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Programme director, Rams Mabote
The Board of LPFF led by Chairperson Ms Kekana
Motlatsi Molefe, Chief Executive Officer of the Legal Practitioners Fidelity Fund
Vice President of LSSA Mr Nkosana Mavundlela
Leadership of the LPC including Ministerial Representatives at LPC meetings
Distinguished guests, Practioners and stakeholders
Good morning
Thank you for inviting me to join you today in this important conference on the sustainability of the Legal profession and related matters, I am joined to this meeting by both my Advisors Dr Lufuno Marwala and Adv Nomonde January.
The sustainability of the legal profession is in our interest as the Department of Justice and Constitutional Development (DOJ&CD).
As the primary guardian of the Constitution, the DOJ&CD is central to promoting constitutional values, the rule of law, and human rights. We can only fulfill this mandate at the back of a growing and sustainable legal profession.
The United Nations General Assembly’s report titled: “Report of the World Commission on Environment and Development: Our Common Future”, defines sustainable development as an approach to growth and human development that aims to meet the needs of the present without compromising the ability of future generations to meet their own needs.
Your theme for this conference is “The sustainability of the legal profession and building for the future”.
This means that, in accordance with the United Nations General Assembly, your gathering is concerned exploring approaches of growing the legal profession and empowering legal practitioners in a way that meets the needs of the present without compromising the ability of future generations to meet their own needs within the sector, what you have called building for the future.
The question that arises is: what is it that makes for a sustainable legal profession?
I am quite certain that all of you will agree that a sustainable legal profession has to be a transformed and inclusive sector.
No sphere of society or sector of the economy can continue to exist in the long run when there is asymmetry of power between those who are benefiting and those who are not, in favor of the latter.
The outcry of the majority about the lack of transformation of the legal profession is a risk to the sustainability of the legal profession and our democracy.
It is for this reason that I have made a commitment to work closely with the sector to ensure that we drive meaningful transformation of the legal profession so that our children do not find themselves behaving like mad men and women who repeat the same calls for change their parents made without yielding any results.
The constitution whose 30th anniversary we are celebrating this year makes it very clear that for the people’s aspirations to be realized, we deliberately have to work together to “Heal the divisions of the past and establish a society based on democratic values, social justice and fundamental human rights” and “Improve the quality of life of all citizens and free the potential of each person”.
Last week, I convened a meeting with the legal profession to discuss this important matter of transformation.
As a way forward, we have made practical proposals to address some of the challenges, and these proposals the following interventions:
The other matter which you asked me to talk about is the funding and the mechanisms surrounding funding as they relate to the sustainability and mandate of the Fund and other stakeholders and amendments to the Legal Practice Act and its associated Rules.
I will take you through some of the critical amendments that we have made to the Legal Practice Act to make it more responsive to the evolution of the legal profession and its sustainability.
With regards to the amendments to the Legal Practice Act, we are now at the stage where the Bill is going to cabinet for approval after which it will be submitted to parliament.
Both the Law Society of South Africa (LSSA) and the Legal Practice Fidelity Fund (LPFF) submitted that the limitation in subsection (1)(b) of section 22 of the Act should be removed by the deletion of the words “an annual”, thereby opening the way for more appropriations in a year, as the need arises.
Clause 3 of the Bill provides for the removal in section 22 of the Act of the limitation that only an annual appropriation can be made by the LPFF, so as to allow for more than one appropriation.
Clause 9(a) of the Bill seeks to amend section 55 of the Act by deleting the expression “(1)” as that section does not have other subsections. Clause 9(b) amends section 55(a), (b) and (c) of the Act.
In terms of section 55(1), the LPFF is liable to reimburse persons who suffered loss as a result of theft only. The expression “or due to the negligence of” is added to subsection (1), to increase the public’s protection relating to trust funds that are lost due to negligence.
Clause 10 of the Bill seeks to amend section 56(1) of the Act, which provides for the limitation of liability of the LPFF, to exclude the LPFF from liability for transactions in cryptocurrency, as the valuations of these currencies are uncertain.
The LPFF pointed out that, taken together, all the provisions of section 57 present the LPFF with competing interests in its resources without specifying which of those interests should take priority in the event of a scarcity or lack of sufficient resources. Conflicts might arise, for instance between interested parties who might express conflicting preferences.
Cognisant of this potential conflict, the LPFF requested that the Act should clearly stipulate which of the activities set out in section 57 takes precedence and priority in the event of resources being inadequate to meet the expectations of interested parties. Clause 11(a) inserts a proviso in section 57(1)(a) that this is the priority purpose of the LPFF.
The LSSA and the LPFF pointed out that there is no guarantee that attorneys, who are in the vast majority and who are responsible for the largest portion of trust accounts and contributions to the LPFF, will be represented on the Board.
Without a legislative requirement it might happen that all of the legal practitioners serving on the Board could be advocates to the total exclusion of the practicing attorneys. Clause 12(a) of the Bill seeks to amend section 62(1)(a) of the Act by substituting the words “legal practitioners” with “practicing attorneys”.
The LSSA submitted that there is an inordinate delay in the election of the Board of the LPFF and this is delaying the transformation of the Board. It was suggested that a new subsection (4) be added to section 62 which provides that the first election of the Board referred to in subsection (1)(a) must take place within six months after each election of the LPC. Clause 14(b) of the Bill provides for this.
The LPFF proposed that a requirement be inserted that any theft, as contemplated in section 55 of the Act, is reported to the South African Police Service and a criminal complaint lodged. The LPFF indicated that claimants have not always lodged complaints in relation to the theft of trust monies and, as a result, the investigation of such thefts has been compromised.
By making it a condition for the institution of a valid claim, claimants will be compelled to report such thefts and lodge criminal complaints related to such thefts. Clause 15(b) inserts a new paragraph (c) in subsection (1) to give effect to the request from the LPFF.
Subsection (5)(b) of Section 86 provides, among other things, that interest accrued in terms of subsection (4) must be paid over to the person referred to in that subsection, provided that 5% of the interest accrued on money in terms of this paragraph must be paid over to the LPFF.
The LPFF requested that section 86(5)(b) should make the recovery of the trust interest that vests with the LPFF through a bank automated process compulsory and remove the discretion from the practitioner on the method of payment of interest to the Board through a manual process.
The Department proposes that a matter such as this is regulatory and should not necessarily be in primary legislation but could rather be dealt with efficiently in the rules that the LPFF Board may make in terms of section 95(2). Clause 15 proposes an amendment in this regard by adding a new subsection (8) to section 86.
After cabinet’s approval the amendment Bill will be sent to parliament for processing by lawmakers. Parliament, in processing the Bill, will conduct extensive public consultation which means that you still have an opportunity to make comments that will help to shape the final Bill that will be adopted by parliament and assent to by the President.
The two days that you will be spending here in this conference will give you an opportunity to explore these issues further and sharpen your thinking which can assist in further enriching the Bill.
I wish you well in your deliberations.
Thank you!