Legal firms press ahead with court bid to scrap BEE sector code

Three of South Africa’s largest law firms will ask the Gauteng High Court next week to set aside the legal sector’s black economic empowerment (BEE) code, arguing that it is unlawful, impractical and risks undermining transformation rather than advancing it.

Bowmans, Webber Wentzel and Werksmans have joined the review application originally brought by Norton Rose Fulbright against the Legal Sector Code (LSC), which was gazetted in September 2024.

Read:
Three legal firms join Norton Rose Fulbright in challenging BEE code
Norton Rose vs the legal sector BEE code

The matter is scheduled to be heard from Monday, 4 May to Friday, 8 May.

The firms make it clear that they support transformation, but argue that the current framework is “fundamentally misconceived” and could harm the very groups it is meant to benefit, including black law students, young professionals and public-interest organisations.

Their intervention flows from concerns first raised when the code was introduced, including the pace and structure of ownership targets and the way the sector has been treated relative to the broader BEE framework.

A central argument is that the code applies to a small portion of the profession. According to court papers, more than 95% of legal practices fall below the turnover threshold and are therefore exempt.The firms argue that a code affecting less than 5% of the sector cannot “credibly transform the sector as a whole”.

They say this effectively removes incentives for transformation across the majority of firms, weakening the overall impact of the policy.

Targets and timelines under scrutiny

The LSC requires large firms to increase black ownership by 10% every two years. The three firms argue that this is arbitrary, unsupported by empirical research, and risks forcing outcomes that are neither sustainable nor lawful.

The firms argue that these timelines are not aligned with how law firms operate, where equity ownership is typically limited to practising lawyers who progress through a structured career path over a decade or more.

Beyond ownership targets, the firms raise concerns about how the code measures transformation.

They argue that the LSC removes recognition for key mechanisms used under the generic BEE codes, including bursaries for black students, skills development initiatives and socio-economic development contributions.

These elements, they say, are central to building a sustainable pipeline of legal talent and broadening access to the profession.

The code also excludes black non-lawyer professionals – such as executives in finance, HR and IT – from management control scoring, despite their role in running large firms. This, the firms argue, undermines recognition of existing transformation efforts.

Read: Scrap BEE laws to unlock ‘billions of dollars’ – US ambassador

Legal and procedural challenge

The review also raises procedural issues, including whether the Department of Trade, Industry and Competition followed the required process in finalising the code.

The firms argue that earlier concerns raised by the ministry were not adequately addressed and that no valid BEE strategy was issued to guide the sector code, as required by legislation.

Importantly, the firms are not seeking to remove transformation requirements altogether. Instead, they are asking the court to set aside the LSC and allow the generic BEE codes to continue applying while a revised, evidence-based framework is developed.

Says Ezra Davids, chairman and senior partner at Bowmans: “We fully support meaningful transformation and believe that, when appropriately configured, the LSC can build on the significant work that has already been done to broaden transformation within the legal sector.”

The firms say that, before the LSC was introduced, all three had a level 1 B-BBEE rating under the generic codes and had made a substantial, measurable contribution to transformation.

Read: Urgent court action aims to halt employment equity quotas