Legal Practice Bill [B20-2012]: Department responses to submissions

Meeting report

Legal Practice Bill [B20-2012]: Department responses to submissions
The Chairperson welcomed all present and requested that the Department of Justice and Constitutional Development (DoJ&CD) commence the deliberations on the Legal Practice Bill.

Adv Jacob Skosana, Deputy Chief State Law Adviser, began by informing the Committee that the deliberations would continue with the pattern adopted the day before - addressing key topical issues rather than a Clause by Clause approach. He explained that the current version of the Bill was a compromise Bill of sorts derived from extensive consultation, discussion and shifting ground of the different stakeholders. The South African Legal Practice Council was targeted as the main body to drive the transformation agenda of the Bill, hence the need to empower the Council.

Mr Lawrence Bassett, Deputy Chief State Law Adviser, continued by stating that the Bill was aimed at democratising the current structures and this was an evolutionary process.

Deliberations on Ministerial Powers to Make Regulations
Adv Skosana referred to the powers granted to the Minister under the Bill and stated that the Council was charged with an advisory role in respect of these regulations and the regulations were to be approved by Parliament; thus, these powers were not exclusively delegated to the Minister. The arguments against these powers were properly addressed by Parliament’s oversight powers. It was however important to distinguish between technical regulations which did not require Parliament’s approval and fundamental regulations such as regulations which related to the independence of the profession, which must be approved by Parliament. In the same vein, the Bill was clear over the Council’s power to make rules; issues of governance were to be covered by the Council and issues of regulation by Parliament and the Minister in terms of regulations.

Ms M Smuts (DA) in response stated that it was essential the Department took note of the view of the General Council of the Bar (GCB) that it was incorrect to take away the rights to form voluntary organisations. Voluntary organisations were founded on the bedrock of the right to self-governance and this role belonged to the organisation.

Mr Raj Daya, DoJ&CD Deputy Director General: Legislative Development, responded that there was no intention in the Bill to take away the right to form voluntary associations; the intention was to create a regulatory regime for admittance of attorneys and advocates.

Ms Smuts referred to Clause 34 (2) (b) of the Bill and noted that the provisions did not provide parameters within which an advocate could take briefs directly from the public.

Adv Skosana responded that the intention was to create ease of access to justice; the details and parameters within which this provision could be practised would be sorted out by way of regulations.

Ms D Schäfer (DA) remarked that it was worrisome to insist attorneys held a Fidelity Fund Certificate on the one hand and on the other hand allow advocates carry out similar functions without the same requirement of holding a Fidelity Fund Certificate.

Mr Daya in response stated that it was an issue that needed further consideration and the Department shared Ms Schäfer’s concerns. The instances in which it was permissible for an advocate to be briefed directly needed to be debated further. Discussions had shown that in the current dispensation, advocates outside of the GCB far outnumbered GCB advocates and there were concerns that some of the non-GCB advocates engaged in direct briefing. The advent of direct briefing of advocates called for further debates and brought with it certain responsibilities, which included an understanding of and training in the operation of trust accounts for these advocates.

Dr M Oriani-Ambrosini (IFP) asked what was to be expected from the moment the Bill came into effect- would an advocate be permitted to take briefs directly from clients; if not what preconditions must be in place for this to happen.

Mr Daya replied that as stipulated in the Bill, advocates could not accept direct briefs until such time as the Minister had made regulations on the issue. It was anticipated that at the stage of drafting of the regulations, further debate would ensue. The provision had been inserted in the Bill to create an enabling environment for future purposes; if this enabling environment were not created, then there would be a further need to amend the Bill after it had come into effect.

Dr Oriani-Ambrosini remarked that over the past 13 years, Parliament had spear headed the transformation of several sectors in the country by adopting extraordinary reforms in legislation. The Department’s response with regard to the determination of regulations related to Clause 34 (2) (b) of the Bill was not satisfactory. The Committee’s responsibility was to determine this outcome and not leave it up to the Minister.

Ms Smuts in agreement with Dr Oriani-Ambrosini stated that while she supported the great wisdom in the evolutionary approach, this was an exception and there was a need to relax the referral rule.

Adv S Holomisa (ANC) asked what the current situation was with non-GCB advocates who took direct briefs from clients.

