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Funding the Please Call Me case

Nkosana Makate's potential winnings may be ‘substantially higher’ than R50 million.

Please Call Me: Nkosana Makate has enlisted the financial services of Sterling Rand to fight his court battle against Vodacom. Picture: Aletta Gardner

JOHANNESBURG - Former Vodacom employee Nkosana Makate, who is suing the cellphone network giant for allegedly failing to remunerate him for inventing the Please Call Me service, has enlisted the services of a litigation financier to fund his case.

Makate claims he invented the Please Call Me service in 2000 and alleges that his former bosses promised to facilitate remuneration negotiations with the company.

But Vodacom denies this and refuses to compensate Makate.

The matter is currently unfolding at the North Gauteng High Court.

Meanwhile, a former MTN employee claims he in fact filed the patent for the service, but is not playing any role in court proceedings.

MAKATE'S POTENTIAL WINNINGS

Director of Sterling Rand, Errol Elsdon, says the financier expects the winnings from Makate's case to be "substantially higher" than R50 million.

The firm will rarely accept a case that isn't likely to achieve winnings of greater than R50 million.

Further, they will only take a case if they judge it to have at least a 70 percent chance of winning.

Prior to 2004, litigation funding was illegal in South Africa but the Supreme Court of Appeal (SCA) then declared the practice fully legal.

However, few firms practice litigation financing here.

Further, Elsdon says their conditions for accepting a case are very stringent.

"We have a panel of attorneys and advocates who would look at the case, conduct a due diligence and give us a report on their thoughts about the likelihood of success.

While there can be no certainty of a win, their requirement of a 70 percent likelihood means the company is clearly confident Makate will succeed against Vodacom.

Elsdon distances his company from certain European examples which are labelled "vulture funds", saying Sterling Rand looks at the level of need on the part of the litigant before taking cases.

"We look at funding litigants that are short of resources, litigants in particular that face the behemoth of the corporate environment."

As cases which involve possible winnings of less than R50 million rarely get accepted, however, the fees taken by Sterling Rand can be extremely high.

"[The fees are] structured, it's done on a case-by-case basis, depending on the amount of money the litigant has invested in the case already and the date at which he brings the matter to us."

In the case against Vodacom, he says, they are looking to take 50 percent of the winnings.

However, the exact amount they expect to win is still unknown.

"We're working somewhat in the dark here, but we're aware that Mr Alan Knott-Craig happened to mention in his book that this was one of the single most profitable enterprises that Vodacom has ever undertaken and they made hundreds of millions out of it."

NO RISK FOR MAKATE

If Makate's case fails, however, he will bear none of the costs.

"The risk lies with Sterling Rand and that's just the nature of the game, which is why we conduct a due diligence on the case before we actually take it on. So we need to be fairly sure of our ground - there's a lot of money at stake."

Elsdon wouldn't comment on whether the company would pay if, for example, Vodacom eventually files a defamation suit against Makate, but said, "Generally, we would indemnify the litigant of all adverse costs."

For a full breakdown of the case including a timeline of events, click here.