Major law firms challenge new Legal Sector Code aimed at transformation.
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After three decades of democracy, South Africa’s legal profession remains among the least transformed sectors in the country. The introduction of the new Legal Sector Code (LSC) is intended to move the industry beyond symbolic compliance and drive real structural change within a multibillion-rand profession.
The LSC was gazetted in September 2024 with the intention to accelerate transformation and increase black ownership, management control, and equity in the country's legal profession.
Law firms and private entities are expected to procure at least 60% of their legal services (including briefings of advocates) from black practitioners.
The State and its institutions are expected to procure 80% of their legal services from black-owned Legal Sector Measured Entities.
The LSC replaces generic B-BBEE frameworks with mandatory, industry-specific targets designed to make transformation a business-critical priority. Within five years, large firms are expected to reach 50 percent black ownership, with 25 percent specifically held by black women, a major increase from previous benchmarks.
Law firms with turnovers below R5 million and advocates who generate an annual R3 million turnovers will be exempt, deemed automatically compliant.
This shift from voluntary compliance to enforceable transformation signals a watershed moment in South Africa's legal landscape.
However, the introduction of the LSC has elicited significant pushback from some of the country's largest law firms, including Deneys-Reitz, Webber Wentzel, and Werkmans. These firms are challenging the LSC, asserting that its scope is too narrow and primarily targets large firms, which constitute less than five percent of the profession—leaving the greater part of practitioners untouched.
They argue that the code is potentially unlawful, unworkable, and could inadvertently hinder genuine transformation efforts. A legal battle is underway in the North Gauteng High Court in Pretoria seeking to set aside the LSC.
Concerns have also been raised about the exclusion of black non-lawyer professionals, such as CFOs and HR directors, from management control scoring under the new code. The firms argue that this weakens recognition of crucial talent development initiatives, like bursaries for black law students, which were highlighted in earlier compliance frameworks.
Pumla Mncwango, President of the Black Conveyancers Association, paints a troubling picture of the current state of the legal sector.
She said that on ground, the legal profession presents a stark contrast between entry-level diversity and senior leadership. While recruitment at junior levels has improved significantly, a severe bottleneck remains at the top.
“Black juniors are often given internships by major law firms, yet they rarely ascend to leadership positions; they remain on the lower rungs, especially black females who face marginalisation based on both race and gender,” Mncwango explains.
The frustration stems from a perceived lack of growth opportunities, contributing to a talent drain from the profession.
Mncwango explained that in large white-owned firms, most partners (on average 75%) remain white, on creating a professional landscape resistant to change.
"The B-BBEE legislation is aimed at breaking this monopoly within the legal fraternity," she said, drawing attention to systemic obstacles that plague many practitioners.
The historical prejudice, she said, often leads to black professionals continually having to prove their competence.
"This is despite on average a talent pool of 59% professional associates (the level from which equity ownership should be sourced) who are black but experience a barrier to becoming equity partners that remain stunted at 25% black."
In countering the claim that the LSC applies to only five of law firms, she points out that this low percentage reflects the concentration of firms that monopolise legal work but hides the fact that a single firm can have 400 partners and therefore thousands of lawyers in its employ.
"This small number of firms represents a huge concentration of talent, which must be viewed from the perspective that each lawyer could have owned a law firm independently. In this context, this five percent represents a large number of lawyers concentrating and monopolising legal work within a small number of firms,'' she said.
She also noted that the exclusion of professionals who are not attorneys was intentional. She explained that only attorneys can hold equity in a law firm, and if other professionals are recognised as counting towards the transformation score, it opens the door for black professional employees who are not attorneys to improve transformation scores without reflecting true transformation at an ownership level.
"Professional employees are therefore counted as if they are owners when they are not, thereby over-representing transformation of equity ownership."
Mncwango argued that the stakes of transformation transcend mere economic reparation; they dictate the future of the judiciary in South Africa. With a significant portion of the judiciary drawn from lawyers and advocates, the prevailing lack of diversity limits the pool of candidates eligible for the bench.
"We must remember that these large firms attained their success and size through the unearned advantages they enjoyed under apartheid. We must demand that they represent and reflect the demographics of this country into the future," she added.
sinenhlanhla.masilela@iol.co.za
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