Mr Daya responded that Independent Association of Advocates had mechanisms similar to those of the GCB to address issues where advocates took on direct briefing. The criticism from the GCB was that the processes were not effective and that it was preferable if one regime existed for all advocates, i.e. the GCB.

Adv Holomisa questioned if the Committee was not being lazy in respect of determining the conditions under which advocates could be briefed directly; it might be helpful to finalise them in the Bill rather than leaving to the regulations. Did the Independent Association of Advocates of South Africa (IASA) have any existing regulations on this issue? It was imperative that the Department and all parties concerned ensured that the determinants were included in the Bill and not left to regulations.

Ms C Pilane-Majake (ANC) asked how the Department intended to distinguish between regulations which were technical and thus did not require Parliament’s approval and regulations which were fundamental and needed the approval of Parliament. It was of concern that there was the possibility that regulations which should have the input of Parliament may not.

Adv L Adams (COPE) noted that the wording of Clause 34 (2) (b) created the assumption that the Minister’s discretion may be applied in deciding whether or not to enact any regulations on the referral rule. Had the Department formed any thoughts on the content of the regulations and had any draft regulations been drawn.

Adv Skosana replied that no thoughts had been formed yet and no drafts drawn up with regard to the regulations. It was envisaged that the process would be initiated by the Council. The Bill was structured such that it gave discretion on regulations; some may be made, some must be made and others made in consultation. The Department would unpack these and forward a breakdown of the regulations under each of these heads to the Committee.

Deliberations on Fee Structure
Adv Skosana commenced the deliberations by clarifying what he described as the confusion created by the Media; the Ministers reference to capping of fees was with regard to matters where the State had an interest and thus the Minister had advocated for setting of parameters on what the government paid for legal services rendered to it by private practitioners. The department did not consider anything untoward in this. The capping in terms of the Bill was with regard to fees payable to any other person. Various opinions were expressed in this regard during the public hearings. The Black Lawyers Association (BLA) opined that fees should be determined by market forces.

The Chairperson asked if the current fees structure was determined by market forces.

Mr S Swart (ACDP) replied that in the case of attorney fees, it was on a party to party basis- attorney’s fees were capped in terms of the Attorneys Act where a contingency agreement had been reached if the case was won and conveyancing attorney fees were also capped. There were fixed tariffs for tax costs. Generally, there were more fixed fees for attorneys than advocates; advocate fees seemed to be more dictated by market forces compared to attorney’s fees. The Competition Commission had further declared it uncompetitive to set and guidelines for legal fees.

Dr Oriani-Ambrosini added that even though it was correct that there were no guidelines, there was a general understanding between advocates that fees were not to be capped without the approval of colleagues- this was a highly uncompetitive practice. There was a need to re-examine the Bill in the light of existing uncompetitive practices, the worst of all being that clients who paid fees had no power to negotiate these fees.

Ms Schäfer in response to Adv Skosana stated that there had been no misunderstanding with the statements of the Minister. In terms of Clause 94 (1) (i) of the Bill, regulations could be made to include the capping of fees.

Mr Daya responded that the issue of fees could be highlighted as one of the most controversial aspects of the Bill. For practising attorneys, there were laid down tariffs for fees on contentious matters. The concern was how to protect public from attorneys who considered it a right to charge injurious fees in non-contentious matters, particularly in cases of third party claims. There must be a responsible mechanism in dealing with this issue. Further, the existing practice of senior counsel/junior counsel model whereby fees were paid on the basis of the bracket a practitioner was pitched in was yet to be eradicated despite the Constitutional Courts ruling that this practice was uncompetitive.

Mr J Jeffery (ANC) requested that the Department forwarded to the Committee comparative statistics on the profession five years ago and the current situation with regard to race, gender, years of practice, fees charged etc.  It was imperative the Committee had these details so as to make an informed decision and determine if the profession was able to grow and entry level advocates able to make a living; the general understanding was that majority of the exorbitant fees were charged by senior counsel whereas junior counsel were left to survive on peanuts.

Ms Pilane-Majake in addition requested that the Department provided the Committee with information on type of qualification held, number of years spent at university and years of experience.

