fbpx

The Legal Sector Code (LSC)

Part 2 of 2024

In September 2024, the Minister of Trade, Industry, and Competition (the dtic) approved the Legal Sector Code in terms of section 9(1) of the B-BBEE Act. A previous article discussing this recent approval and the basic requirements of the Sector Code is available to read too.

In January and February 2021, three previous articles dealt with the draft code. The reader is advised to browse these three articles for a basic insight into the Sector Code, particularly Ownership and Management Control as it was in 2021.

The Code was published on 20 September 2024 via Gazette 51271 after the announcement made on 13 September 2024 that the Code had been approved. The LSC’s implementation is therefore effective from 20 September 2024.

All B-BBEE verification certificates issued before the gazetting of this LSC in terms of the Generic Codes remain valid and applicable for the period of their validity, notwithstanding the date of gazetting of the LSC. In such an event, the relevant LSME will be required to apply for the relevant B-BBEE verification certificate under this LSC upon the expiry of the B-BBEE verification certificate issued in terms of the Generic Codes. LSMEs that had not been measured for B-BBEE compliance before the gazetting of this LSC, will be measured in terms of this LSC with effect from 20 September 2024.

Steering Committee

This is a Committee that was established in terms of the B-BBEE Act as read with Statement 003 to consult with stakeholders concerning this LSC and to draft the LSC and submit it to the Minister of Justice and Correctional Services and Minister of Trade, Industry and Competition for gazetting and which is constituted by key stakeholders in the legal profession, being the following:

 Black Lawyers Association (“BLA”);
 Pan African Bar Association of South Africa (“PABASA”);
 National Association of Democratic Lawyers (“NADEL”);
 National Bar Council of South Africa (“NBCSA”);
 General Council Bar of South Africa (“GCBSA”);
 Law Society of South Africa (“LSSA”);
 Black Conveyancers Association (“BCA”);
 Department of Justice and Constitutional Development (“DOJ&CD”);
 Department of Trade, Industry & Competition (“DTIC”);
 The Corporate Counsel Association of South Africa (“CCSA”);
 Advocates for Transformation (“AFT”)
 Legal Aid South Africa (“Legal Aid SA”);
 South African Women Lawyers Association (“SAWLA”); and
 The Legal Practice Council (“LPC”)

The Steering Committee conducted public consultations throughout the country from November 2020 in seven provinces physically and one virtual meeting was held to include all stakeholders who could not attend physical meetings. Stakeholders were also invited to submit written comments. Based on the public consultations and comments received, several drafts of the LSC were produced by the Steering Committee. The LPC provided logistical support for the consultations and acted as secretariat for all the work of the Steering Committee. After the comments were closed, the Steering Committee held several meetings to consider the comments and amended the draft LSC accordingly. The final draft was submitted to the DTIC in August 2021 and published for comment in July 2022. After the comments were received, a committee consisting of some members of the Steering Committee, officials of the DTIC, and the Department of Justice and Correctional Services considered the comments and amended the draft LSC. The full Steering Committee considered comments and the amendments and made their own and then approved the final draft for gazetting. This draft was submitted to the Minister of Justice in September 2023 for approval. The Minister of Justice approved the LSC and submitted it to the Minister for gazetting in October 2023.

Further to the above, the Minister is to establish a Legal Sector Code Charter Council to oversee and implement the LSC, as set out in paragraph 13 of the Sector Code.

On an ongoing basis, the Charter Council must:

