The Draft Legal Sector Code: controversial and cause of concern, or transformative and welcomed?

The Draft Legal Sector Code: controversial and cause of concern, or transformative and welcomed?

Legal Sector Code

Cabinet has approved the publication of the Draft Legal Sector Code for public commentary, as members of the legal profession do not have a sector code to guide them in addressing the imbalances and inequalities within the profession.

In this blog we introduce the potential implications that the Draft Legal Sector Code might have for the legal fraternity and address burning questions such as whether a legal practice can be exempted from the Legal B-BBEE Code.

Can a legal practice be exempt from the Legal B-BBEE Code?

Factors that will be considered when determining whether your legal practice is exempt from the sector-specific (Legal) B-BBEE Code which legal practitioners (attorneys in private practice, advocates, organs of state and public entities) may very soon face, are as follows:

  • The total annual revenue of the entity;
  • The number of partners/directors in the firm;
  • The number of years in existence (this is completely new and specific to the legal sector as opposed to any other sector).

The change from 24 hours’ mandatory pro bono hours to a suggested 200 – 1 500 hours in order to be in good standing with the LPC (Legal Practice Council) might be a legitimate cause of concern as it could cripple small law firms and possibly prevent them from complying with all the B-BBEE elements. This will ultimately challenge the transformative goal the proposed Draft Legal Sector Code envisions.

Law firms will be unable to comply with this requirement immediately because no practising attorney has a total of more than three months available to dedicate exclusively to pro bono work while still generating a viable income.

As such, law firms will have to start immediately with strategic planning to ensure that they obtain at least the same B-BBEE level as previously when rated under the Codes of Good Practice, as there will be no transitional period. They may potentially receive much lower levels due to poor planning and failure to take cognisance of the onerous proposed targets.

In conclusion

In the meantime it is still a choice to comply with B-BBEE legislation, but the envisaged route is clearly to make a Fidelity Fund Certificate conditional upon having a valid B-BBEE Certificate (reference to section 50 of the Property Practitioners Act).

SERR Synergy guides and assists businesses in implementing viable structures in order to be legally compliant with a range of continuously changing new-generation legislation. Our services include but is not limited to POPI Act and PAIA compliance, B-BBEE compliance and Corporate Governance.

About the Author: Annerize Shaw graduated from the University of Pretoria in 2019 with an LLB degree, completed an accredited advocacy course in association with the Pretoria Society of Advocates in 2020 and was admitted as a Legal Practitioner in August 2021. She is an admitted attorney of the High Court of South Africa and currently specializes in B-BBEE Compliance at SERR Synergy.

Sources:

https://www.sanews.gov.za/south-africa/cabinet-approves-draft-code-transform-legal-sector

 

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