The Chairperson also requested that the Department forwarded to the Committee the Constitutional Court’s judgements on the Concord, Camps Bay and Road Accident Fund matters where the Court had made statements on the exorbitant fees of practitioners.

Mr Daya responded that all information requested would be forwarded to the Committee.

Mr Swart referred to the provision relating to the fee structure on attorneys and asked if the Superior Courts Act relating to tariffs were one of the rules to be repealed. Would the current dispensation under the Superior Courts Act continue or new were rules to replace it.

Mr Daya replied that the rules board would continue to make rules on litigious matters before the Court. The rules board was however considering the introduction of fee tariffs for advocates which currently did not exist.

Ms Pilane-Majake opined that leaving the market to determine legal fees contradicted the intention of the Bill; the intention was to devise means to ensure affordable legal fees and if left to the market forces then the current staus quo will be maintained.

Ms Schäfer asked the Department why it reckoned it was allowed to fix an upper limit on fees but not a lower limit; it was contradictory to have tariffs for tax costs but not for general legal fees.

Mr Daya responded that in the current rules, when a person was sued or an application brought before the Court, there were distinct tariffs which an attorney was allowed to charge and an advocate also had allowed tariffs to take a matter to a trial stage. There were tariffs for preparing documents, perusing documents, attending consultations etc; all these were referred to as taxed cost which one party was allowed to recoup from the other. These were developed so the public was enlightened on what the fees chargeable were and attorneys and advocates aware of what they can charge. The Rules Board has over the years from representations received, increased the tariffs to bring it realistically in line to what was fair and reasonable. The legal profession still believed the fees needed to be increased and it was an on-going process and what was fair and reasonable was decided by the Rules Board. The problem lay with non-litigious matters where no guidelines currently existed to determine how much was chargeable. Nothing prevented a client from entering into an agreement with his attorney to pay above the taxed fee arrangement and this was the attorney-client fee, which was dictated by the agreement entered into. Some tariffs currently existed in the fee guidelines in terms of the Rules of Court which set fixed tariffs; there was however nothing stopping the advocate from charging below these. The problem was setting tariffs that had maximum impact and coming to the decision in the public interest; this debate fell into the realm of the fees committee or Rules Board.

Ms Schäfer questioned why there were tariffs for litigious matters and no tariffs for non-litigious matters.

Mr Daya replied that because the practice had been declared uncompetitive by the Competition Commission.

Dr Oriani-Ambrosini opined that what was needed was to eliminate the illusion that some were better than others; hence some should cost more than others. It was important that rather than seeking to alter market dynamics, true market dynamics be brought back into market dynamics and hence the market should ultimately decide costs, not the government.

Dr Oriani-Ambrosini stated that in the current dispensation, legal matters tended to be interrelated and cut across many specialist fields; this meant the future by necessity was geared towards specialisation, hence the advent of large firms which pulled together a variety of specialist skills. The legislature should therefore encourage the professions transformation in this direction; single proprietorships were no longer viable.

Mr Jeffery highlighted that the medical profession had tariffs which guided in billing of patients; had the Department considered this model to learn from it in the setting of tariffs?

Mr Jeffery opined that it was important the dispensation in other countries were taken into consideration, particularly developing countries which had a similar common law background with South Africa. What direction was legal reform taking in former developing colonies?

Ms Smuts noted that Mr Daya had studied the development in the United Kingdom (UK) and requested that he updated the Committee on the reforms.

Mr Daya responded that the UK currently had about 120 000 lawyers and 15 000 barristers, with several boards governing each of the professions. The latest position under consideration was to collapse all governing boards into a single national body over the next three years. It was evident that the Bill was a step ahead of these propositions, as it had already done this through the Council.

Ms Smuts remarked that the point was noted however it was important to bear in mind that more than one approach had been proposed for the UK situation.

Dr Oriani-Ambrosini opined that the Bill fell short of completing its objectives if it failed to address; (a) the reform of the judicial process - the discussion on fees is a direct result of a non-functional, dysfunctional judicial process; (b) on contingency fees. He sought the indulgence of the Chairperson to address Members on these issues at a more convenient time.

Adv Skosana conceded that there was need for further discussion on the issue of fees; however, the Committee may want to further consider that the regulations envisaged in Clause 94 of the Bill arose from Clause 35. The matter of fees remained an issue understood by the practitioners themselves and not necessarily consumers, the Rules Board thus consulted with practitioners on drafting of the rules pertaining to fees.

