid. The attempt failed.

Two months later, Arbiters sued Mr Steven and Madam Tan for the total outstanding sum.

The firm argued that the couple have to pay because the letters of engagement they signed constituted valid agreements on costs.

Mr Steven, who retired from the Ministry of Defence in 2020, and Madam Tan, a part-time teacher, said the costs would deprive them entirely of the settlement sum.

Under the Legal Profession Act, a lawyer and a client are free to reach an agreement on costs for contentious matters such as court proceedings.

However, the court can void such agreements if they are found to be unfair or unreasonable.

In the current case, the Appellate Division found that the terms were unreasonable. 

The court noted that the total fees charged were more than 2.5 times the stated estimate of $150,000.

If Mr Rai were allowed to claim the full amount of the fees, the couple would be entirely deprived of the settlement sum, the court said.

The court added that the case was not as complicated as Mr Rai had portrayed it to be.

Taking into account that Arbiters had done work up to the point of preparing for trial, the court awarded $87,000.

It also ordered Mr Steven to pay £12,300 (S$20,541) for the expert witness’ fees.

Turning to Mr Rai’s conduct, the court said he could not give a good explanation for why the couple needed separate representation, which unnecessarily expanded their legal costs.

Mr Rai should also have advised the couple that the fees were escalating beyond estimates, said the court.

The judges added that Mr Rai gave them the misleading impression that the couple were unwilling to have the costs assessed when, in fact, they were amenable to it.

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

Arbiters Inc Law Corp v Arokiasamy Steven Joseph and another [2024] SGHC(A) 37

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