Unreasonable and unfair increased costs imposed on Legal practitioners by regulatory bodies.

4 November 2019  

The Law Society of South Africa (LSSA) is cognisant that the Legal Practice Council (LPC) and the Legal Practitioners Fidelity Fund (LPFF) are the two regulators in South Africa that regulate the legal profession in the public interest.

The LSSA appreciates, understands and respects the statutory functions enjoined to these two bodies in terms of the Legal Practice Act (LPA).

The LSSA’s constitution enshrines the rule of law as one of the key principles which the LSSA is committed to uphold and protect. The LSSA notes the regulatory function is based on the principle of the rule of law and cannot be exercised in a vacuum without consideration of the practitioners which the LPC and the LPFF are enjoined to regulate.

The LSSA is therefore concerned that recent proposals by the regulatory bodies has the potential to negatively impact on legal practitioners and may threaten access to and entry to the legal profession, as an unintended consequence of their proposals, viz.

The LPC in publishing rules that were placed in the recent Government gazette, that set levels of prescribed fees that in the view of the LSSA, as the representative body of the legal profession, is of serious concern in that:

The fees were published without engagement with the profession.

That the various levels proposed is arbitrary and irrational.

That there appears to be no consideration by the LPC of containing its costs or proposed alternative measures, (most law firms are currently implementing stringent cost containment measures, due to the current economic realities in our country).

That there is no financial basis provided for the establishment of these exorbitant increases.

The punitive amounts proposed for practitioners based on years of service, which is divorced from the economic reality of the practices of these attorneys.

That mere establishment of the various proposed levels based on demographics appears to be prejudicial and discriminatory.

The increased costs have the potential to negatively impact on some the transformation objectives of the LPA (this responsibility vests on both the regulator and the profession).

The LSSA has resolved to request the LPC not to implement the revised annual levies on law firms and practitioners, subject to engagement  and agreed consensus with the LSSA on the levels of annual levies.

The LSSA therefore calls for urgent engagement with the LPC and has been requesting a meeting for some time now, with no commitment from the LPC to meet with the LSSA to deal with serious issues facing the profession.

The LSSA as a key stakeholder is willing and committed to engage on the various issues and seek resolution, as the legitimate body representing the attorneys’ profession and the LSSA will consider all remedies available to protect the interest of its members.

The LSSA reminds all members to vociferously make their voices heard and their concerns known to the LPC and the public and to lodge these by 4 of November 2019, in terms of the notice placed in the Gazette by the LPC.

The LPFF has concomitantly also announced plans to levy legal practitioners for professional indemnity insurance, this is currently provided by the Legal Practitioners Insurance Indemnity Fund  (LPIIF), of which the LPFF is the sole shareholder.

The estimate cost of PI insurance  will eventually rise to above R10 000 p.a.

Similarly, this will also negatively impact on the cost of the profession as detailed above, in addition, there may be negative cost implications on the public, which in view of the LSSA is contrary to the objectives of the LPA.

The LSSA welcomes the decision by the LPFF to urgently consider to delay the proposed implementation of the recovery of the premiums payable for PI insurance, by a year.

In addition, the LPFF advised that the portal for legal practitioners to apply for their new Fidelity Fund certificates (FFC) will be opened shortly.

The LSSA is encouraged by the stance of the LPFF to engage with the LSSA and discuss options available to the LPIIF to address its underwriting losses, so that the financial impact on legal practitioners may be reduced.

Issued by Mvuzo Notyesi, President of Law Society of South Africa, 4 November 2019