The LSC will enable transformation of the sector and level access to the profession, writes Thabo Masombuka
From the 4th to the 8th of May this year, the Legal Sector Code was on trial. The Pretoria full bench of the High Court heard arguments from four large law firms (Deneys Reitz (former Norton Rose), Bowmans, Webber Wentzel, and Werksman), supported by Afri-Forum, in an application seeking to set aside, as invalid and unconstitutional, the gazette by the Minister of Trade, Industry & Competition, Parks Tau, of the Legal Sector Code (LSC), which he had gazetted to be the transformation framework to measure empowerment and BEE in the legal profession in terms of Section 9 (1) of the B-BBEE Amended Act of 2024.
In the main, the applicants before court argued and submitted that the LSC is not only flawed and irrationally based, but that the Minister exceeded his authority and did not properly apply his mind before signing the gazette.
For it’s part, Afri-Forum sought to argue that their members (largely white males) who are employed in these large law firms, will be racially discriminated against by the implementation and enforcement of the LSC.
The large law firms also claim that their inputs were not properly considered by the LPC steering committee that recommended the gazette to the Minister.
If the LSC is not invalidated—so they submitted—its implementation and enforcement will have adverse and dire consequences on the BEE level status of the large law firms since most of the expenditures and financial contributions will, in terms of the LSC, no longer be recognised as they would ordinarily have been recognised under the generic B-BBEE scorecard. Other than this, they further argued, that the ownership and management targets and provisions in the LSC will make it impossible to achieve given the complex structure of big law practices.
At least eleven respondent parties, representing various constituencies and stakeholders across the legal profession, filed papers in support of the Minister of Trade & Industry, effectively arguing in defence of the transformation framework.
These were led by the Minister of Justice & Constitutional Development, whose department is the Line Ministry for the profession and whose counsel presented a compelling legal and constitutional argument for transformation, as well as the Legal Practice Council (LPC), the General Council of the Bar of South Africa (GCBSA), the Advocates for Transformation (AFT), the Black Lawyers Association (BLA), NADEL, the Black Conveyancers Association (BCA) and Basadi Ba molau, and the SA Women in Law, amongst others.
Developed through the stewardship of the Legal Practice Council (LPC’s) Steering Committee and after extensive consultation with practitioners, the LSC is largely intended to deal with a number of industry challenges facing primarily black and women practitioners:
- It seeks to deal with the systematic discrimination and inadequate flow of work, inconsistent briefing patterns by organs of state.
- By facilitating and enabling transformation of the legal profession through the provision of opportunities for previously disadvantaged sections of the communities who nonetheless make up the majority of the sector.
- It also ensures that black employees who work in these law firms are sufficiently skilled, empowered into senior and meaningful management roles.
- It further seeks to give effect to the relevant provisions of the Legal Practice Act (the LPA), which was promulgated as early as 2014, particularly Section 3 (a)(b), which seeks to ensure that transformation and restructuring of the legal profession should be promoted. That is why the Legal Practice Council had to be one of the respondents in court.
So, in opposing the implementation of the LSC—as the applicants before court sought to do—these would imply and suggest that the LSC is not founded on constitutional values and principles. They want the courts to declare a transformation policy/code as invalid, unlawful, and unconstitutional.
What the applicants omitted to mention was that the LSC was not only a product of a well thought out process, it was also gazetted as a result of a robust consultation phase (of over four years since 2020) that actually dealt with hundreds of drafting versions, inputs, and criticism.
The LSC will in fact facilitate the change in ownership patterns of the legal firms, increasing representation in the skewed briefing patterns by the state owned enterprises, compelling them to make use of black women practitioners, as such increasing skills and capacity, particularly in enterprise and supplier development.
The LSC specifically identifies at least 35 specialised areas of the law where black practitioners are insignificantly represented. It introduces recognition points for state and client bodies that will brief eligible black law firms and advocates in complex instructions such as in aviation and maritime, road freight, mining, pension, corporate mergers and acquisitions, banking, and competition law for instance.
The immediately noticeable objectives and targets set out in the gazetted LSC, is that over a five-year measurement period, applicable legal entities are required to meet the following core reasonable targets:
- Black Ownership: 50% black ownership, with at least 25% held by black women practitioners.
- Management Control : At least 50% black representation in senior roles (such as partners, associates, and directors), which should include 25% black women representation.
- Skills Development: An expenditure of 3.5% of the leviable amount on training programs for black candidate practitioners. Linked with the emphasis on the specialised areas of the law, this is the most important provision of the LSC.
- Legal Services Preferential Procurement: At least 60% procurement from black-owned firms within the private sector, and up to 80% from the public sector clients such as the state departments and organs.This would include the procurement of Black Advocates by law firms in divisions and areas of the law where these have previously been excluded.
In consultation with the practitioners in the profession, these targets are reviewable after every three years as part of the ongoing monitoring of the impact of the sector code.
With this said, those opposed to the LSC can only be motivated by an inherent unwillingness to see change and transformation in the sector. They want to retain the current status quo and the inclination to tick-box exercises with the bare minimums which are provided for as the results of being measured in terms of the Generic B-BBEE Codes.
In essence, the firms, which are structured and designed in corporate complex manner, are in fact, looking to receive recognition for empowerment (B-BBEE points) without committing to, spending, and embracing substantive transformation initiatives that result in the long-term benefit of black practitioners and the sector.
The majority of the legal profession agrees that the LSC, which is largely an instrument through which effective measures aimed at leveling the playing field in the legal profession, is introduced. These include, but are not limited to the provisions for financial assistance and support—through the Legal Sector Transformation Fund (The LSTF)—of black candidate legal practitioners during their training and pupillage, and the provision of training allowances and stipends—such will inadvertently extend to rural youth amd women who are new entrants, and those on maternities.
The support for legal start-up firms, the broadening of the briefing patterns by the state and its entities are amongst other important new provisions that the applicants are challenging.
Therefore, the intended set aside application is, in fact, not really about the technical issues that the applicants were raising in court, but about the attempt to derail transformation, refusal to allow entrance of more black lawyers into the profession.
With judgement reserved, and whatever the outcomes, one thing is certain, the transformation of the legal profession as a whole, including the equitable allocation of commercial work to black firms by corporate clients and state departments alike, is a non-negotiable inevitability.
Thabo Masombuka is a BBBEE expert and Senior Legal Practitioner who was the lead technical adviser in the drafting of the LSC.