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The South African
07-05-2025
- Business
- The South African
Gatekeepers gone rogue: Why Big Law's Legal Sector Code challenge deserves contempt
This article is written reluctantly. However, the writer has no real option but to write this opinion piece, as the application brought by Webber Wentzel, Bowmans, and Werksmans (in its current form) is not only disingenuous, but alarmingly out of touch with South Africa's constitutional and transformative imperatives. It reads as a strategic retreat disguised in legalese; a reaction not to unfairness, but to the discomfort of transformation gaining ground. Last month, three of South Africa's largest corporate law firms — Bowmans, Webber Wentzel, and Werksmans —intervened in Norton Rose Fulbright's legal challenge against the Legal Sector Code (LSC), gazetted by the Minister of Trade, Industry and Competition. The firms seek to have the code reviewed and set aside, arguing it is unlawful, irrational, and unconstitutional. In a country where transformation is not a luxury but a constitutional imperative, the Legal Sector Code (LSC) represents a long-overdue step toward an equitable profession that reflects the demographics of South Africa. Let's be clear: the LSC is not a revolution. It is not asking for reparations. It is asking, ever so politely, that the legal profession begin to reflect the demographics of the country it claims to serve. It sets targets for ownership, management control, skills development, and procurement; all tailored specifically for a profession that has systematically excluded black South Africans from the highest echelons of influence for generations. That some of the largest and most prestigious law firms—who have benefited immensely from an inequitable system—now oppose that code should be enough to raise eyebrows. Of importance is that the Code was first published for public comment in 2022. Bowmans, Webber Wentzel, and Werksmans i.e. the Big Three of Resistance did, in fact, comment during this process, and those comments were taken into account in finalising the Code. The LSC was signed off by Minister Ronald Lamola in October, but later blocked from publication by then-Minister Patel. As frustration mounted, several stakeholders—including NADEL (The National Association of Democratic Lawyers) and the Black Lawyers Association—threatened legal action. It was ultimately the Black Conveyancers Association (BCA) that formally instituted litigation to compel gazetting. The case was later withdrawn after Minister Parks Tau, under the 7th Administration, assured that all conditions had been met and committed to publication. The episode reflects the persistent political resistance transformation continues to provoke—and the resolve of black professional formations to see it through. While Minister Ronald Lamola was a key stakeholder, the legal authority to gazette Sector Codes rests solely with the Minister of Trade, Industry and Competition under Section 9 of the B-BBEE Act. The Code was ultimately gazetted by Minister Parks Tau on 20 September 2024, after confirming all legal and procedural requirements were met. At the heart of their founding affidavit, the firms argue: The LSC applies only to less than 5% of legal practices — excluding over 95% of firms from its scope — yet imposes severe and disproportionate targets on large firms. No transitional period was provided before implementation. Several deviations from the Generic Codes (e.g., in ownership, management control, skills development, and socio-economic development) lack the required justifications based on 'sound economic principles, sectoral characteristics or empirical research.' The LSC excludes black non-lawyers in calculating transformation metrics — a move the applicants say is unjustified and discriminatory. The process leading to the LSC's gazetting was flawed: the Minister did not address the concerns of his predecessor, Minister Patel, who declined to publish the Code due to legal and procedural irregularities. The B-BBEE targets could cripple the applicant firms' procurement competitiveness and violate their existing client obligations, particularly in the public and financial sectors. But that is just a summation; let us now get into the meat of it: the founding affidavit spans over 110 pages and raises 11 grounds of review—each of which we will unpack in detail below, following the broader context and summary provided above. Minister Tau acted unreasonably and/or irrationally The applicants argue that Minister Tau should not have gazetted the Code without first confirming that Minister Patel's concerns were resolved. However, it is important to note that the formal consultative process for the Legal Sector Code (LSC) spanned five to six years, beginning in earnest around 2018/2019. While broader conversations on legal sector transformation predate this, structured and sustained engagements specific to the LSC trace back to that period. The Department of Trade, Industry and Competition (DTIC) was not blindsided; it participated, advised, and contributed