Details on the LSSA’s further submissions on the LPB and response to the AFF submissions

July 1st, 2013
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By Barbara Whittle

The second set of submissions made by the Law Society of South Africa (LSSA) on the Legal Practice Bill (B20 of 2012) in May this year focused on responding to a number of questions raised by the Justice Portfolio Committee during oral hearings on the Bill, which were held in February. While the LSSA news column in the June issue of De Rebus (2013 (June) DR 11) provided a brief overview of the submissions, this article sets them out in detail.

Access to the attorneys’ profession

In responding to questions on race and gender demographics for the attorneys’ profession, the LSSA submissions provide statistics to illustrate progress made by black and female attorneys entering the profession, as well as initiatives taken to break barriers of entry for historically disadvantaged practitioners.

The LSSA statistics show the current figures as follows, illustrating that the number of white male attorneys has dropped by 6% over the past five years, whereas the number of black male attorneys, as well as black and white female attorneys, has increased by 2% in each case over the past five years.

Against this background, the LSSA provided graphs showing the numbers of first-year law students and final-year law graduates at universities, illustrating the demographics of candidates available to enter the profession. The LSSA also provided a graph of the demographics of candidates registering articles and admissions to the profession.

The LSSA noted that, although there has been a significant improvement in terms of historically disadvantaged candidates entering the profession over the years, progress has been slow and many challenges remain to improve the growth further.

Access to justice

The LSSA pointed out that small firms constitute the bulk of practising attorneys in South Africa – in excess of 75% – which was important for access to justice, as members of the public generally approached smaller firms for legal advice. In addition, other initiatives, such as the mandatory 24 hours per year of pro bono service by attorneys and the significant footprint of Legal Aid South Africa, contributed to access to justice.Access to justice

In dealing with the portfolio committee’s observation that the current fee structures in the profession impede access to justice and its query regarding why a client is made to pay twice for a single assignment (for an attorney and an advocate), the LSSA noted that an advocate is a service provider to the attorney. In confirming its support for the retention of the Bar as a referral profession, the LSSA indicated that even a small firm is able to take on big and complex matters, knowing full well that it can rely on the readily available skills of advocates.

As regards the cost of counsel, the LSSA outlined the difference between the role of the attorney and that of counsel: ‘The obligation to ensure the correctness of the advice vests with the attorney. The assurance that the work has been carried out diligently and without negligence is the responsibility of the attorney. The indemnity for anything that may go wrong in respect of the matter, including an opinion, is the sole responsibility of the attorney. Thus, the attorney acts as an insurer in matters of this nature. On a practical level, an attorney receives instructions, makes the initial assessment, narrows issues for consideration by counsel and then scrutinises the completed opinion in the interest of the client. Both parties, therefore, have a critical role to play, albeit in the same matter. Furthermore, it is the attorney that carries the indemnity cover for possible negligent advice leading to a loss by the client. This is singularly important for the protection of the public. The client, therefore, is provided with all the necessary protection by the attorney, while having access to the expertise of counsel.  Essentially, what is paid for is a comprehensive service, not a duplication of services.’

Funding the South African Legal Practice Council

The LSSA indicated that if, on the one hand, the South African Legal Practice Council is the body that governs a South African national Bar or law society – as is the case in other countries, especially in the Southern African Development Community region – the profession has a responsibility to fund it. On the other hand, if the council is a stand-alone statutory body with no recognisable constituency – as is the case of the Independent Communications Authority of South Africa and the South African Broadcasting Corporation board, for example – then government would have the responsibility to fund it.

Disciplinary matters and self-regulation

The LSSA provided an outline of the current types and numbers of disciplinary matters being dealt with by the statutory provincial law societies, as requested by the portfolio committee. At the oral hearings, the committee had indicated that there was a perception that the law societies were ‘soft’ on their members. The LSSA stressed that it was important to note that the percentage of attorneys who are offenders is minuscule compared to the number of ethical and law-abiding attorneys. This was an important indicator for self-regulation.

