THE DRAFT LEGAL SECTOR CODE

When we look at the law, it has a history: a past and a

constantly evolving present. The former appears in ancient law.

In ancient times, Plato called the law an “external authority”

that functions as the “ally of the whole city.” In the present day,

the law in its modern form dictates the rules and regulations

by which we live globally. Bringing this foundation across all

spectrums for which the law operates in the South African

context, is B-BBEE and, for the purposes of this article, the

Draft Legal Sector Code (DraftLSC).

Legal practitioners collectively are Advocates and Attorneys

defined as such by the Legal Practitioners Act 28 of 2014.

On the 8th November 2020, an invitation was issued to

legal practitioners to participate in a consultative process to

conceptualise, then develop, a sector code. The deadline

for concluding comment on this first draft was in December

2020. In February 2021, a second draft was released for

public comment. The deadline for comment on the second

draft passed in March 2021. Since the date mentioned

above, there have been no additional changes, comments or

statements about the DraftLSC.

Until such a time as the Department of Trade, Industry and

Competition (the dtic) gazettes the DraftLSC in terms of

Section 9 of the B-BBEE Act, it remains a draft document.

However, generally following a gazette of a sector code, there

is no transitional period implemented. Therefore, organisations

falling within the scope of application of the DraftLSC should

be in the process of aligning with its expectations.

Following the gazetting of the DraftLSC, those who procure

from this sector must understand the targets, financial

thresholds and unique features.

The vision of the DraftLSC

The DraftLSC aims to transform the legal sector to give

effect to the objectives of the B-BBEE Act to promote effective

and sustainable economic participation for ‘Black’ People in

the economy at large. In outlining the DraftLSC, the

following references relate to definitions that include the scope

of application:

Previously members of the legal profession did not have a

sector code to guide them; hence the DraftLSC intends to

provide the tools necessary to address the imbalances and

inequalities within the profession. Such disparities link to

the injustice in the socio-economic and political landscape

stemming from Apartheid.

Without a sector code in place for the legal profession, the

legal fraternity relied on the principles of the Codes of Good

Practice issued under the Government Gazette #36928 of

May 2015 and Gazette #42496 of May 2019, known as the

‘Amended Generic Codes of Good Practice’ (Codes), that

have a broad scope. By its very name, the Codes address

organisations that do not represent a specific sector, thus are

generic in nature. Hence the DraftLSC intends to recognise

and address the unique needs of the sector. The following

tables portray the representation of ‘Black’ People in the Legal

Profession. The illustration breaks down Advocates, Attorneys,

Candidate Attorneys and Law Firms operating in the sector.

Priority Elements and Sub-minimum Requirements

> Ownership

The sub-minimum requirement is 40% of the Net

Value points.

> Skills Development

The sub-minimum requirement is 40% of the total

Weighting Points.

> Enterprise & Supplier development

The sub-minimum requirement is 40% for the sub-

elements in this category, namely Preferential

Procurement, Enterprise Development and

Supplier Development.

The DraftLSC vs The Generic Codes

Due to the nature of the sector, the DraftLSC introduces

different financial threshold categories to those that feature in

the Generic Codes. The categories outlined in the DraftLSC

include Large Enterprises, Qualifying Small Enterprises and

Exempt Legal Enterprises (ELE). An ELE is the equivalent of

an Exempt Micro Enterprise. The DraftLSC divides Attorneys

and Advocates. The rationale behind the focus on ELEs is that

ELEs constitute 84.6% of law firms that operate in this bracket.

The financial thresholds and qualifying criteria are categorised as follows:

ELE Attorneys

This category applies to law firms registered with the Legal Practitioner Council either as sole practitioners, partnerships and/or incorporated

law firms. The qualifying criteria are

Qualifying Small Enterprises & Large Enterprises The Qualifying Small Enterprise (QSE) and Generic Enterprise thresholds are determined per element. The DraftLSC intends to

measure Ownership, Management Control, Skills Development, Procurement Supplier & Enterprise Development (PESD), as well as

Socio-Economic Development.

Each element is then further sub-categorised between Attorneys and Advocates. The area within which the firm operates, namely

Advocate chambers or Attorney law firms, then determines the turnover threshold applicable to QSEs or Large Enterprises. The

intended financial thresholds are:

> QSE Turnover is from R3 million to less than R15m, and

> Large Enterprises turnover is from above R15m.

The distinctions between the size of the enterprise and further sub-categorisation between Advocates and Attorneys lie with Skills

Development, Management Control and Socio-economic Development.

The DraftLSC scorecard has been presented as:

The focus, especially within Ownership and PSED, is the uplifting and support of ‘Black’-owned smaller entities known as ELE’s and

QSE’s. The drive behind the support from a preferential procurement perspective relies on the domino effect of Procurement. Although

dependant on the public or laypeople to generate an income, the legal sector often relies on larger corporates outsourcing legal services

and/or products, banks having legal representation or debt collection through legal entities, and most likely are on a retainer basis to

create sustainability. Therefore, legal entities are under pressure to reach a level of compliance or potentially risk losing large income

streams from larger organisations