to drafts. That Patel did not personally sign off is not a legal requirement. Moreover, the Minister of Justice is empowered under section 9 of the B-BBEE Act to issue sector codes in consultation—not co-dependence—with the DTIC. Against this backdrop, any suggestion that Minister Tau acted unreasonably or irrationally is unconvincing. Exclusion of 95% of legal practices This is a wildly misleading figure. The LSC is binding only on firms with an annual turnover of R10 million or more. That threshold is standard in all sector codes. Smaller firms are measured using the Qualifying Small Enterprise (QSE) or Exempt Micro Enterprise (EME) scorecards, just as in other sectors. The majority of black-owned firms are QSEs and EMEs. The complaint here is not about exclusion—it's about the discomfort of finally being included. Absence of a B-BBEE Strategy under section 11 This ground collapses under basic legal literacy. Section 11 of the B-BBEE Act allows, but does not require, the Minister to issue a strategy. The existence of sector codes does not hinge on the prior publication of a national strategy. In any event, the DTIC's 2019 national B-BBEE strategy is publicly available. Breach of section 9(2) of the Constitution The applicants suggest that the Code's provisions are 'self-defeating' and violate equality rights. This is a bizarre inversion of logic. The LSC was created precisely to give effect to section 9(2), which allows for measures to advance persons disadvantaged by past discrimination. It is not for the historically privileged to suddenly claim victimhood when structural redress is finally enforced. Arbitrary ownership targets The LSC sets a 50% black ownership target by year five. In a country where approximately 93% of the population is non-white, it is both inaccurate and intellectually dishonest to assert that a target of 50% black ownership within five years is unachievable. The demographics of the population clearly align with the potential for such equitable representation in partnerships. Alternative forms of equity such as profit sharing and equity equivalents are also recognised in the Codes. Other professional sectors have complied; legal firms must too. Unworkable targets for black legal spend Firms are required to brief black advocates and instruct black-owned firms. The profession has long lamented the lack of black counsel getting briefs—now that there's a policy solution, it's suddenly 'unworkable'? The LSC recognises market realities by allowing a ramp-up period and includes flexibility where specialist skills are lacking. Use of unmeasurable indicators This is incorrect. Every element in the scorecard includes a measurable target and verification standard. The Codes of Good Practice mandate verification agencies to assess B-BBEE compliance based on submitted evidence. If some firms cannot produce records, the fault lies not in the Code but in their own HR and procurement departments. Misalignment with Generic Codes The LSC was developed in line with the DTIC's guidelines, as acknowledged in the gazetted notice. Sector codes are, by definition, allowed to depart from generic frameworks to accommodate sector-specific dynamics. The legal sector is not exempt from that flexibility. Breach of the Rule of Law This is a buzzword argument with no legal backbone. The Code was developed after a transparent, multi-year consultation involving major stakeholders. It was gazetted after proper public comment and signed by the competent authority. Nothing about it undermines the Constitution or legislative supremacy. Specialised scorecard for state institutions The applicants are not state-owned entities and thus lack standing to object to this clause. But for clarity: the scorecard for organs of state simply encourages them to support transformative procurement. It's aspirational, not binding. Lack of a transitional period There was a six-month lead-up to the gazette date and an effective grace period thereafter. Moreover, the DTIC's practice notes make clear that measurement periods can overlap with old codes for a brief time. The hysteria is misplaced. The firms emphasise that while they support transformation and B-BBEE, they believe the Code in its current form threatens not only their operational sustainability but also the broader objectives of economic inclusivity and access to justice. Exactly how a framework designed to promote inclusion and equity threatens inclusion and equity is anyone's guess — but apparently, in the alternate reality of Big Law, equity is dangerous when it asks too much of the privileged. The irony is rich: the very firms now dragging the Legal Sector Code to court are the same ones desperate to retain the Level 1 B-BBEE ratings that guarantee them a steady pipeline of lucrative state work. They want the benefits of transformation without the burden of accountability. It's a paradox; suing the state for enforcing the very code that underpins the procurement rankings they depend on. If the goal is to remain eligible for public sector briefs, the solution isn't litigation. It's compliance. Instead, these