Hurdles faced by start-up law firms

I am a candidate attorney, having previously worked in the small, micro, medium enterprises (SMME) sector as, inter alia, a Senior manager: Legal, corporate governance and compliance, as well as Deputy Company Secretary. I was fortunate enough to be an ex officio member of the executive committee and a permanent invitee to all board and board committee meetings by virtue of my role towards the board and the executive management. Among the regular agenda items were ‘reasons why most SMME’s fail at the infancy stages’. Research has shown that these SMME’s are not necessarily failing on their own, but are rather being deliberately failed by big businesses for fear of competition and the greed to monopolise the business sector. Government has, by its own failure to control this economic inequity, exacerbated the situation and thereby, consciously or inadvertently, colluded in the perpetration of economic injustice at the expense of the poor SMME’s.

While the definition of a SMME appears to be that the annual income thereof should be within certain thresholds it does not, however, seem to be inclusive of providers of professional services, such as law firms, specifically start-up law firms. This exclusion has created an impression that law firms are equal, which assumption is incorrect. Consequently, start-up law firms are unable to get projects from both big corporate firms and government as they are subjected to the same selection criteria as the established law firms. Banks, for example, outsource collection and conveyancing work worth millions of rands to select established law firms because of their ‘experience’. Government does the same. There are regular reports of municipalities and other state entities outsourcing huge debt collection contracts to a single law firm because of the so-called ‘the law firm is reputable’ excuse. Surely these projects can be awarded equitably to several law firms regardless of size. There must be obligatory open and transparent reporting by big corporates and government, through regular engagements with the legal industry, on how projects are being awarded and, where there are inequities, reasons thereof be provided.

This inequity has tremendously added to the strain experienced by start-up law firms operating in cities around the country to the extent that they cannot keep up with the ever increasing prices in office rental resulting in them either sharing small cubicles in order to pay less, however, at the expense of their growth. Government must come in here. Either categorise the start-up law firms at the same level of SMME’s and provide them with incentives, such as a rental rebate at a reasonable rate or allow them to establish offices in private homes around the various suburbs of the cities within which they operate, of course subject to proper regulation, perhaps up to the first two years of practice and as may be permissible in terms of the rules of the provincial law society.

The cake is big enough for all to share but the hyenas are so greedy they will not allow the helpless jackals to have a piece. Start-up law firms also aspire to grow and participate actively in the economy of South Africa.

Puledi Terrence Shoba, candidate attorney, Polokwane

This letter was written in Mr Shoba’s personal capacity. – Editor

 What does a comma have to do with it?

The importance of the correct use of English grammar is constantly stressed in legal drafting. No matter the type of drafting, whether it is a contractual, legislative or testamentary, it is the drafter’s responsibility to accurately record the content of the contract, statute or will.

The importance of correct English usage was recently illustrated in the United States case of O’Connor v Oakhurst Dairy (First Cir. 2017, 16-1901). The judgment’s opening line aptly summarised the kernel of the issue by stating ‘[f]or want of a comma, we have this case.’

The case, on appeal, revolved around whether the dairy farmer’s drivers fell within the ambit of the Maine’s overtime law reflected in the Maine Revised Statute or whether their activities fell within the Exception F that reads as follows:

‘The canning, processing, preserving, freezing, drying, marketing, storing, packing for shipment or distribution of:

(1) Agricultural produce;

(2) Meat and fish products; and

(3) Perishable foods’ (my italics).

The italicised section was the root of the ambiguity and brought into question the scope of the exception. One of the arguments was that without a comma after the word ‘shipment’, the provision could read that ‘shipment’ and ‘distribution’ were synonyms and that the legislature had included two words to deal with the same concept. By including, what the court called a serial comma (sometimes also referred to as an Oxford comma), so that the provision would read ‘packing for shipment, or distribution’ it would then have been clear that the legislature had intended to use ‘shipment’ and ‘distribution’ as two separate and distinct concepts.

Both parties attempted to resolve this ambiguity by using a number of legislative aids, including grammatical arguments, legislative comparisons where similar terminology was used, the Chicago Style Guide (that recommended that serial comma’s not be used in the drafting of legislation), and the drafting history of the legislation. The court noted that if the serial comma had been used it would have provided clarity, however, ultimately found that the Exception F remained ambiguous irrespective of the legislative aids presented by the parties. The court’s decision ultimately hinged on how to achieve the purpose of the legislation, which was to provide protection of overtime pay to employees. The court found that the dairy farmer’s drivers did not fall within the scope of Exception F and were, therefore, protected by the Maine’s overtime laws.

Even though this case does not have authority within the South African context, it illustrates the importance of the correct use of punctuation and grammar when drafting any document. It also highlights that a drafter should rather focus on ensuring clarity in their drafting than rigidly following the prescribed style guide.

Michele van Eck, legal adviser, Johannesburg

This article was first published in De Rebus in 2018 (June) DR 4.