The high court in Pretoria will this week hear a legal challenge against the new government policy aimed at transforming the legal sector.
The broad-based BEE legal sector code, aimed at addressing imbalances created by apartheid and promoting equal participation in the economy in the sector, was implemented in September 2024 and triggered the biggest battle in the legal fraternity.
Top law firms Norton Rose Fulbright SA, Bowmans, Webber Wentzel and Werksmans want the policy reviewed and declared unconstitutional. Trade union Solidarity has also joined the applicants seeking to have the legal sector code declared unlawful.
The case against trade, industry and competition minister Parks Tau has been scheduled to be heard this week in the special motions court.
The legal sector did not have its own code transformation policy and has been operating under the generic BEE code policy.
The legal sector code, which was in the making from 2020 until 2024, requires firms to increase black ownership, management, control and procurement.
It requires law firms to achieve 30%-50% of black legal practitioners to be equity directors in the next five years.
The code requires large law firms generating more than R25m per annum to have 30% of exercisable voting rights held by black legal practitioners in the first year, 30% of economic interest held by black legal practitioners in the first year and 15% of economic interest held by black women legal practitioners in the first year of assessment.
The code will also score large firms generating more than R25m on briefing patterns of black advocates.
The policy is backed by several legal bodies, including the Legal Practice Council, the Pan African Bar Association of South Africa, led by former deputy director of public prosecutions Nomgcobo Jiba, the Black Conveyancers Association, the National Association of Democratic Lawyers, and the Black Lawyers Association (BLA).
The BLA argues the policy is important to address injustices of apartheid policies which created inequalities in the country’s socioeconomic landscape.
“The vision of the [code] is to transform the legal sector to give effect to the objectives of the constitution of promoting effective and sustainable economic participation in the general economy of South Africa and, in particular, the legal profession,” BLA court papers read.
Bowmans, Webber Wentzel and Werksmans make the same argument as Norton Rose Fulbright: that when rated under the new legal sector code criteria, the firms will lose their top BBBEE status.
The firms contend this would adversely affect their ability to procure work from public and private sector entities because of possible poor BBBEE ratings.
“This application is brought reluctantly. However, the applicants [the three law firms] have no real option but to bring this application, as the legal sector code is not only unconstitutional and unlawful but will materially and adversely affect the applicants in ways that threaten their sustainability,” the law firms’ court papers read.
The firms argue that the policy implementation could cause them to lose billions in contracts with big banks and the public sector because “it would be impossible” to meet the legal sector code requirements within the set timelines.
“The timeline for the achievement of the code’s black ownership targets is problematic, with the legal sector code doubling black ownership targets to 50% by year five,” the firms said.
“This fails to recognise that in the legal sector, only practising lawyers in a firm can be owners. They are personally liable for the debts of the firm and retain ownership until retirement.
“Junior lawyers follow a structured progression path that generally takes 10 to 11 years before becoming equity partners.”
The legal challenge comes amid long-standing complaints by black lawyers about the slow pace of transformation in the legal sector, particularly ownership of large firms generating billions.
Tau argues he followed all lawful procedures in approving the policy.
“The legal sector code was developed to achieve the objectives of the BBBEE Act in the legal sector or legal profession.
“It is to address inequities resulting from the systemic exclusion of black people from meaningful participation in the economy to access South Africa’s productive resources, economic development, creation and poverty eradication in the legal sector,” he says.
He denies he ignored and failed to consider and address the concerns of his predecessor, former minister Ebrahim Patel, who left the office without signing the policy into law.
“Those concerns were addressed, and I was satisfied that the legal sector code should be gazetted.”
Business Day
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.