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- Four major law firms and Solidarity challenged Trade Minister Parks Tau’s decision to publish the Legal Sector Code.
- The applicants accepted the need for transformation but argued that Tau had not independently assessed the material before approving the Code.
- The High Court in Pretoria set aside the decision and sent it back to Tau for reconsideration, but did not require the consultation process to start again.
The Legal Sector Code has been set aside after the High Court in Pretoria found that Trade, Industry and Competition Minister Parks Tau did not independently evaluate the material before him when he decided to publish it.
The challenge was brought by Deneys Reitz Inc, Bowman Gilfillan Incorporated, Webber Wentzel and Werksmans Incorporated. Solidarity Trade Union brought a separate application against the same decision. Both applications were heard together.
Respondents included the Minister of Trade, Industry and Competition, the South African Legal Practice Council, and the Minister of Justice and Constitutional Development. Several organisations representing legal practitioners also participated in the proceedings, such as Advocates for Transformation, the African Legal Professionals Association, Basadi Ba Molao Education and Training Services, the Black Conveyancers Association, the Black Lawyers Association, the General Council of the Bar of South Africa, the National Association of Democratic Lawyers, the Pan African Bar Association of South Africa, and the South African Women Lawyers Association.
The Johannesburg Society of Advocates took part as amicus curiae. The applicants did not dispute the need for transformation in the legal profession. They recognised its necessity and agreed that the Minister was empowered to introduce a sector-specific code. Their challenge focused on how Tau exercised that power.
Code developed after years of consultation
The Legal Sector Code came about after extensive consultation, involving the Legal Practice Council, a Steering Committee, a Technical Committee, professional bodies, government departments, and other stakeholders.
A first draft was published for public comment in November 2020. Further submissions were considered, and another draft appeared in July 2022 with a revised Statement 003.
The Code covers areas like ownership, management control, skills development, preferential procurement, and enterprise development. Its main aim was to address ongoing inequalities in the legal profession.
The Legal Practice Council highlighted progress in the number of black practitioners, but said this hadn’t led to similar changes in ownership and leadership, especially in large commercial law firms.
Patel voices concerns over proposed Code
The proposed Code was sent to former minister Ebrahim Patel, who declined to approve it and outlined several concerns. He questioned the proposed departures from the Generic Codes, the exclusion of non-legal practitioners from certain measures, the management control element, and whether the targets and methodologies were supported by enough empirical evidence.
When Tau became minister in July 2024, he inherited the process and the concerns that had been raised previously. An updated Deviation Memorandum and supporting material were submitted to Tau on 15 July 2024. He approved the Code on 30 August 2024, and it was published on 20 September 2024 under section 9(1) of the Broad-Based Black Economic Empowerment Act.
Court looks at Tau’s decision-making process
The applicants argued that Section 9(1) required Tau to exercise his own judgment before deciding to publish the Code. They agreed he could rely on the extensive work done by officials, committees, and stakeholders, but insisted he still had to evaluate the material and make the statutory decision himself.
Tau said he had considered the material before him and was entitled to rely on the years of work that went into developing the Code. A full bench of the High Court in Pretoria, made up of Judge N Janse van Nieuwenhuizen, Judge AC Basson, and Judge S Mokose, agreed that a Minister does not need to repeat technical work done by others. The Minister can rely on that work when exercising their statutory power.
The problem, the court found, was that Tau’s evidence showed he had gone further by essentially treating the agreement reached within the legal sector as the decisive factor.
Tau saw sector agreement as decisive
Tau described his role as being to “consider and publish the code” after the legal sector had agreed on it. In another part of his evidence, he said he had “done nothing except to execute my legislative obligation of gazetting the LSC”. He also commented that finding the optimal targets was “not my space”.
The court found these statements important because they showed that Tau saw the substantive decision as belonging to the legal sector and its stakeholders, not himself as the Minister with statutory power.
The judges concluded that the Minister was required to consider the material himself and decide whether the requirements of Section 9(1) had been met. The fact that extensive consultation occurred did not remove that responsibility.
Court finds Minister did not independently review material
The court held that Tau had not shown he independently evaluated the key issues before him. This included the concerns Patel raised, the reasons for departing from the Generic Codes, and the evidence supporting the targets and weightings in the proposed Code.
The court also rejected the idea that simply stating the Minister had “applied his mind” was enough to show the required discretion had been exercised. The record had to show the material was evaluated and that the Minister reached his own conclusions.
The judges found Tau had not exercised the statutory discretion required by section 9(1), the Constitution, and the Broad-Based Black Economic Empowerment Act.
Court does not rule on Code’s measures
The judgment does not suggest that transformation of the legal profession is unnecessary. The court acknowledged persistent inequalities and the constitutional need to address them.
The court also did not decide whether the Code’s targets, methodologies, or other provisions were lawful. It said there was no need to decide those points because the Minister’s failure to exercise proper discretion was enough to resolve the challenge.
Code sent back to Minister for reconsideration
The High Court set aside Tau’s decision to promulgate the Legal Sector Code and sent the matter back to him for reconsideration. It did not order the whole consultation process to begin again. Tau may use the consultation, technical work, and submissions already generated during the Code’s development.
However, he must independently evaluate the material before him and exercise the statutory discretion himself before deciding whether to promulgate the Code.
Tau was ordered to pay the applicants’ costs, including the costs of two counsel where used, on Scale C. No costs order was made against the other respondents.
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