firms would rather challenge the rules than play by them; a move that exposes exactly why the Code is needed in the first place. This article is also written against the backdrop of the amendments to the Employment Equity Act (EEA), a cornerstone of South Africa's legislative framework aimed at addressing the deep-rooted structural imbalances that continue to plague our corporate landscape. The developments are a direct response to the entrenched disproportionality that defines the composition of top management in many sectors, where the overwhelming dominance of white men persists despite decades of democracy. The EEA does not merely encourage transformation as a moral ideal — it mandates it as a legal and societal necessity. The significance of the Act has been unequivocally endorsed by President Cyril Ramaphosa, who has consistently reaffirmed the government's commitment to substantive transformation in the private sector. President Ramaphosa has explicitly stated that the private sector remains skewed, with top management still overwhelmingly controlled by white males, and he has called on companies to be more inclusive and reflective of South Africa's demographics. He has defended the EEA as a vital instrument that not only prohibits unfair discrimination but actively seeks to correct the inequalities of the past. According to the President, these laws are not an overreach — they are part of a broader effort, built over the last three decades, to dismantle the structural inequality inherited from apartheid. It is against the development of these progressive labour laws, designed to move the country toward justice and equity, that efforts to undermine transformation must be scrutinised. In particular, the actions of the 'big three' law firms, who now challenge transformative instruments like the Legal Sector Code, stand in direct contradiction to the spirit and letter of employment equity legislation. Rather than embracing the responsibility to lead by example, these firms appear to entrench exclusionary practices under the guise of legal technicalities, undermining the very goals that the Employment Equity Act seeks to achieve. Perhaps the most galling aspect of the LSC challenge is who's leading it. Not just white firms, but also a few black professionals who have made it to the top and now seem intent on pulling the ladder up behind them. This isn't just a legal fight — it's a moral abdication. As legal scholar Dr. Mandisa Mahlobo aptly put it in a recent panel on transformation: 'Representation isn't enough. We need redistribution — of power, of resources, and of opportunity.' Transformation in the legal sector has been glacial. In 2018, the LSSA reported that only 36% of attorneys were black and just 35% were women. At partner level, the disparities are starker. According to the Law Society's 2023 statistics, only 17% of attorneys in senior positions are black, and less than 10% are black women. More than 60% of legal spend in the private sector goes to the same few firms — firms that now seek to entrench the very exclusivity they claim to be reforming. It is no coincidence that these same firms who wave the Level 1 flag are gatekeeping the work that status brings in. The Generic Codes may help firms attract clients, particularly from the public sector, but the benefits often stop at entry. Junior black attorneys are routinely excluded from the most lucrative matters, often offered no meaningful bonuses or promotions, and ultimately pushed out under the pretext of not meeting billable targets. Promotion data since 2022 in these firms shows an alarming disconnect between the public transformation rhetoric and private practice reality. This invites an uncomfortable question: is the Generic Code, without enforceable sector-specific guidance, merely a legalised form of fronting? If the black lawyers who help achieve Level 1 B-BBEE ratings are not getting the work, not being promoted, and not staying in the profession, then something is deeply wrong. Transformation is not measured by PowerPoint presentations or glossy brochures. It is measured by power — who holds it, who shares it, and who is systematically kept from it. South Africa's corporate sector also bears responsibility. It continues to abet these firms, rewarding Level 1 B-BBEE status without asking how it is achieved or whether it translates into real, lived transformation. It is simply enough to tick the box. No accountability. No follow-through. Just performative compliance wrapped in progressive language. Instead of engaging with the substance of the Code, Webber Wentzel, Bowmans, and Werksmans have chosen the path of obstructionism. These are not cries of injustice, they are tantrums from gatekeepers reluctant to yield space. Against this background, it becomes increasingly difficult to view the challenge to the Legal Sector Code as a good-faith objection rooted in technical or procedural shortcomings. Rather, it bears all the hallmarks of a systemic, coordinated attempt to defang transformation under the familiar guise of 'practicality' and 'sustainability.' The