This week the high court in Pretoria will hear a challenge against the government’s new policy aimed at transforming the legal sector.
The broad-based BEE legal sector code promotes equal participation in the economy of the sector and was implemented in 2024 by trade, industry and competition minister Parks Tau to address imbalances of apartheid.
Prominent law firms Bowmans, Webber Wentzel, Werksmans and Norton Rose Fulbright SA and trade union Solidarity want the policy reviewed and possibly scrapped. Adv Tembeka Ngcukaitobi SC is representing some of the law firms.
The law firms argue the code will result in them losing their top B-BBEE ratings and possibly losing out on government jobs.
The legal sector has never had its own transformative policy and had been using generic BEE policy.
Other parties backing Tau include the Legal Practice Council, the pan-African Bar Association of SA, the Black Lawyers Conveyancers Association and the Black Lawyers Association.
What you need to know about arguments between Tau and the law firms
What the code says:
- New regulations require law firms to increase black ownership, management and procurement. It requires 30% of state procurement to be reserved for black-owned companies in the next five years.
- Firms generating more than R25m a year must have 30% of exercisable voting rights held by black legal practitioners in the first year.
- It also mandates that businesses seeking state contracts ensure 40% of their own procurement comes from black-owned suppliers.
The law firms’ arguments:
- The firms claim that under the new legal sector regime, they will lose their B-BBEE status, which will affect their ability to business with the state and big banks due to poor equity ratings. Non-compliance now means automatic exclusion from state contracts, they claim.
- The timeline to achieve the black ownership targets is too short and the code fails to recognise that in the legal sector practising lawyers in a firm can be owners.
- Junior lawyers follow structured progression paths that generally take 10-11 years before becoming equity partners.
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