BRIEFING TO THE PORTFOLIO COMMITTEE ON JUSTICE AND CORRECTIONAL

SERVICES ON THE ATTORNEYS AMENDMENT BILL, 2014

[B 9-2014]

29 July 2014

BACKGROUND

The Bill aims to amend the Attorneys Act, 1979 (Act 53 of 1979)(the Act), as an interim measure pending the implementation of the Legal Practice Bill.

Background to the problems the Bill seeks to address:

After being declared “independent states”, the former Republics of Transkei, Bophuthatswana (BOP), Venda and Ciskei (the TBVC states) enacted their own legislation regulating attorneys.

These laws of the former homelands are still applicable in the areas for which they were enacted.

In 1998, the Act was amended in terms of which attorneys practising in the former Bop and Venda were deemed to be members of the Law Society of the Northern Provinces (LSNP) for purposes of obtaining indemnity cover under the Attorneys Fidelity Fund. (The LSNP was tasked with issuing fidelity fund certificates to attorneys in these areas).

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Background (Continued)

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The LSNP was granted concurrent jurisdiction with the law societies of Bop and Venda over disciplinary matters of attorneys in these areas. This was to protect members of the public who are clients of these attorneys.

These 1998 amendments were intended to be of a temporary measure, pending the rationalisation of the legal profession through the “Legal Practice” legislation, the preparation of which was in a foundation stage at the time.

The concurrent jurisdiction exercised by the LSNP over attorneys in the former Bop and Venda marked the beginning of challenges experienced by the LSNP, particularly in the former Bop.

Some of the challenges experienced include the following:Lack of disciplinary and regulatory control.

Cases of unprofessional conduct are not properly investigated and the Bop Law Society does not cooperate with the LSNP in the investigation of disciplinary matters.

Candidate attorneys in the jurisdiction of the Bop Law Society are not required to attend the practical legal training course, which is compulsory under the Act.

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Background (Continued)

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The Act moreover allows candidate attorneys who attend the six month practical legal training course offered by the Law Society of South Africa (LSSA) to claim a reduction of six months from their two year period of articles of clerkship. Candidate attorneys in the former Transkei, where the Transkei Attorneys, Notaries and Conveyancers Admission Act, 1934, still applies, do not enjoy this benefit.

There has been continuous litigation where the Supreme Court of Appeal has reprimanded the Bop Law Society over its reluctance to deal with legitimate complaints by the public, and has even questioned whether the continued existence of this Law Society is desirable in the public interest.

These problems have increased the need for stability in the attorneys’ profession, particularly in the former Bop.

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BACKGROUND (continued)

WHAT ABOUT THE LEGAL PRACTICE LEGISLATION?•The Department and Parliament have not been in favour of ad hoc amendments to the Act, pending the enactment of the Legal Practice legislation, which will rationalise the legal profession and also address the challenges experienced in relation to the regulation of attorneys.•The implementation of the “Legal Practice” legislation, which adopts an incremental approach, will still take some time.•The Department has continued to receive representations from the LSNP and the LSSA, requesting that the Act be amended urgently in order to address the problem surrounding the regulation of attorneys in the former Bop even after the introduction of the Legal Practice Bill into Parliament. These problems have not manifested themselves in the former Venda.•It is therefore necessary to urgently promote the amendments as an interim measure pending the implementation of the “Legal Practice” legislation, in the interests of the legal profession, and to protect the members of the public, who are clients of attorneys in the former Bop.

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Discussion

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Most of the clauses of the Bill therefore aim to-(a) terminate the continued existence of those law societies still operating in

the former TBVC states and which, it is understood, are empty shells; and (b) incorporate them into the mainstream law societies.However, there are also other amendments not related to this issue and are dealt with below.Clause 3:Section 3 of the Act provides for categories of attorneys who may engage and retain candidate attorneys for purposes of articles of clerkship.