Ms Schäfer suggested that perhaps it had become necessary to consider the composition of the Rules Board to include more persons from the public.

Adv Skosana replied that the Rules Board was a mix of practitioners and judges

Mr Swart with reference to the continuation of voluntary associations remarked that the interpretation of Clauses 97(2) and 116 implied that upon the commencement of Chapter Two, the associations came to an end. It was necessary to redraft these Clauses.

Adv Skosana responded that the Department would reflect on the Clauses. With regard to assets to be transferred to the Council by virtue of the Bill, the real intention excluded assets of voluntary organisations; only assets of organisations established in terms of statutory enactment were intended to be transferred to the Council. With regard to Clause 116, the observation was that under the current dispensation, some of the voluntary organisations performed regulatory functions which were outside the ambit of governance of the associations and currently yet to be legislated upon; the Clause thus contemplated the transfer of those regulatory functions to the Council upon coming into effect of the Bill.

Ms Schäfer remarked that it was comforting to learn the Bill did not anticipate the transfer of assets of voluntary organisations.  However, if only assets of organisation established in terms of statutory enacted were contemplated did this not affect the funding model of the Council. She requested that the Department forwarded information to the Committee on the financial model and cost proposed under the Bill.

Deliberations on the Legal Services Ombud
Adv Skosana referred Members to Clause 46 of the Bill and stated that the principle of the Legal Services Ombud (Ombud) had not been objected to; objections were with respect to appointment and powers granted to the Ombud. If the suggestions on the Ombud being appointed by the Judicial Service Commission (JSC) were considered, it meant the Constitution had to be amended to provide for this function by the JSC. The Department believed the current requirements for appointment as an Ombud were satisfactory. The Department also considered the appointment of the Ombud by the President reasonable. Recommendations that the Ombud reported to the Minister and Parliament had been proposed.

Dr Oriani-Ambrosini opined that the value of the Ombud was best reflected in his role of taking care of clients of the profession. However, convention in other jurisdictions had proved that it was most effective to create a Legal Malpractice Board where legal malpractice lawyers could institute action against erring lawyers- this put a check on most lawyers and ensured the highest standards of ethic were maintained in relation with clients. This approach was worth further consideration.

Adv Adams referred to the provisions of Clause 50 (4) of the Bill and stated that the drafting of the Clause was vague and needed to be consistent- there was a need to clearly define the term.

Adv Adams referred to Clause 52 (2) of the Bill and opined that the term of the director of the office of the Ombud be clearly defined.

Adv Adams asked how many terms of reappointment of the director of the office of the Ombud were envisaged under Clause 52(3) the Bill.

Adv Skosana replied that the director was more an operational staff of the office of the Ombud and in keeping with precedence of other bodies, terms of reappointment were not prescribed in the Bill. The Department believed the Bill should not be a means to micro manage the day to day running of the office of the Ombud.

Mr Jeffery asked why there was so much concern around limited term of office for the Ombud. While the limitation on term of office for persons monitoring abuse on State powers was understood, the Ombud contemplated in the Bill was for monitoring private affairs.

The Chairperson remarked that this was an issue to be debated further.

Ms Pilane-Majake stated that the consideration for persons to be appointed as Ombud should be flexible and not confined to judges only; other persons within the legal fraternity ought to be considered.

Ms Schäfer requested that the Department compared Ombud regimes in other sectors with that proposed in the Bill to draw from their experiences, particularly with regard to appointment and term of office.

Adv Holomisa opined that appointing persons outside of the profession as the Ombud raised concerns on the proper understanding of the workings of the profession.

Deliberations on Composition of the Attorneys Fidelity Fund Board
Adv Skosana drew Members attention to Clause 63 of the Bill and stated that it was the view of the Department that the process of nomination of attorneys to the board of the Attorneys Fidelity Fund (AFF) was a process that should be regulated outside of the Bill and within the voluntary organisations.

The Chairperson asked who currently appointed members of the board of the AFF.