interventions by the big three of resistance only reinforce this concern. While these firms publicly tout their support for transformation and parade their previously disadvantaged candidate attorneys as evidence thereof, their decision to align with NRF's legal challenge exposes a troubling and deliberate inconsistency. Their argument that the Legal Sector Code is unworkable or too onerous mirrors the same rhetoric historically deployed to stall meaningful transformation: commitment in language, resistance in practice. If the Generic Codes were truly adequate, we would not still be contending with such glaring underrepresentation of black practitioners, particularly in ownership and senior leadership. These interventions do not seek to refine or enhance the Code. They aim to dilute its impact and shield entrenched privilege, all while posturing as reasonable critique. This is not pragmatism; it is a refusal to confront the structural inequalities the Code was expressly designed to remedy. As the Constitutional Court reminds us, transformation is not optional. The time for debating whether we need redress has passed. What remains is the task of implementation. If this is the hill Big Law wants to die on, let them. We'll be too busy building something better. The courts may decide the case — but the people have already judged the intent. Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1 Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
Zawya
24-04-2025
- Business
- Zawya
Kenyan Revenue Authority unveils the Electronic Rental Income Tax System
Nairobi: On 10th April 2025, the Kenya Revenue Authority (KRA) officially announced that it had unveiled the Electronic Rental Income Tax System (eRITS), touted as a landmark innovation designed to streamline rental income tax compliance in the country. According to Alex Mathini, Tax Partner at Bowmans in Kenya, "The eRITS is accessible through the Gava Connect and eCitizen platforms, which support real-time integration with KRA's digital services. "The platform is designed to enable seamless tax computation, filing and payment of monthly rental income tax, and reduce the administrative burden associated with tax compliance in the real estate sector," he explains. Pursuant to the press release from the KRA, the Rental Income Tax System (RITS) is a voluntary compliance tool tailored to support tax compliance by landlords, property owners and agents with residential rental income under the Monthly Rental Income (MRI) tax regime, which only applies to Kenyan residents. Mathini explains that the introduction of eRITS complements the existing MRI regime, which was introduced in 2016 for landlords earning rental income of between KES 288,000 and KES 15 million annually. Notably, the MRI tax rate was reduced from 10% to 7.5%, effective 1st January 2024. "With the rollout of eRITS, the KRA is leveraging technology to enhance revenue collection. While the use of eRITS is not mandatory, it would be ideal to adopt it as it eases compliance," he explains. Bowmans Tax Partner Andrew Oduor notes further that the KRA has yet to issue the step-by-step guidelines on the eRITS registration process. "However, once registered, taxpayers will be able to generate and submit monthly MRI tax returns through eRITS. These monthly returns are official and feed into the individual's or entity's overall tax returns, easing the person's annual income tax filings," Oduor says. Oduor notes that eRITS is only accessible via Gava Connect and eCitizen platform, meaning that users must have internet access to use the system. "This does pose a drawback since despite Kenya having made commendable efforts to improve internet connectivity, the quality and affordability of internet access still remain a challenge. Accordingly, while residential property owners may view eRITS as a welcome move towards simplifying compliance, its adoption may be hindered by limited access to reliable internet," he says. Oduor explains that the eCitizen platform has occasionally experienced downtimes during peak usage periods. "Such outages could hinder timely filing and result in compliance difficulties, particularly in the absence of alternative filing methods. The KRA may therefore consider setting up a USSD code for taxpayers who do not have internet connectivity to access the system. "It is noteworthy that the KRA has yet to issue guidance on procedures to follow in the event of system failures, highlighting the need for contingency planning as the platform continues to roll out," adds Oduor
Bloomberg
09-04-2025
- Business
- Bloomberg
Three South African Law Firms Join Black-Ownership Rules Review
Three more South African law firms joined a legal challenge to review stricter policies around Black ownership and representation in these practices. Bowmans, Webber Wentzel and Werksmans 'have intervened in support of legal proceedings' initiated by Norton Rose Fulbright LLP to revisit the new broad-based Black economic empowerment legal sector code of good practice introduced by Trade Minister Parks Tau in September 2024, the firms said in a statement Tuesday.
