Legal Practice Bill on agenda at KwaZulu-Natal Law Society AGM

March 1st, 2014
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By Mapula Sedutla  

The KwaZulu-Natal Law Society (KZNLS) held its annual general meeting (AGM) in Durban late last year. Speakers at the AGM included Deputy Minister of Justice and Constitutional Development, John Jeffery; Manager of the Attorneys Development Fund (ADF), MacKenzie Mukansi; Manager Director of the Attorneys Insurance Indemnity Fund (AIIF), Sipho Mbelle; Chairperson of the Attorneys Fidelity Fund (AFF), CP Fourie and Co-chairperson of the Law Society of South Africa (LSSA), David Bekker.

A necessary Bill

Opening his keynote address, Mr Jeffery said that AGMs were a good time to assess where the law society and the organised profession were in order to look to the future and plan for the following year. He said the legal profession was on a threshold of major changes with the imminent finalisation of the Legal Practice Bill. Speaking on the importance of the Bill he said:

‘There are some who would say that this Bill is unnecessary – that there is nothing wrong with the Legal Profession that needs to be fixed. A few go further to claim that this Bill will destroy the independence of the Legal Profession or that the changes will destroy the professionalism of the attorneys and advocates. But let’s look at some facts.

We come from a British common law system and when it comes to the legal profession, comparisons need to be made with other British Commonwealth countries. Reform of the legal profession is something that has been happening in almost all the larger countries of the Commonwealth. Britain itself – in its component parts of England, Ireland, Scotland and Wales – has been reforming the profession on an on-going basis. In Nigeria, Kenya, Zimbabwe and Namibia the distinction between the Bar and side Bar was abolished on independence. The same situation applies in New Zealand and parts of Australia, so what is wrong if we in South Africa look at the reform of the legal system and why it is so difficult to get any kind of reform implemented?

There are other factors that we need to look at in the [South African] context. I have recently given speeches on the topic of the legal profession and access to justice, more specifically the role of the profession in making justice more accessible to all South Africans. The main thrust of my arguments on both those occasions were, firstly, that the majority of our people, not only the poor, but also the middle class, simply cannot afford private legal services or the services of an attorney, thus making it difficult for them to access justice and, secondly, that there is a growing level of disillusion and distrust amongst members of the public in the legal profession.’

Highlighting transformation issues that need to be addressed by the Bill, Mr Jeffery said that the profession needs to ask themselves the following questions: In KwaZulu-Natal for example, is there any large attorneys firm with a majority of African partners? In the large law firms, most of whom will have some black partners, do those black partners have any real power? How many managing directors or CEOs of these firms are black people or women?

Profession vs business

Mr Jeffery said that it was accepted that attorneys need to make a living but that they cannot see themselves as simply running a business in the normal course for the primary aim of increasing a profit margin. He added that this is not what a profession does, since a profession renders a specialised service under a strict code of ethics. He said what differentiates a profession from a business was taught to candidate attorneys as part of their ethics course. He said that there are generally six common characteristics of a profession, namely:

  • It demands possession of a body of specialised knowledge and extended practical training.
  • It renders an essential, specialised service and demands continuous in-service training of its members.
  • It has a clearly defined membership of a particular group with a view to safe-guarding the interests of the profession.
  • It involves a code of ethics.
  • It sets up its own professional organisation.
  • It has a transparency of work.

In closing Mr Jeffery said: ‘Lawyers have the power and the responsibility of restoring society’s faith in the legal system, the rule of law and in democracy. I hope that we can return to what Michael Greco, former President of the American Bar Association, calls the “renaissance of idealism”, a “recommitment to the noblest principles that define our profession: Providing legal assistance to assist the poor, disadvantaged and underprivileged; and performing public service that enhances the common good”.’

Word from the ADF

Mr Mukansi said that the ADF has not had a manager for some time and thanked the board for keeping the organisation afloat during the absence of a manager. He said that since he took the appointment of manager in July 2013, there have been about ten newly established firms applying to the ADF that have been approved and assisted as per the mandate of the fund.

He reiterated the importance of the ADF’s attendance at the AGM stating that it was an important governance imperative that the ADF’s management meet the council of the KZNLS as they are shareholders of the fund. Mr Mukansi further said ‘the first priority of the fund was to identify strategic stakeholders that would ensure the success of the fund, thus talks were held between the ADF and the Legal Education and Development (LEAD) arm of the Law Society of South Africa to ensure that the ADF uses LEAD’s mentorship program to allocate mentors for ADF applicants and channel mentors elected by applicants to the LEAD mentorship program. This practice helps us leverage on our strategic partners’ capabilities and avoids duplication of effort.’