Mr Daya replied that current board was appointed by the previous board of the AFF based on the recommendation of the Law Society of South Africa (LSSA). The arrangement was fundamentally defective and the Bill sought to correct this. Further, by virtue of specific provisions in the Bill, board members of the AFF were disallowed from serving on the Council.

Mr Jeffery referred to Clause 69 of the Bill with regard to Ministerial appointments to the Council and the AFF Board and stated that while the scenario contemplated in the Bill was an improvement from the status quo, it was important to define what constituted ‘competence’ and ‘incapacity’ so this was not used as a lee way for politicking.

Dr Oriani-Ambrosini agreeing with Mr Jeffery’s observation stated that there was a need to set up a framework on assessment of competence and entrench canons on ethical standards and legal responsibility.

Ms Schäfer questioned why the Minister should be vested with powers in the Bill to prescribe where the AFF board could invest.

Mr Skosana responded that the provision was based on the notion that the funds were aimed at protecting the public; hence the government had an interest on behalf of the public’s interest.

Mr Jeffery asked what the Department’s response was to the proposal to cap claims payable to individuals by the AFF.

Mr Bassett replied that the Department had no objections to capping, as far as the capping and any adjustments were published in the gazette.

Ms Schäfer requested the Department provided the Committee with statistics on the type and value of claims the AFF had paid over the last ten years.

Mr Swart opined that there should be no caps on claims arising from professional negligence. Why cap amounts claimable on theft of person’s investments.

Ms Schäfer in response to Mr Swart stated that the AFF in its presentation during the public hearings had expressed concerns on the possibility of the whole fund being wiped out by a singular claim as had happened in the case of New Zealand.

Mr Swart asked if the AFFF took out reinsurance on the funds.

Mr Daya responded in the affirmative; the AFF took out reinsurance, but it was extremely expensive and not fool proof. The concern of the AFF was in the light of mergers with international firms and the possibility of conveyancing deals running into millions of dollars.

The Chairperson questioned if the Courts would allow the setting of caps on claims.

Ms Schäfer asked if the AFF provided cover for cases of professional negligence.

Mr Daya responded that the AFF was established to address cases of claims for stolen funds. The Attorneys Assurance Indemnity Fund was established for negligent claims. All attorneys who held a Fidelity Fund Certificate automatically had cover up to the tune of R1million for the Indemnity Fund. Attorneys could elect to take out additional cover on their indemnity funds, but they would be responsible for payment of the premiums.

Mr Jeffery asked what the current situation in New Zealand was after the funds had been wiped off.

Mr Daya committed to providing the information for the Committee.

Ms Schäfer also requested details on negligence claims covered by the Indemnity Fund.

Ms Schäfer questioned whether there was any legislation that backed the Indemnity Fund cover.

Mr Daya responded that all that currently covered this was the insurance cover; licences on the AFF were renewed yearly and automatically the indemnity fund was renewed for the year.

Deliberations on Regulations and Rules
Adv Skosana highlighted Clauses 94 and 95 of the Bill as the Clauses that covered regulations and rules in the Bill and explained that with regard to the regulations, some of regulations were subject to Parliaments’ approval while regulations related to the governance of the profession were to be considered in consultation with practitioners in the profession.

Ms Smuts questioned why voluntary associations which should ordinarily be self-governing had to send their draft regulations to the Council for consideration and gazetting as proposed in the Bill. Further, there was a provision for the Council to edit draft rules of these associations - this was akin to a take-over of the governing role of these associations.

Ms Schäfer asked what was meant by ‘transformational legal education’.

Adv Skosana responded that the Department was ready to be guided by the Committee on the appropriate name.

Mr Swart referred to Clause 94 (2) of the Bill and asked what Parliaments powers were in terms of the regulations. The current status quo with regard to most regulations that came before Parliament for consideration, was that Parliament could only either accept or reject the regulations. Was this to be the case with the regulations contemplated under the Bill?

Mr Jeffery responded that he reckoned the practice would be the same as the regulations on the Money Bills. In practice, Ministers informally sent regulations to the responsible Parliament Committees for consideration and suggestions before formally tabling the regulations. Where the requests were formally tabled and the Committee was not satisfied, the Minister withdrew the regulations, redrafted and retabled before Parliament.


