South African law firms are bracing for sweeping changes as the country’s Legal Sector Charter Council, headed by Christine Qunta, issues its first-ever official Clarification Notice.
The notice ushers in a new era for broad-based black economic empowerment (B-BBEE) compliance in the legal profession.
The move on Monday follows the gazetting of the Legal Sector Code (LSC) last September.
Now under the enforcement of the charter council, the LSC aims to “monitor compliance” and “provide clarification, support and assistance in the interpretation and implementation of the LSC”.
Compliance is expected
The council unambiguously warns that compliance is now the new norm, not an exception.
“Stakeholders must therefore use these clarifications for the purpose of compliance and measurement,” the notice orders.
From now on, compliance is not merely encouraged — it’s expected.
Crucially, the legal sector is not merely adopting a generic version of the B-BBEE rules. The council stresses: “The LSC is a sector-specific B-BBEE measurement code. Therefore, the interventions contained therein are based on the unique characteristics of the legal profession.
“It therefore, of necessity, differs from the Generic Codes of Good Practice in certain respects as a result of such unique characteristics.”
Who stands to benefit the most from these toughened rules? The council clearly states that “black legal practitioners are the principal beneficiaries of the measurement elements in the LSC”.
The charter underlines its focus, adding: “Reference to various categories of beneficiaries in the LSC scorecard, whether in the ownership or management control elements, refers to black legal practitioners in general and specific categories of legal practitioners in particular.”
Scope of compliance changed
When it comes to management measurement, there is a clear distinction.
“Only legal practitioners are recognised for weighting points. It is accepted that in certain instances there would be non-legal practitioners in law firms who are in management positions, such as, for example, in finance and human resources roles.
“These would be catered for in the category outlined on page 50, in their capacity as support staff, and therefore are distinct from the above management categories, which are only intended to count and measure legal practitioners.”
Although legalese often obscures clarity, a key directive stands out: “Substance must take precedence over legal form.”
The council insists this principle must guide all B-BBEE compliance assessments in the sector.
The scope of required compliance and the timeline for it have also changed.
Law firms and advocates registered with the Legal Practice Council can elect to be measured under the LSC, but, as the council cautions, once this decision is made, “they will be measured in terms of the LSC”.
Smaller entities catch a break: law firms with annual revenues below R5-million and advocates below R3-million are exempt.
However, those wishing to enhance their B-BBEE standing “must be measured and issued with a B-BBEE certificate and report and must comply with the QSE scorecard”.
Public sector not off the hook
The public sector is also not exempt from these requirements.
“Organs of state will require a B-BBEE certificate from legal sector measured entities (LSMEs) that wish to transact with the state. Some private sector companies may also require the same,” the council’s notice states.
The timeline is unambiguous. “In practical terms, and for the avoidance of doubt, any LSME whose financial year commences on or after the date of gazetting is subject to the LSC as of the date of the commencement of such financial year.”
Additionally, regarding verification, law firms and advocates must be prepared: “The verification of LSMEs is always based on the compliance spending that occurred in the previous 12 months.
“Therefore, in practical terms, depending on the commencement of the financial year periods, verification in terms of the LSC will only occur in 2026.”
