The legal sector has seen big changes in the last few weeks. As of 1 November 2018, the Attorneys Act 53 of 1979 was replaced by the remaining chapters of the Legal Practice Act following many years of comments on the Legal Practice Bill. The implementation of the Act will regulate all legal practitioners, candidate legal practitioners and juristic entities for the first time in the history of South Africa.
According to an article released by the South African Government, “the Legal Practice Council replaces the four statutory provincial law societies which have to date fulfilled the dual purpose of regulating and representing attorneys. Advocates and attorneys will now be regulated by the Legal Practice Council. Bar associations will no longer have the responsibility to regulate the profession. They can however continue to exist as voluntary associations to advance any non-statutory interests of the profession.”
Along with this change, comes some important changes to note. These include:
- The Attorneys Fidelity Fund (AFF) will become the Legal Practitioners Fidelity Fund (LPFF).
- The four Law Societies have been dissolved and replaced by nine Provincial Councils.
- The nine Provincial Councils fall under a new structure called the Legal Practice Council.
- Trust interest which has been paid to Law Societies will be payable directly to the Legal Practitioners Fidelity Fund (LPFF).
In terms of trust accounts and trust interest, the following important changes should be noted.
- Every legal practitioner, with some exceptions, must operate a trust account with one of the arranged banks. These banks include: Absa, Albaraka Bank, FNB, Grindrod Bank, HBZ Bank, Investec Bank, Mercantile Bank, Nedbank, and Standard Bank.
- Legal practitioners may not deposit trust account money or invest money in accounts at banks that are not included in the above list, unless they have received written consent from the LPFF.
Other changes regarding trust interest and trust account include:
- Section 78(1) of the Attorneys Act will be replaced by Section 86(2) of the LPA. This states that 100% of trust interest earned, less approved recoverable bank charges, will be paid monthly to the LPFF as provided for by Rule 54.14.16.1 made under the authority of Section 95 (1) of the Legal Practice Act, 28 of 2014.
- Section 78(2)(a) of the Attorneys Act will be replaced by Section 86(3) of the LPA. This states that 100% of trust interest earned will be paid on an annual basis to the LPFF as provided for by Rule 54.14.16.3 made under the authority of Section 95 (1) of the Legal Practice Act, 28 of 2014
- Section 78(2A) of the Attorneys Act will be replaced by Section 86(4) of the LPA. This states that with effect from 1 March 2019, 5% of the trust interest earned will be paid monthly to the LPFF in terms of section 86(5)) and as provided for by Rule 54.14.16.4 made under the authority of Section 95 (1) of the Legal Practice Act, 28 of 2014.
Our Thoughts…
We all (legal practitioners, law firm employees, current law students and futures law students) need to keep an eye on the changes that will come as a result of the new Legal Practice Act. While certain provisions of the Act have already been formally put in place, the practical roll out of some other sections still need to be ironed out and finalised by the new LPC. Examples of the changes we are expecting will be – community service rules for Candidate Attorneys, new tariffs/fee guidelines, investment interest charges by banks (effective 01 March 2019), etc. While most of the provisions may not seem to directly impact our clients, we serve and assist individuals/businesses and therefore, anything that could affect our practice’s day-to-day operation is important news for our clients. We will, as always, make sure any changes are handled as smoothly as possible and that anything affecting our clients is communicated well and efficiently managed.