Mr Mukansi noted that the ADF has been on a huge drive to get itself known: ‘What we would like to know is how can we be relevant to the organised profession; is our mandate talking to what is required on the ground as far as developing the legal profession and the newly admitted attorneys. I would like to put forward the challenge to say talk to us either by e-mail or telephone and let us know. Through these engagements, we are confident that we will remain relevant to the needs of the profession and be able to manage and meet our expectations.’

Word from the AIIF

Giving background on the insurance organisation, Mr Mbelle said that the AIIF is a non-profit organisation 100% funded by the AFF and that Aon, which took over from Glen Rand, has been given a contract until 2015 to manage the insurance organisation. He said that the AIIF is an insurance organisation that provides professional indemnity cover and bonds of securities to a limited extent.

In terms of the performance of the AIIF, Mr Mbelle said that the organisation has been providing free court bonds since 1998. He added that, at that time, the AIIF had a total exposure of about R 9 billion and that exposure continued to grow on an annual basis. He said that by the end of 2013 the insurance organisation would have taken bonds of about R 1,6 billion. He further said that one of the problems the AIIF has is that it still has court bonds that are open since 1998. He said: ‘Very often people approach us for the bonds and we ultimately give them the bonds, but when estates have been closed … there is no communication between us and the profession. It is important to keep the communication open in order to make sure that we do not continue to have unlimited exposure.’

According to Mr Mbelle professional indemnity claims have continued to increase and, in the past five years, there was a compound growth rate of 16,6%, which is higher than those in other professions; ‘the only other profession that has exceeded that compound annual growth rate is the medical fraternity’. He further said there has been a growth in conveyancing and Road Accident Fund claims.

Mr Mbelle said that one of the risks that has increased is the general prescription area; in 2012 alone there has been eight claims associated with general prescription. He said that the AIIF’s income statement has been under pressure, ‘we have had an underwriting loss for the past five years. … When you look at the underlying factors behind them it is primarily because the claims have been increasing. The level of the cost escalation of running the AIIF has not escalated at the same rate as what we have seen in terms of the claims that have come across. We have been surviving because of the investment income that we have had, we have a healthy investment but on an annual basis we find ourselves having to dip into that investment in order for us to be able to balance our books. … It is not the kind of a situation that we want to see continue going forward. … We need to see ourselves being able to build on the investment assets of the organisation in order to grow it and make sure that we continue to survive and service the profession.’

Word from the AFF

Mr Fourie said that in the present environment of a slow economy with low interest rates, the AFF’s growth rate is unfortunately unable to keep pace with its financial commitments. He said the fund’s actuary provided a report on the long-term sustainability in June 2013, indicating that the current trends of income and expenditure point towards the fund becoming potentially unsustainable within five to ten years.

Speaking on the AFF’s operational deficit in 2014, Mr Fourie said: ‘While it is acceptable to use accumulated reserves to cover short-term operating deficits, it is not acceptable to use reserves to cover ongoing deficits, which threaten long term sustainability. … As a result of all this we have decided as far as s 46(b) funding to the [LSSA] is concerned we have to cap the funding for the next three years at the current funding levels, [w]ith the exception [of] exceptional circumstances.’

Word from the LSSA

Mr Bekker said that it is sad to say that members of the legal profession were quiet and did not respond to questionnaires or circulars that were sent out by the LSSA to assess some of the problems its members were faced with. He urged attendees to get involved and communicate with their council and put forward their opinions.

Touching briefly on the Legal Practice Bill, Mr Bekker said that interesting issues were raised by the portfolio committee and that the LSSA made submissions, which are available on www.LSSA.org.za. He said the LSSA met with the General Council of the Bar as well as the Independent Association of Advocates of South Africa, which are now known as the National Bar Council of South Africa and, although they tried to reach a consensus on a number of matters, there were some matters where they could not agree and separate submissions were made by the Bar and the attorneys.

He added: ‘I think one worrying aspect as far as the regulatory bodies are concerned is the fact that advocates can receive briefs directly, I do not think that it is a threat for us as attorneys, but it might be a threat for the public and I do not know whether the entire issue of the practical implications of taking direct instructions has really been debated and exhausted by all those involved. It will seriously impact on the Attorneys Fidelity Fund and we will have to ensure as a profession, … that we have the necessary controls in place to ensure that those advocates that choose to take that route are trained and that the necessary controls are in place.’

Mapula Sedutla, mapula@derebus.org.za

This article was first published in De Rebus in 2014 (March) DR 4.

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