Need for transformation remains ‘necessary and urgent’ as court sets aside gazetting of Legal Sector Code
In a long-awaited ruling, yesterday a full bench of the High Court in Pretoria set aside a Ministerial decision to gazette a B-BBEE Legal Sector Code that leading firms had said was structurally flawed and unworkable, would undermine broader industry transformation, and had ‘unreasonable, impractical, and unrealistic’ operational targets
The South African legal profession needs a sector code that is workable, evidence-based, and capable of delivering genuine transformational outcomes, says leading firm Deneys, which had spearheaded a challenge to a ‘structurally flawed and unworkable’ Legal Sector Code that was subject of a significant ruling made yesterday by a full bench of the Gauteng Division of the High Court, Pretoria.
The High Court reviewed and set aside the decision of the Minister of Trade, Industry and Competition to gazette the B-BBEE Legal Sector Code in September 2024, and remitted the matter to the Minister for reconsideration. The Court found the Minister did not correctly exercise their discretion, or properly evaluate whether the Legal Sector Code and its departures from the Generic Codes were justified. The Court’s finding focused on how the Minister’s decision was made, not the Code’s content.
"This was never about whether the profession should have a sector code,” says Deneys CEO Brent Botha, speaking with Africa Legal this morning. “It should.”
“It was about whether the decision to gazette this one was lawfully taken. The court has found that it was not, and has said that the need for transformation in our profession remains undiminished and urgent. We agree on both counts."
For Deneys, transformation is a strategic and professional imperative, not a regulatory formality, and the obligations that go with it “do not fall away” as a result of yesterday’s judgment. The firm says its commitment to meaningful and sustainable transformation in the legal profession is unchanged, and it will continue to pursue its transformation commitments, and will engage constructively with the Minister, the Legal Practice Council, and the profession on the way forward.
Several legal organisations supported the introduction of the Broad-Based Black Economic Empowerment (B-BBEE) Legal Sector Code (LSC) when it was gazetted in September 2024, seeing it as a vital legal mechanism to break down historical inequalities, and a much faster solution than voluntary transformation under generic B-BBEE Codes to issues including high attrition of black practitioners and a persistent lack of access to complex commercial work and high-value litigation.
However, while the LSC was designed to be binding on all advocates and attorneys in South Africa, its separation of practitioners into different compliance categories depending on turnover levels, alongside various exemptions for newer entrants and others, meant the vast majority of the profession (95% of legal practices) was completely excluded from the full compliance and scorecard requirements.
Moreover, the LSC demanded large law firms hit 50% Black ownership (including 25% Black women) within five years, despite equity partnership tracks taking 7-10 years or more, while ignoring the elevation of black non-lawyer professionals to leadership and top strategic roles that were key to large organisations including large law firms.
“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,” said Bowmans Chair Ezra Davids, when large South African firms Bowmans, Webber Wentzel, and Werksmans intervened in April 2025 to the legal proceedings previously initiated by Deneys against the gazetting of the LSC. “Our goal is not to oppose transformation, but to help shape a legal sector code that is evidence-based, practical, and inclusive.”
The large firms’ challenge to the LSC has often been mischaracterised (and incorrectly reported) as opposition to transformation in the sector; it was opposition to a poorly drafted, unworkable LSC that would undermine true transformation.
The High Court noted that the Minister’s predecessor, Ebrahim Patel, had “identified serious legal and factual concerns” in the drafting of the LSC. Conversely, Minister Parks Tau gazetted the LSC in less than three months of taking office.
While entrusted with statutory discretion, Minister Tau admitted to largely relying on department summaries and decisions of the broader legal profession, rather than exercising the rigorous, independent judgement of his predecessor. The High Court noted that while “consultative and technical processes” could inform exercise of the Minister’s discretion, they couldn’t themselves supply the exercise of that discretion.
The High Court observed that while Minister Tau did not lawfully exercise his statutory discretion in accordance with the Constitution and B-BBEE Act, meaningful transformation of the legal sector remains “necessary and urgent”. The importance of the Code's transformative objectives cannot, however, displace the constitutional requirements governing the exercise of public power. “The Constitution requires that such power be exercised in accordance with the Rule of Law.”
