The Legal Practitioners’ Fidelity Fund (LPFF) held a stakeholder’s brunch on 29 July 2022 in Johannesburg. In her welcoming speech, the Chairperson of the LPFF, Peppy Kekana, said the purpose of the brunch was to build a conversation on how stakeholders see the LPFF. At the brunch, Chief Executive Officer of the LPFF, Motlatsi Molefe, and his team made presentations to attendees on the work the LPFF does.
Chairperson of the Legal Practitioners’ Fidelity Fund, Peppy Kekana, welcomed guests at the organisation’s stakeholder brunch.
Mr Molefe said that it is important for the profession to understand that as an institution, the LPFF has been in existence for more than 70 years, but if one asks the fundamental question of how many people know about the LPFF, he said not too many people know of its existence. He added that a secondary question that one must ask is ‘how many legal practitioners even know the process of claiming against the Fund on behalf of clients?’
Mr Molefe pointed out that some legal practitioners do not even know the types of claims that are allowed in law that the LPFF must settle. He said that the LPFF – together with its stakeholders – should investigate ways on how to educate legal practitioners and the public about the LPFF and its functions. Mr Molefe spoke about the LPFF as a business, he pointed out that the reason for speaking about the organisation as a business, is that the organisation must remain sustainable in order to carry out all the statutory functions that it is supposed to carry out. He added that the primary function of the LPFF is to protect the public against theft of trust funds by legal practitioners.
Mr Molefe added that the second and most important function of the LPFF in terms of s 22(b) of the Legal Practice Act 28 of 2014, is to subvent the activities of the Legal Practice Council (LPC). He said the subvention is very important as it enables the LPC to have sufficient resources to allow it to be able to carry out its regulations in a proper and reasonable way and to ensure that risk is controlled.
Chief Executive Officer of the Legal Practitioners’ Fidelity Fund, Motlatsi Molefe said that the LPFF – together with its stakeholders – should investigate ways on how to educate legal practitioners and the public about the LPFF and its functions.
Mr Molefe further explained that the LPFF’s revenue is primarily dependent on interest received from trust accounts and returns on investments. He pointed out that the issue regarding trust accounts is a problem, as it depends on a third party, which happens to be the monetary policy in South Africa, which decides interest rates are applicable. He said that the income of the LPFF is the function of interest rates and pointed out that the interest rates can go up or down at any time.
Mr Molefe said in the past few years the interest rate was flat and the LPFF did not receive as much interest as it did in previous years. He added that the bad things that are done by some legal practitioners reflect on the whole legal profession, as people start to paint all legal practitioners with the same brush. He said that what is worrisome is that those who have misappropriated trust fund money appear to have no personal shame.
Mr Molefe spoke about the automated monthly transfer system that legal practitioners should use. Mr Molefe appealed to the profession to be receptive and cooperative on any new initiatives brought by the LPFF. He also asked that legal practitioners identify themselves properly when they put money in the LPFF’s account, as it becomes difficult for the LPFF to allocate the amount when there is no reference. He apologised for the backlog that the LPFF has had paying back refunds to some legal practitioners. He said the system the LPFF uses is old and only allows one person at a time to be logged in to process refund payments. However, he said the backlog should be dealt with by the end of September 2022.
Investment Executive of the Legal Practitioners’ Fidelity Fund, Robert Barawundi, presenting at the stakeholder’s brunch.
The LPFF’s Investment Executive, Robert Burawundi discussed, among other things, the importance of why legal practitioners should use the automated monthly transfer system. He said that the LPFF has statutory obligations to meet, which means it has payments to make regardless of whether the Fund is making money or not. He pointed out that one of the tools the LPFF is going to use to increase returns is the automated monthly transfer system, which will allow legal practitioners to make trust interest payments to the Fund, which is earned in their trust accounts on a monthly basis. He said legal practitioners should use the system because –
Mr Burawundi pointed out that the automated monthly transfer system reduces the need to make investment withdrawals to finance shortfalls, to pay claims, the LPC and other costs that are associated with running the business of the LPFF. He added that it will mean the increase in the return investment of the LPFF and better dividends because the Fund will not be withdrawing money in inopportune times.
Kgomotso Ramotsho Cert Journ (Boston) Cert Photography (Vega) is the news reporter at De Rebus.
This article was first published in SA Lawyer in 2022 (September) DR 2.
