Webbers, Werksmans, Bowmans go to court to take on BEE

This article was first published by The Common Sense.Key topics:Major SA law firms challenge B-BBEE Legal Sector Code as unlawful, unworkableCode demands 50% black ownership in 5 years, scrapping bursaries and pro bonoCritics cite exclusion of small firms, unrealistic targets, and transformation debate.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..From The Common Sense.Three of South Africa’s largest and most influential law firms – Werksmans, Webber Wentzel, and Bowmans – are heading to the Gauteng High Court to challenge the new broad-based black economic empowerment (B-BBEE) Legal Sector Code of Good Practice.In a joint statement issued last week, the firms slammed the code as “unlawful, unworkable, and [that it] risks undermining, rather than advancing, meaningful broad-based transformation in the legal profession, harming the very people it is supposed to benefit.”The Code was published in September 2024, and requires that qualifying law firms raise their black voting rights and ownership from 25% to 50%, all within the space of five years.The firms are objecting to the code as it derecognises a number of “proven transformation mechanisms”, which had been accepted under the previous “generic” codes. These included bursaries and development contributions such as pro bono legal work. These, they argued, are “foundational to a functioning transformation pipeline”. These efforts open up pathways into the legal profession for people who might otherwise not have such access and make high-end legal expertise available to vulnerable groups..Read more:.South African law firms challenge equity code in court.The exclusion of smaller firms from the purview of the code (those with between one and three partners) would mean that it would effectively apply to fewer than 5% of all firms in the legal profession in South Africa. This would have a very limited impact on the transformation of the profession.The metrics used to measure management and ownership excluded “black non-lawyers”, even though these were operationally crucial.Perhaps most significantly, the demands are “practically unachievable”.“The heads of argument,” the statement comments, “note that the Technical Committee (which advised the Minister on the draft [Legal Sector Code]) itself described a 5% increase every two years as reasonable, yet the final LSC adopted a 10% increase every two years. The firms argue that this is arbitrary, unsupported by proper empirical research, and risks forcing outcomes that are neither sustainable nor lawful.”South Africa’s racial “transformation” policies have been a longstanding point of contention for their impact on the country’s investment and business climates. Demands to cede equity in firms or to have staff policies determined by labour legislation are dictated more by ideology than by an appreciation of the realities of operating a business in a tough environment. Businesses have tended to be cautious about expressing their concerns, although from time to time both domestic and foreign businesspeople have spoken out..Read more:.From redress to reassessment: The evolution of BEE and the legal, political reckoning.In recent years, the African National Congress has doubled down on these policies, declaring them non-negotiable and forcing more demanding and prescriptive measures on business. However, open questioning and public challenging of these policies has become more vocal and explicit too..This article was first published by The Common Sense and is republished with permission.

Webbers, Werksmans, Bowmans go to court to take on BEE

Key topics:

Related Stories

South African law firms challenge equity code in court

David Ansara: Musk is right about race laws in South Africa

Wietze Post: Wright's Law kicking in- solar, battery prices collapsing

The Economist: Every company a media company - rise of 'chatter-industrial' complex