A Durban legal firm has denied stealing millions of rands that were intended to be deposited into the trust account of a child born with cerebral palsy – as a result of medical negligence – 11 years ago, but appears unwilling to divulge details of where the missing money landed up.
MLS Attorneys is currently under investigation by the Legal Practice Council (LPC) in KwaZulu-Natal after allegations that it stole R4.5m meant for the child, after the provincial Department of Health had forked out an amount of R9.3m meant for Sfundo Phiwayinkosi Hlongwane: the trust opened in the boy’s name received just R4.9m.
News24 reports that NMK Forensics, the company appointed by the department to investigate medico-legal claims in the province, has recommended that MLS Attorneys, which brokered the deal, be criminally charged for defrauding Hlongwane.
Sfundo, who was born with brain damage after a mishandled birth, is just one of many cases documented in a forensic investigation report commissioned by KZN MEC Nomagugu Simelane-Zulu into alleged corruption in medical malpractice claims.
In the 2023 report by NMK Forensics, which carried out the investigation, it was revealed that in the 2021/22 financial year, the department had coughed up R266m in medical malpractice claims.
The document outlines how thieving, greedy lawyers in the medical negligence field fleeced hundreds of millions from both their clients and the department.
Two years ago, President Cyril Ramaphosa authorised the Special Investigating Unit (SIU) to probe medico-legal claims across all provincial Health Departments, after an earlier SIU investigation uncovered widespread corruption in administering such claims in the Eastern Cape and Gauteng.
At the time, both provinces were facing medico-legal claims totalling R15.9bn and R21.2bn, respectively.
Currently, the SIU is currently investigating more than 2 800 medico-legal claims countrywide with a combined value of more than R33bn.
Durban case
In the Hlongwane case, NMK’s report shows that the boy’s mother, Pretty-Girl Hlongwane, gave birth on 14 July 2013 at King Edward VIII Hospital in Durban.
In 2016, she approached the now-defunct personal injury law firm Friedman and Associates for help, and on her behalf, the company filed a medical negligence claim on a contingency basis against KZN Health.
The agreement between Pretty-Girl and Friedman and Associates authorised the law firm to be paid 25% of the final amount settled with the department.
Based on expert advice, the department conceded liability early in 2018. Thereafter, the parties started discussing the quantum to be paid to Sfundo. However, before the process could conclude, Michael Harris Friedman, the sole owner of Friedman and Associates, died in February 2021.
After his death, AC de Sousa Attorneys, another personal injury law firm – with the approval of the LPC in KwaZulu-Natal – took over some of the cases Friedman and Associates had left unfinished, with the clients mandating the company to do so, in writing.
However, according to NMK’s report, after Friedman’s death, a law firm called MLS Attorneys approached the Hlongwanes and told them the company had received a mandate from KZN Health to take over the case.
On 6 March 2021, shows the report, the Hlongwane case was taken over by MLS Attorneys.
The report also showed that the department and MLS Attorneys eventually agreed to a final settlement of R9.3m, which the law firm communicated to the Hlongwanes. Of the R9.3m, Sfundo’s trust account received R4.9m.
NMK’s dossier sets out that MLS Attorneys would need to explain the following deductions: “The total amount that is unexplained is R4 520 903.62, which is made up of R1 840 788. 53 (interim payments) + R2 546 892.12 (unknown) + R133 220.44 (bill of costs),” said the report.
NMK’s investigators recommended the Hlongwanes be assisted in laying a criminal case against MLS Attorneys.
“The attorneys must be reported to the Law Society for misleading the court by claiming that the interim payment was for the benefit of the child, and failure to follow the court order in terms of how much was supposed to be paid to the plaintiff and lastly, for alleged fraud worth R4 520 903.62.”
What they said
Sfundo’s father, Xolani Hlongwane, told News24 shortly after Friedman’s death in January 2021 that he received a letter from the sheriff advising him to go to court in April to finalise his son’s case.
“A few days later, I received a call from MLS Attorneys who claimed they had been appointed by the Health Department to conclude our case. When I told them that we were due to go to court to settle all outstanding matters, the company said we cannot go to court alone. We believed them.”
After a while, Xolani said, MLS Attorneys visited their house in KwaMashu, Durban, and showed them a document containing the settlement details.
“The settlement was R9.3m. But eventually, they deposited R4.9m into my son’s trust. When I asked them what happened to the rest of the money, they said it was taken by Friedman and Associates. They told us Friedman and Associates claimed some of the money for all the legal services they rendered before Michael died.”
Antonio de Sousa, the founder and chief executive of AC de Sousa Attorneys, told News24 Friedman’s estate did not receive any payment for the legal work it rendered to the Hlongwanes.
He said MLS Attorneys’ representatives misled Xolani by telling him the Department had instructed the law firm to take over his son’s claim.
De Sousa added that the LPC’s code of conduct did not allow lawyers to tout for clients.
He said MLS was not entitled to charge the Hlongwanes a fee equivalent to 25% of the quantum of the claim, as the family had already signed a contingency fee agreement with Friedman and Associates.
De Sousa added Friedman and Associates, not MLS, took on all the risks associated with the Hlongwanes’ claim.
When MLS came on board, Friedman and Associates had already done more than 90% of the work on the case, he said.
He also questioned how MLS could finalise the case, as all documents – including medical records, medico-legal expert reports, financial accounts, disbursements, and correspondence – were in the custody of Friedman’s estate.
Lwazi Mnguni, the sole director at MLS Attorneys, told News24 Xolani approached the law firm, not the other way around.
Mnguni, who has since opened another legal practice, Mnguni and Associates, said it was not true MLS got involved right at the end of the case.
“When MLS Attorneys got involved in this matter, both the issue of liability and quantum had not been resolved, and therefore, we are not sure what you mean the matter was at its tail end,” he told News24.
Mnguni would not confirm the department had decided to pay Sfundo R9.3m as the full and final settlement. He also denied MLS had deducted R1.8m, R2.5m, and R133 220.44.
“No such deductions were ever made by MLS Attorneys.”
Mnguni also declined to reveal the fees the law firm charged the Hlongwanes.
“The fees due to MLS Attorneys were deducted after full engagement with the Hlongwanes in their native language, and they confirmed their full understanding of the fees due to MLS Attorneys… The fees due to MLS Attorneys are privileged due to the attorney-client relationship. It would be irregular for us to venture into such terrain,” he said, adding it was MLS that secured the settlement for the Hlongwanes.
The LPC’s KwaZulu-Natal director said the organisation’s investigation into MLS Attorneys’ conduct was almost complete.
“The investigation is at an advanced stage, and we are expecting a report any day now from our investigating committee.”
KZN Health did not respond to News24’s questions.
See more from MedicalBrief archives:
Lawyer who blew disabled children’s millions ‘should be struck off’
Lawyers probed over millions due to disabled children
Justice in sight for cerebral palsy victims of rogue attorney
Minister targets dodgy lawyers as SIU probes R30bn medico-legal claims