Zawya
04-04-2025
- Business
- Zawya
Kenya launches national strategy for responsible AI development
In a progressive move that aims to position Kenya as a leader in AI adoption and governance in Africa, the country officially launched its National Artificial Intelligence (AI) Strategy (2025-2030) (strategy) on 27 March 2025. According to John Syekei, partner and head of IP and Technology at Bowmans Kenya, the process of developing the strategy began as part of a broader push to harness emerging technologies for economic and social transformation. The formation of the National Emerging Technologies and AI Strategy Technical Working Group brought together experts from government agencies, development partners, the private sector, academia, and civil society organisations. Richard Odongo, a senior associate in Bowmans' IP & Technology practice, represented Bowmans on this working group. Roadmap for AI development Odongo notes that the goal of the strategy was to create a roadmap for responsible AI development while ensuring alignment with Kenya's broader digital economy agenda. "The strategy aims to address gaps in AI regulation, investment and skills while fostering innovation in key sectors," he says. Ariana Issaias, partner at Bowmans in Kenya, explains that currently, Kenya lacks a comprehensive AI regulatory framework. "While existing laws such as the Data Protection Act 2019, Computer Misuse and Cybercrimes Act 2018, Intellectual Property (IP) laws, and Consumer Protection Act 2012, offer some guidance, they are currently insufficient to address AI's complexities. "The absence of a specific AI regulatory framework creates governance challenges in areas such as ethics, data privacy and safe AI deployment. Kenya's current regulatory environment for AI is fragmented, with multiple bodies working independently without a unified approach," she explains. A further goal of the strategy was to position Kenya as a leader in AI R&D, innovation, and commercialisation for inclusive socio-economic development. "It aligns with Vision 2030, the ICT Masterplan (2022–2032), and the African Union Agenda 2063, all of which emphasise technology-driven economic growth and improved service delivery. The African Union's Continental AI Strategy (2024) also provides a cogent regional perspective on AI adoption," says Issaias. Key focus areas and recommendations The new AI strategy encompasses six key areas, namely: AI digital infrastructure; data research and development; talent; governance; investment; ethics, equity and inclusion. The environmental analysis in the strategy also assesses Kenya's social and economic environment, regional context, national context, political environment and technology ecosystem in relation to Kenya's readiness for AI adoption at scale. Odongo notes that, in terms of Kenya's AI Readiness Assessment, Kenya has been rated within a variety of these indices, including safety and government AI readiness. Overall, the assessment is based on five core dimensions, namely legal & regulatory, social & cultural, scientific & educational, economic, technological and infrastructural. "The key stakeholders also identified under the strategy's stakeholder groupings include AI developers (technology companies and technology service providers), communities, regulatory agencies, researchers and investors," he says. The new AI strategy was developed through a consultative process that began in April 2024, and it seeks to create an enabling environment for AI innovation, economic growth and inclusive development. "It examines the relationship between emerging technologies and AI, considering global, regional and national influences on AI adoption," Odongo notes. The document references key frameworks like the Constitution of Kenya (2010), the Data Protection Act (2019), and the National ICT Policy (2019) while also integrating broader digital strategies such as the National Digital Economy Blueprint and the Kenya National Digital Master Plan (2022-2032). Vital reforms and recommendations in the AI Strategy Syekei points out that the Kenyan Government and ecosystem stakeholders have identified several high-priority use cases across key sectors aligned with Kenya's Bottom-up Economic Transformation Agenda (BETA) and corresponding pillars in Kenya's Vision 2030. The key sectors prioritised for this strategy include healthcare; education; agriculture; public service delivery; security; micro-, small and medium-sized enterprises; the creative sector and sustainability. "The Strategy proposes several technical and regulatory reforms to create an enabling environment for AI adoption including cloud computing and AI infrastructure, addressing skills and capacity gaps, strengthening data protection and governance, and AI decision-making, fairness and data quality," says Syekei. Impact and next steps for Kenya's AI ecosystem The strategy serves as a framework to guide AI adoption and governance in Kenya and is spearheaded by the Ministry of Information, Communications and the Digital Economy. "The launch of the AI strategy signals new opportunities for technology companies, startups, and investors in Kenya. The proposed reforms could unlock funding for AI innovation, create new jobs, and attract global AI firms to set up operations in Kenya," explains Syekei. Issaias notes that other African countries that have developed similar AI strategies include Algeria, Benin, Egypt, Ethiopia, Ghana, Mauritius, Nigeria, Rwanda, Senegal, Tunisia and Uganda. "The strategy documents published by these countries also discuss AI in the context of public sector reform, education, research, national competitiveness, and mutually beneficial partnerships with technology companies," she says. Issaias concludes, "The consensus on the African continent is to take advantage of the opportunities offered by AI while mitigating the associated adoption and implementation challenges, such as those highlighted in Kenya's strategy."
