Top law firm challenges empowerment targets

The SA unit of Norton Rose Fulbright has launched a lawsuit against the government, seeking to overturn a newly implemented policy aimed at the transformation of the legal sector. A Business Day report says the legal confrontation – initiated last month by Trade, Industry & Competition Minister Parks Tau – will prove to be a test for the government’s determination to push through transformation in the sector via the B-BBEE (Broad-based black economic empowerment) legal sector code, aimed at giving black practitioners a fighting chance in the industry. The battle comes amid longstanding complaints by black lawyers about the slow pace of transformation in the sector that is dominated by Bowmans, Cliffe Dekker Hofmeyr, ENSafrica, Webber Wentzel and Werksmans. Brent Botha, a director at Norton Rose Fulbright, has said the new policy imposed unrealistic targets on law firms, potentially jeopardising their status in the government’s transformation agenda. ‘It changes the manner in which ownership, management control, enterprise development and skills development are measured. It imposes targets that are unreasonable, impractical and unrealistic, given the nature of large law firms,’ Botha said. Under the new policy, large firms such as Norton Rose Fulbright have been handed ambitious targets to jack up black ownership, management control and procurement. These firms must achieve 30%-50% voting rights for black practitioners, the same range for executive management roles and source 40% to 60% of legal services from black advocates. ‘The impact of the legal sector code is severe and irreparable. In an instant, as at the date of its next B-BBEE verification (in April), (Norton Rose Fulbright) will drop from a level one (135%) B-BBEE contributor to a level six (60%). This will, in turn, severely affect its ability to attract local clients and all but extinguish its ability to obtain work directly from the state,’ Botha’s affidavit reads.

The firm split its plea into two parts, notes the Business Day report. First, it is urgently seeking an interim order to suspend the legal sector code’s operation. The second part of the application wants the High Court to declare the legal sector code unlawful and unconstitutional. The government views the policy as a game changer for accelerating transformation in the legal sector. In a Government Gazette notice about changes to the policy, the state highlights challenges facing black lawyers, from being handed inferior work assignments and facing discrimination in procurement to inconsistent briefing patterns and being overlooked for senior roles. Tau’s office has until 24 January to file an answering affidavit. Meanwhile, the Black Lawyers Association was gearing up to jump in as an interested party to oppose the application, according to its president, Nkosana Mvundlela. ‘We believe in the transformation of the legal sector. Our view is that the application is something that should be dismissed and we believe after the court hears our arguments it may agree with that,’ he said. As one of the policy drafters, Mvundlela said the association was confident the policy was in line with the Constitution. ‘... The legal profession is a feeder system to the judiciary. Almost 90% of judges are sought from the legal profession. When you transform the legal profession, you empower the judiciary,’ he said.

In challenging the government’s transformation agenda policy, Botha was adamant the firm was not against the principle of transformation. ‘This application is therefore not an attack on the principle or idea of the legal sector code, or the objective of achieving greater transformation in the legal sector. However, the legal sector code is an unlawful, irrational and unconstitutional means to achieve that objective.’ According to the Business Day report, he described some of the changes made in the legal sector code as ‘counter-transformative’. ‘It is also notable that, unlike under the generic code, the legal sector code is limited to black practitioners, and not to black people generally. Moreover, it imposes higher targets on black ownership which has increased from 25% under the generic code to 30% under the legal sector code in year one and 50% in year five; and black women ownership has increased from 10% to 15% in year one and 25% in year five.’ 

Full Business Day report