Important Update on the Legal Sector Code – 29 October 2024

On 29 October 2024, the Legal Practice Council (LPC) issued a notice to all legal practitioners, providing clarification on the Legal Sector Code as we await the establishment of the Legal Charter Council. The Legal Sector Steering Committee confirmed key updates, which are outlined below:

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Exemptions from Compliance with the Legal Sector Codes

The following legal practitioners and law firms are exempt from compliance:

• Law Firms:some text
  • Annual revenue between R0 to R5 million.
  • Annual revenue between R5 million to R25 million, with more than 51% Black Ownership.
• Advocates:some text
  • Annual revenue between R0 to R3 million.
  • Black Advocates with annual revenue between R3 million to R15 million.

To qualify for exemption, these entities need only submit an Affidavit or CIPC Certificate confirming their turnover and level of Black Ownership. This determines their automatic B-BBEE Status level.

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Priority Elements for Compliance

Large Entities

Large entities must meet the sub-minimum targets for the following elements to avoid being discounted by one B-BBEE level:

• Ownership
• Skills Development
• Enterprise and Supplier Development

Qualifying Small Enterprises (QSEs)

• Compliance Requirements:
  QSEs are required to comply with Ownership and either Skills Development OR Enterprise and Supplier Development to avoid being discounted.
• Exemptions for Black-Owned QSEs:
  QSEs with 51% or more Black Ownership do not need to comply with priority elements unless they opt to be measured under the QSE Scorecard.

Transition Period for Verification

• Existing B-BBEE Certificates:
  Certificates issued before the gazette remain valid for the period stated on the Certificate.
• In-progress Verifications:
  If a verification process began before 20 September 2024, it can be finalized and issued under the Generic Scorecard.
• Legal Sector Measured Entities:
  All other entities will be verified based on the new Legal Sector Codes.

This poses challenges for entities with December year-ends, as they have limited time to plan and implement initiatives under the new standards. The lack of clarity from the Charter Council, which is still being set up, adds to this difficulty.

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Stay Informed and Plan for Compliance

These updates reflect significant changes designed to drive transformation within the legal profession. It’s vital for law firms and legal practitioners to understand these obligations and take action to ensure compliance.

For more details or to schedule a consultation, contact Elevate Advisory Partners at info@elevateadvisory.co.za.