  1. monitor compliance with the LSC;
  2. provide clarification, support, and assistance in the interpretation and implementation of the LSC;
  3. liaise with all government departments, agencies, and other relevant stakeholders to facilitate the implementation of the LSC;
  4. initiate and supervise revisions to the LSC; and
  5. publish annual reports reviewing progress in the transformation of the legal profession and submit such reports to all relevant stakeholders including the Minister, the Minister of Justice, and the B-BBEE Commission.
  6. to ensure compliance with this Sector Code, all Measured Entities that elect to be measured for B-BBEE compliance, shall annually provide a report to the Charter Council. Where applicable, the report must include a scorecard audited by an accredited verification agency and a detailed report on progress complying with the provisions of this Sector Code.
  7. ELEs (exempt legal entity) and black-owned QSEs are not required to file a report referred to therein, except if they elect to obtain enhanced recognition in terms of LSC 000 in the case of ELEs. They are only required to submit a sworn affidavit, or a certificate issued by the Companies and Intellectual Property Commission (CPIC) provided for in paragraph 14 to the Charter Council annually.
  8. The first annual report shall be filed not later than the first anniversary of the promulgation of this Sector Code. The date for subsequent annual reports shall be determined by the Charter Council.
  9. The Charter Council must, by the provisions of the B-BBEE Act and established working protocols that may be finalised with the B-BBEE Commission, report all suspected incidents of fronting and fraudulent scorecards to the office of the B-BBEE Commission to enable investigation of any fronting and circumvention practices within the legal services profession.
  10. The Charter Council must ensure that: 10.1 the LSC is complied with in both the public and private sectors; and
    10.2 the relevant public sector clients and procurers of legal services achieve targeted procurement as set out in this LSC.

The role of the Charter Council may not override that of the B-BBEE Commission as provided for in the B-BBEE Act. The obligation to file reports to the Charter Council is in addition to the obligation to file reports with the B BBEE Commission, not in substitution.

MEASUREMENT OF LSME’s

LSME means a Legal Sector Measured Entity in the form of a law firm in the case of attorneys whether as a sole practitioner, in a partnership, an incorporated legal entity, or an individual advocate.

  1. The provisions set out in this paragraph shall apply to the measurement of all LSMEs in terms of this LSC.
  2. An ELE (exempt legal entity) is only required to obtain a sworn affidavit or a certificate issued by the CPIC on an annual basis confirming the following: 2.1 annual total revenue of R5 million (five million rand) or less; and
    2.2 level of black ownership.
  3. Any misrepresentation in terms of paragraph 2 above constitutes a criminal offence as set out in section 13 (O) (1) (a) of the B-BBEE Act as read with paragraph 4.7 of the Generic Codes.
  4. Notwithstanding any other provision in this LSC, a black-owned QSE is only required to obtain a sworn affidavit on an annual basis confirming the following: 4.1 annual total revenue of between R5 million (five million rand) and R25 million (twenty-five million rand); and
    4.2 level of black ownership.
  5. Despite the provisions of paragraph 4 above, a black-owned QSE may be measured in terms of the QSE scorecard should it so choose.
  6. QSEs that are not black-owned must be measured in terms of the QSE scorecard.
  7. Any misrepresentation in terms of paragraph 14.4 above constitutes a criminal offence as set out in section 13 (O) (1) (a) of the B-BBEE Act as read with paragraph 5.5 of the Generic Codes.
  8. Any B-BBEE verification certificate submitted by an LSME shall be deemed incomplete unless it is accompanied by a verification report that details the applicable LSME’s performance and scoring against the scorecard elements in the LSC.
  9. The information relied upon for providing the B-BBEE verification certificates and reports must be accurate, correct, and verifiable by means of suitable evidence.
  10. B-BBEE verification certificates and reports are valid for a period of 12 (twelve) months from the date of issue.
  11. The Charter Council shall use the information, data, and detail provided on the B-BBEE verification certificate and reports to assess the performance of each LSME to provide accurate and reliable state-of-the-industry reports to the DTIC and the Department of Justice and Constitutional Development.
  12. No contractual obligations between the B-BBEE verification agencies and the LSMEs shall preclude the B-BBEE verification agencies from providing such information and data as the Charter Council may require from time to time for measurement and monitoring purposes provided that the Charter Council shall fully comply with the provisions of the Protection of Personal Information Act No. 4 of 2013.

This concludes a basic overview of implementation and control of the Legal Sector Code. The next article will discuss Priority Elements, Sub-Minimum Requirements, and Key Measurement Principles, amongst others.

Share:

Facebook
LinkedIn
WhatsApp
Email

Social Media

Most Popular

Categories
On Key

Related Posts

Socio-Economic Development Element

What does the Socio-Economic Development Element entail? According to paragraph 7 of Statement 000 of the Codes of Good Practice (the Codes), one of the

B-BBEE FRONTING

2024 update Back in August 2020, an article was published on beeratings.com discussing BEE Fronting, current practices, and legal outcomes from court cases. This article