Last week, the Minister of Trade, Industry and Competition gazetted the Broad-based Black Economic Empowerment Legal Sector Code of Good Practice (‘the LSC’), effective 20th September 2024. Underpinned by the objectives of the Broad-based Black Economic Empowerment Act (‘the B-BBEE Act’), the Code establishes a policy framework to accelerate the transformation of the legal fraternity.
Pursuant to section 9(1) of the B-BBEE Act, the LSC is an industry-focused code that contextualises the aims of B-BBEE within the legal sector. It provides helpful guidance to stakeholders to establish transformation charters, introduces indicators to assess B-BBEE compliance, and delineates qualifying criteria for procurement purposes. Until now, the legal profession did not have a sector-specific code to meaningfully address its ‘imbalances and inequalities’. Instead, the profession previously relied on generic codes, which are formulated broadly and do not take account of the unique nature or professional and commercial characteristics of the industry.
Undergirded by a commitment to sectoral and society-wide transformation and designed to encourage compliance with the B-BBEE Act, the LSC introduces various strategic targets to advance the implementation of B-BBEE objectives within the legal profession. Specifically, these targets include 50% black ownership, with black women owning a minimum of 25%, over 5 years, and 50% representation of black practitioners – including a target of 25% for black women practitioners – at management level, that is executive and board participation. Further, the LSC establishes a 60% procurement target when private entities procure services from black advocates, and a target of 80% in instances where the state procures specialised legal services from black-owned Legal Sector Measured Entities (‘LSMEs’).
To achieve these aims, the LSC imposes a compliance target of 3.5% expenditure on skills development and training programmes for black candidate practitioners. For clarity, this target equates to the percentage of a legal entity’s annual leviable amount. Motivating this target, the LSC pinpoints the importance of providing specialised training to junior black advocates, black attorneys, and black candidate legal practitioners, with a specific emphasis on black women and youth, black individuals with disabilities, and those from rural areas.
Delineating the scope of its application, the LSC clarifies that its provisions apply to all practising advocates and law firms registered with the Legal Practice Council, including partnerships, sole proprietors, and incorporated legal entities, which elect to be assessed in accordance with – and benefit from – the B-BBEE Act and related policies for compliance purposes. However, Exempted Legal Entities (‘ELEs’), which fall within a defined monetary threshold, are excluded from compliance.
STBB’s commercial-focused B-BBEE specialists have extensive experience in navigating the complexities of the B-BBEE Act and its Regulations and various Codes of Practice. For professional advice or assistance, contact our experts here.