Professional assistants are attorneys who are admitted to practise the profession of attorney in a private law firm. Section 3 does not include professional assistants in the category of attorneys who may engage candidate attorneys. Attorneys of similar status employed in the State Attorneys’ Offices, Legal Aid SA and law clinics are entitled to engage candidate attorneys. The proposed amendment in clause 3 is intended to ensure that, similar to their counterparts in the State Attorneys’ Offices, Legal Aid SA and law clinics, professional assistants in private practices are also entitled to engage candidate attorneys. This will broaden the pool of persons who can engage and train candidate attorneys, thereby increasing the number of persons who are able to enter the legal profession.

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Discussion(continued)

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Clause 14:In terms of section 19 of the Act, a person who intends applying to the High Court for admission as an attorney must give notice of such intended admission to the secretary of the relevant law society.Currently the Act does not make a distinction in notice periods between new applications and applications for readmission as an attorney.While a shorter period may be justified for processing new applications, a longer period is required to process applications for readmission to the legal profession. There may be issues that the law society in question may need to investigate before it can support and process and application.One month’s notice is regarded as insufficient for such an investigation.Clause 14 of the Bill therefore increases the notice period for applications for readmission to three months.

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Discussion (Continued)

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Clause 15(a):

Section 20 of the Act provides that a person who was admitted and enrolled as an attorney, notary or conveyancer “under this Act” may apply to the registrar of any court other than where he or she was admitted to have his or her name placed on the roll of that court so that he or she can also appear at that court.

The Constitutional Court in the case of Mabaso vs the Law Society of the Northern Provinces and the Minister of Justice and Constitutional Development held that the words “under this Act” discriminate unfairly against attorneys admitted in the former TBVC states and struck them out. These words have the effect that attorneys admitted under the former homeland legislation could not appear in courts other than where they had been admitted.

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Discussion (continued)

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This clause merely gives effect to the judgment of the Constitutional Court in the case of Mabaso by also covering attorneys admitted in the former TBVC states.

Clause 16: Section 23(1)(a) of the Act authorises attorneys to practise as incorporated

companies. Section 8(3) of the new Companies Act, 2008 (Act 7 of 2008)(the Companies Act)

prohibits any association of persons from carrying on any business that has for its objects the acquisition of gain, unless that business is registered under the Companies Act.

Section 8(2) of the Companies Act defines a profit company, among others, as a personal liability company if it meets the criteria for a private company and its memorandum of incorporation states that it is a personal liability company.

A private company is defined in section 8(2)(b) of the Companies Act as a company that is not state-owned and its memorandum of incorporation prohibits it from offering any of its securities to the public and restricts the transferability of its securities.

An incorporated company as provided for in the Act is not recognised by the Companies Act.

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Discussion(Continued)

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Clause 16 aims to do away with the requirement that the memorandum of incorporation of a practice registered as a company must state that all past and present directors of the company shall be jointly and severally liable for its debts and liabilities.

The proposed amendment will also ensure that such a practice is registered as a personal liability company.

Section 23(1)(c) of Act provides that the name of an incorporated firm of attorneys can only consist of the names of former or current directors of that firm. According to the LNSP, some of the largest firms in its area of jurisdiction have entered into arrangements with overseas firms, in terms of which the name of the foreign firm is used as a trade name. This arrangement is in conflict with the provisions of section 23(1)(c) of the Act as the overseas firms do not have past or current directors in the local firm.

The LSNP (and the profession nationally) is of the view that use of the name of the foreign firm as a trade name by local firms is justified as it allows its members to gain experience and compete in the global arena. The amendment contained in clause 16 will also allow the council of a law society to approve the use of any name as a trade name which could include the name of an overseas law firm.

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Discussion(Continued)

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The word “membership” is only used in the context of a not for profit company or close corporation. The Act uses the term “member” instead of a “shareholder”. Proposed amendments in clause 16 also aim to correct this terminology.

Clause 19: This clause aims to amend section 49 of the Act, which requires any action against

the Attorneys Fidelity Fund to be instituted in the High Court. Litigating in the High Court is expensive and if a matter can be brought in a lower

court, which is less expensive than in the High Court, the question is raised why litigants should be forced to approach the High Court.