The LSSA responds to the Attorneys Fidelity Fund submissions

The LSSA took the view that it would not make specific comments on the future of the Attorneys Fidelity Fund (AFF) and deferred to the board of control of the AFF to do so.

In the process of formulating its comments to the portfolio committee over many months, the LSSA invited the AFF to participate in the deliberations, and its chief executive officer and chairperson of the board (and others from management) sat in on the LSSA council meetings, as well as special meetings held to discuss the Bill. The process evolved over several drafts, which were, for the most part, made available to the AFF as and when the draft submissions were formulated. However, the LSSA pointed out to the portfolio committee that the submissions by the AFF were not made available to the LSSA before they were presented to the committee and it was thus not possible for the LSSA to deal with their content before the hearing (see 2013 (Apr) DR 29).

The LSSA noted that some ‘misconceptions and inaccuracies’ existed in the AFF submissions and aimed to clear these up in a separate annexure to its May document, dealing specifically with the AFF’s oral and written submissions made in February.

In its introduction in the comments responding to the AFF, the LSSA stressed that the attorneys’ profession had lobbied parliament over 70 years ago for the creation of the AFF because attorneys realised and acknowledged that there were – and would always be – dishonest practitioners among them. The AFF was created to ensure that the public had confidence in using the services provided by attorneys.

Attorneys had initially made annual contributions to the AFF. When the AFF was strong enough so as not to require these contributions, attorneys made – and continue to make – token contributions in order to practise as sole practitioners, partners or directors. The reason was simple: The interest income of the AFF was so substantial that it simply did not need annual contributions from attorneys. If ever funds from trust interest become insufficient, attorneys can be held liable to boost them again via annual contributions.

As regards the nature of the funds in the AFF – which were referred to as ‘public funds’ at the portfolio committee hearings – the LSSA pointed out that, initially, as indicated above, the AFF was a fund to which attorneys contributed. Later, when trust fund interest was used to boost the AFF, such interest was, and still is, derived from deposits by the clients of attorneys. While such clients are members of the public, any view that such interest is ‘public money’ is, according to the LSSA, misdirected. The LSSA is of the view that legislation intended that such interest should vest in the AFF, and the AFF’s board has in the past been at pains to make it clear that such interest paid over to the AFF belongs to it.

In dealing with the contention that there is a perception of a conflict of interest by attorneys serving on the AFF board, the LSSA highlighted the following:

‘In most companies, the major shareholders are directors of that very same company. That does not result in the shareholding directors depleting the company. Attorneys practising in incorporated companies find themselves in the same position. Attorneys, by the nature of their work, have an inherent ability to wear separate hats. The nature of the profession is one that takes care of the interests and assets of others. That is why the profession takes its own governance and that of the AFF so seriously.’

The LSSA agreed with the suggestion by the AFF that the fund should have the power to assert its institutio­nal independence from the mainstream profession. However, the LSSA noted: ‘It is a separate entity, but there should always be recognition of the close relationship with the attorneys’ profession.’

The LSSA added: ‘If one accepts the position that the profession has a vested interest in the AFF and its ability to indemnify the public against theft by rogue attorneys (of whom the organised profession wants to rid itself), then one must accept that the governors of the regulatory structure who will comprise, among others, of a substantial number of attorneys, will have the preservation of the AFF at heart. This is all the more so, bearing in mind that it is they who effectively created the AFF in the first place, and maintained it to the position where it is today.’

The asset base of the AFF is worth more than R 3 billion.

  • The full further submissions on the Legal Practice Bill and the response to the AFF submissions can be accessed on the LSSA website, at www.LSSA.org.za.

Compiled by Barbara Whittle, communications manager, Law Society of South Africa, barbara@lssa.org.za

This article was first published in De Rebus in 2013 (July) DR 18.