Deliberations on the Transitional South African Legal Practice Council
Adv Skosana highlighted that Clauses 96 to 107 of the Bill discussed provisions on the Transitional South African Legal Practice Council (the Transitional Council). The same concerns expressed with regard to ministerial appointees, parity of nominee representatives on the Council between advocates and attorneys also applied to the Transitional Council. From the Department’s perspective, the Transitional Council was a vehicle to help usher in the governance framework envisaged in the Bill within the timeframes set. The transitional Council should therefore be distinct from the Council. The Transitional Council sought to deal with immediate business not legislated upon and which would otherwise create a vacuum if not addressed. Therefore, the ministerial role was more pronounced in the Transitional Council. The Minister took on the role of funding the Transitional Council as the Minister had a stake in the outcome of the process.

Mr Swart referred to Clause 96 (1) (a) and asked why the Bill provided for an equal number of representatives of attorneys and advocates on the Transitional Council. Was there a consensus on the part of the attorney’s to this provision? The composition, numbers and rationale of the Council needed to be given further consideration.

Adv Skosana responded that the representation on the Council was a product of discussions- there had been no general consensus on parity of members.

Ms Schäfer questioned what happened if after the term of the Transitional Council prescribed in Clause 96 (3) of the Bill, an agreement had not been reached on the electioneering process for a new Council.

Mr Bassett responded that the Bill provided for an extension by virtue of Clause 97 (5).

Ms Schäfer responded that the extension was left to the discretion of the Minister. If there was a decision not to extend what happened.

Mr Daya replied that there was an arbitration clause which the Transitional Council could revert to. The rationale behind not leaving too many options for unreached decisions was to force the Transitional Council to make a determination within the prescribed time and avoid a Transitional Council in perpetuity.

Mr Jeffery opined that it was necessary to apply some pressure to force a determination by the Transitional Council considering the history of the Bill and how long it had taken to come to an agreement of some sorts on various issues in the Bill.

Ms Smuts requested further clarification on the Terms of Reference of the Transitional Council; an examination revealed a possible de establishment of the voluntary associations.

Ms Smuts questioned what the purpose of the Code of conduct was- was it to take the place of the disciplinary proceedings of the voluntary associations?

Adv Skosana explained that the current status quo was for voluntary associations to institute disciplinary proceedings against their members; the GCB sometimes went beyond its members only. The Department’s view was that regulatory functions and disciplinary matters should not be left to voluntary associations.

Ms Smuts opined that the responsibilities outlined for the transitional Council in the Bill seemed enormous, along with de-establishing already existing structures.

Adv Skosana responded that as earlier stated, the Bill had no intention of transferring the assets of voluntary associations to the Council; only assets of statutorily established associations were to be transferred to Council.

At the end of the deliberations on the Bill, the Chairperson thanked the Department for its insight and comments.

Deliberations on Reports on the Suspension of Magistrates
The Chairperson urged the Committee to commence deliberations and adoption of the reports on the suspension of Magistrates before it.

Report on Magistrate C M Dumani
Members made a few typographical corrections to the report. Mr Jeffery moved for the adoption of the report subject to amendments, Mr Swart seconded the adoption.

Report on Magistrate L Myles
Mr Jeffery remarked that Paragraph three of the report contained too much information on personal details of Magistrate Myles’ illness and suggested the deletion of some phrases.

Ms Pilane-Majake opined that details on the absenteeism of Magistrate Myles be left in the report as it was the basis of recommendation for her removal from office.

Adv Holomisa disagreed with Ms Pilane-Majake and state that information on the basis of the Committee’s recommendations should only be made available upon request.

Mr Jeffery decried the state of the report and the time at which it was sent to Members - there had been no sufficient time to go through the report in details. He suggested that the report be stood down. Members agreed.

Report on Magistrate N E Ndamase
Mr Jeffery also suggested that this report be stood down for proper consideration by Members. Members agreed.

Mr Swart cautioned that the Magistrate Commission had expressed some frustration on the Committee’s time line in finalising issues. It was important that the Committee was careful about delays.

The Chairperson responded that the current delay was unavoidable. The Committee still required a plenary session of the House o accept the reports.

Mr Jeffery stressed the need for the Committee secretariat to adopt better working ethics and send out reports timeously to Members.

The Chairperson thanked all in attendance.

The meeting was adjourned.