Contingency fee arrangements

You are the in-house legal advisor to the Eastern Cape Pineapple Co-operative Board. You are tasked with investigating certain irregularities allegedly committed by the Board's erstwhile general manager, Peter Pine. In the course of your investigation, you find several irregularities committed by pine which caused huge financial loss to the Board. In your in opinion, the independent auditor to the Board, Andrew Apple and Co, should have picked up on these irregularities which occurred over a 10 year period. You include your findings in a report to the Board and, as a result of this report; the auditor firm resigns. In order to recoup the losses suffered by the board, you suggest that Andrew Apple and Co sued by the board for breach of contract. It is your opinion that the auditor failed to carry out audits properly in accordance with the relevant common-law and statutory rules. The Board is under severe financial stress and cannot finance the proposed litigation against the auditor. One of the members of the Board suggests that the Board approach a reputable law firm on the basis that it will litigate on behalf of the Board on a 'no win, no fees' basis. In addition, he suggest that the law firm should share a percentage of the profits.

Help prepare a memorandum to the Chairperson of the Board in which you advise whether such an approach is permissible and if so, any legal requirements that need to be met.

Nb please include or refer to the following case law and legislation when answering

1. Contingency Fees Act 66 of 1997
2. Price Waterhouse Cooper Inc v National Potato Cooperative Ltd 2004 (6) 66 (SCA)
3. Law Society of South Africa and Others v Road Accident Fund and Another 2009 (1) SA 206 (C)