Mr. Parks Tau, the newly appointed Minister for the Department of Trade, Industry and Competition (“dtic”), on Friday the 13th of September 2024 approved the Draft Legal Sector Codes of Good Practice for promulgation and gazetting, bringing to life the long-awaited codes that are more sector-specific to allow for easier compliance for legal sector organisations, as well as to increase the pace of transformation in the sector overall.
What has come as a surprise to any seasoned B-BBEE professional are the relatively low targets when compared to other more recently gazetted sector codes, but even more interestingly, the targets confirmed in the media briefing are lower than those in the original draft issued in July 2022.
Key measurements and objectives:
Although limited information is currently available related to the amended draft code, the below Key measurements and objectives have been confirmed:
- A Black Ownership target of 50% and Black Female Ownership target of 25%, both with a 5-year phase-in period;
- A Management Control target of 50% Black and 25% Black Female practitioners, particularly those seen as equity partners and associates;
- A Skills Development target of 3.5% of Leviable Amount for training programmes for Black Candidates. The overall goal here is to promote the upskilling of Black Youth, Black Women, Black Persons with Disabilities and Black Persons from Rural Areas, with a targeted focus on Black Legal Practitioners, Candidate Legal Practitioners and Black Junior Advocates;
- A Preferential Procurement target of 60% by the Private Sector, and 80% for the Public Sector.
Many legal and B-BBEE professionals have also welcomed the amended requirements for SMMEs operating in this space. With the original draft codes issued in 2022, many professional organisations raised concerns around the impact of forcing SMMEs to comply with more than just Ownership, however the June 2024 amendments to the draft eased these concerns, with the DTIC confirming the below:
- Attorneys with an Annual Turnover between R 0 – 3 million, and/or with 1 to 3 Directors or Partners, will be exempted and may complete the Legal Sector B-BBEE Exempted Micro Enterprise (EME) Affidavit, receiving the below recognition:
- 100% Black or ≥51% Black Women Owned = Level 1
- ≥35% but <51% Black Owned = Level 4
- <35% Black Owned = Level 5
- Advocates with Annual Turnover of R 0 – 3 million with less than 3 years in operation will be exempted whereby a Black Advocate will qualify as a Level 1 B-BBEE Contributor, and a White Advocate as a Level 4
- Attorneys & Advocates with Annual Turnover of R3 – 15 million will qualify as Qualifying Small Enterprises (QSEs) and will be measured according to the QSE scorecard.
- Enhancement options are available to increase the above levels by making contribution towards the Legal Sector Transformation Fund, or through expenditure and/or contributions to Skills Development.
Although the above is a positive move for B-BBEE and Transformation of the legal sector, this announcement has led to many B-BBEE professionals now waiting, with bated breath, to see if there will be any news around the remaining draft codes currently sitting with the dtic, these being:
- Integrated Transport Codes of Good Practice;
- Temporary Employment Services Codes of Good Practice;
- Events, Technical & Productions Services Codes of Good Practice;
- 2019 Aligned Media, Advertising & Communications
At Siyakha, we have a team of dedicated Transformation specialists with many years of experience working with legal professionals and legal firms to unpack the requirements for B-BBEE. Outside of the legal obligations of B-BBEE, understanding how to prioritise implementation in a way that adds business value is our area of specialty. Feel free to reach out to anyone in our team should have any queries or require further information.
Suzaan Bezuidenhout
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