High Court sets aside law firm’s RM1.55mil fee agreement with 203 clients

The Kuala Lumpur High Court has set aside a fee agreement between a law firm and 203 clients in an investment case, ruling that it was not fairly obtained and contained unreasonable terms.

Judicial commissioner Nixon Kennedy Kumbong also ordered all 18 legal bills issued by Messrs Jerald Gomez & Associates, totalling RM1.55 million, to be taxed as if there had been no fee agreement.

In court terms, “tax” means to officially assess, determine, or fix the exact amount of legal costs or fees owed in a lawsuit.

Nixon directed the High Court registrar to conduct the taxation.

He also ordered the firm to refund any amount found to have been paid in excess of the taxed sum within 30 days of the certificate of taxation being issued.

The plaintiffs, who were investors, collectively suffered substantial financial losses in an investment scheme associated with MYAirline co-founder Goh Hwan Hua and had appointed the legal firm to pursue legal recourse.

The firm carried out preliminary investigations, held several meetings with prospective claimants, and eventually filed a writ and statement of claim on their behalf.

The plaintiffs had challenged the terms of engagement signed on Jan 16, 2024, under Sections 116, 118, 126 and 128 of the Legal Profession Act 1976.

They sought to have the agreement set aside or varied, to extend the time to invoke the taxation process, and to obtain consequential orders for the taxation of the 18 bills.

Among the issues considered was whether the agreement had been fairly obtained in view of meetings between the parties before it was signed.

The court also examined whether its terms were reasonable, including the hourly rate structure, the absence of a fee cap, and the firm’s estimate of about RM5 million in legal fees.

The plaintiffs had raised concerns over charges including RM2,000 an hour for work carried out by a person not called to the Bar, RM160,100 for eight personnel attending a press conference, and RM58,500 for a lawyer’s attendance at 11 meetings.

They alleged over-staffing, duplication of work, and the absence of contemporaneous time records.

In his 43-page judgment, Nixon said the fairness of the agreement had to be assessed in light of the fiduciary nature of the solicitor-client relationship.

He concluded that the plaintiffs had made out their case under Section 118 of the Act, and also ruled that the alternative dispute resolution clause in the fee agreement contravened Section 118.

“The terms of engagement dated Jan 16, 2024, (are) to be set aside,” he said.

Jared Tee and Syed Afiq Syed Albakri appeared for the plaintiffs, while Michelle Wong and David Dev Peter represented the legal firm.

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