LPA changes: The new normal

December 1st, 2018

2018 was an eventful year, the enactment of more sections of the Legal Practice Act 28 of 2014 (LPA) that will change the landscape of the legal profession for years to come. Legal practitioners will have to grapple with the fact that these changes will have some type of effect on the way they practise. What do all these changes mean for legal practitioners? What changes will you as a legal practitioner have to implement to ensure that your practice is in line with the LPA?

One of the changes that has been brought about by the LPA is that the Attorneys Fidelity Fund is now called the Legal Practitioners Fidelity Fund. In relation to Fidelity Fund Certificates, s 84 of the LPA states:

‘(1) Every attorney or any advocate referred to in section 34(2)(b), other than a legal practitioner in the full-time employ of the South African Human Rights Commission or the State as a state attorney or state advocate and who practices or is deemed to practice –

(a) for his or her own account either alone or in partnership; or

(b) as a director of a practice which is a juristic entity, must be in possession of a Fidelity Fund Certificate.

(2) No legal practitioner referred to in subsection (1) or person employed or supervised by that legal practitioner may receive or hold funds or property belonging to any person unless the legal practitioner concerned is in possession of a Fidelity Fund Certificate.

(3) The provisions of subsections (1) and (2) apply to a deposit taken on account of fees or disbursements in respect of legal services to be rendered.’

Since the provincial law societies no longer exist, their regulatory functions have been taken up by the Legal Practice Council (LPC) and through delegated authority the Provincial Councils. The offices of the former provincial law societies are now operating as regional offices of the LPC, practitioners can contact those offices to obtain Fidelity Fund Certificates. To obtain a Fidelity Fund Certificate, legal practitioners must satisfy the following requirements –

  • pay an annual contribution of R 345 (including VAT) to the LPC for issuing of the certificate;
  • prove that they have completed the Practice Management Training before applying for the certificate, subject to provisions of r 27.1 of the Legal Practice Act Rules;
  • timeously submit trust account audit report/s (in respect of all practices in which the legal practitioner is either sole practitioner/partner/director) approved by the LPC; and
  • complete the application, which now also includes the Attorneys Insurance Indemnity Fund risk questionnaire.

In preparation for the application process, legal practitioners must be ready with the following information in respect of all practices that they are linked to as either sole practitioner/partner/director:

Trust account/s balances for the previous four quarters ended (31-12-2017; 31-3-2018; 30-6-2018 and 30-9-2018) for the following accounts –

  • s 86(2) – to be reported individually for each s 86(2) account held by the practice per financial institution;
  • s 86(3) – to be reported individually for each s 86(3) account held by the practice per financial institution;
  • s 86(4) – total balances to be reported per financial institution;
  • a breakdown of the reported balances, for example, what portion was for conveyancing/litigation/estates/commercial/etcetera, in terms of values. Please note that this breakdown is compulsory;
  • estates – total balances to be reported per financial institution; and
  • properties (other entrusted assets) – total balances to be reported.

The LPA has come into operation as follows:

  • Chapter 1 – Definitions, application and purpose.
  • Chapter 3 – Regulation of legal practitioners: This includes s 35 with the exclusion of subss 35(1), (2), (3) and (7) up to and including (12) which deal with fees for legal services. The Law Society of South Africa (LSSA) wrote to the Justice Minister some time ago requesting the suspension of these subsections until the investigation by the South African Law Reform Commission (SALRC) has been completed and there has been proper consultation. This means that only subss (4) and (5) of s 35 relating to the SALRC investigation on fees for legal services and s 35 (6) legal fees payable by government, will come into operation.
  • Chapter 4 – Professional conduct and discipline, excluding:

– s 37(5)(e)(ii) – lay persons on disciplinary committees (DCs);

– s 40(1)(b)(ii) and (7)(b) and s 41 – right of appeal against DCs’ findings

– s 42 – monitoring of disciplinary functions by the Ombud.

  • Chapter 6 – Legal Practitioners Fidelity Fund.
  • Chapter 7 – Trust money and accounting.
  • Chapter 8 – General provisions, excluding s 93(5) – Offences relating to the Ombud.
  • Chapter 9 – Regulations and Rules, excluding s 95(2), which deals with the rules relating to the Ombud.
  • Chapter 10 – Part 3 – Transitional provisions; and Part 4 – Repeal of laws.

During the next few months many changes will be taking place, practitioners are advised to keep abreast of the developments in the profession. Legal practitioners will have many questions during this time as they navigate their way into their new normal. The LSSA has set up a questions and answers page on their website for practitioners to ask questions pertaining to the LPA and the LPC, see page 14.

The De Rebus Editorial Committee and staff wish all of our readers compliments of the season and a prosperous new year.
De Rebus will be back in 2019 with its combined January/February edition, which will be sent out at the beginning of February 2018.
De Rebus staff, back from left: Kgomotso Ramotsho, Kevin O’Reilly, Shireen Mahomed and Isabel Joubert.
Seated from left: Kathleen Kriel and Mapula Sedutla.

This article was first published in De Rebus in 2018 (Dec) DR 3.