Therefore, clause 20 amends this section by allowing actions against the Attorneys Fidelity Fund to be instituted in any court having jurisdiction and not necessarily in the High Court.

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Discussion(Continued)

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Clause 21:This clause aims to amend section 56 of the Act by providing for the continued existence of the four societies under their present names, namely the Law Society of the Cape of Good Hope, the Law Society of the Orange Free State, the Law Society of the Transvaal and the Natal Law Society. Clause 21, however, provides that these societies may, by resolution of their members, change the names of the societies. It provides unambiguously that these societies have jurisdiction over all attorneys practising in their areas of jurisdiction as follows-(a) The Law Society of the Cape of Good Hope has jurisdiction over

all attorneys practising in the Western Cape, the Eastern Cape (including Transkei and Ciskei) and the Northern Cape.

(b) The Law Society of the Orange Free State has jurisdiction over all attorneys practising in the Free State.

(c) The Law Society of the Transvaal has jurisdiction over all attorneys practising in Gauteng, Mpumalanga, the North West (including Bophuthatswana) and Limpopo (including Venda).(d) The Natal Law Society has jurisdiction over all attorneys practising in KwaZulu-Natal.

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Discussion(Continued)

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Clause 21 further provides that any law society not mentioned (that is the law societies of the former homelands, to the extent that they still exist, mostly in name only) will dissolve in accordance with regulations made under section 81 of the Act.

The clause also contains transitional arrangements, for instance by providing that any rights and obligations of any society which is dissolved will transfer to the Law Society of the Transvaal, in the case of Bophuthatswana and Venda, and to the Law Society of the Cape of Good Hope in the case of Transkei and Ciskei.

Clause 22: The amalgamation of the former homeland societies law societies into the four

former RSA law societies will result in attorneys becoming members of different law societies to the ones of which they are currently members. This will require the “new” law societies to have proper and updated records of practitioners in their areas of jurisdiction. Therefore, clause 22 amends section 57 of the Act to make it obligatory for practitioners who become members of a law society for the first time to provide that law society with information as may be required.

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Discussion(Continued)

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Clause 24:Section 71 of the Act deals with the right of the council of a law society to enquire into alleged unprofessional or dishonest or unworthy conduct of attorneys. On the other hand, section 15(1) of the Act provides for a court to admit or enroll any person as an attorney if, among others, that person is fit and proper to be so admitted or enrolled. Clause 24 amends section 71of the Act to make provision for the council of a law society to enquire into the alleged unprofessional or dishonest or unworthy conduct of an attorney irrespective of where or when the alleged conduct took place or whether it occurred before or after that attorney became a member of its society or not.

Clause 26:Section 75 of the Act limits the liability of law societies in respect of anything done in good faith under the Act. Section 59 of the Act gives law societies the power to conclude an agreement with any person for the performance of any work or to render services. Clause 26 of the Bill aims to extend the limitation of liability to agreements which were concluded under any law repealed in terms of clause 35 of the Bill.

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Discussion(Continued)

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Other clauses:Clauses 1, 3 to10,12 -18, 22 to 25, 28 and 30 give effect to the view that law societies are not necessarily bound to specific provinces.Clauses 1, 2, 7, 11,19, 25, 28 and 29 aim to amend the provisions of the Act which still refer to concepts such as the “Supreme Court”, “provincial divisions and local divisions” and the like so as to bring them in line with current realities.Clauses 20, 27,31 and 32 repeals sections 55, 77,84 and 84A of the Act which have become obsolete because they contain interim measures relating to the former homelands. Also linked to these clauses is clause 34 which extends the Act to the entire country. The transitional arrangements contained in clause 7 of the Bill are aimed at protecting the interests of candidate attorneys whose rights of appearance were issued by law societies which will be amalgamated as a result of the Bill. The right of appearance of these candidate attorneys will be valid for five years from the commencement of the Bill or for such a period as may be determined in the Legal Practice legislation when it is implemented. Clause 35 repeals former homeland legislation.