The National Empowerment Fund (NEF), an agency of the Department of Trade, Industry and Competition, has announced a combined funding commitment of R51-million to advance transformation in South Africa’s legal and professional services sectors.

The announcement was made by NEF CEO Mziwabantu Dayimani at the Legal Sector Codes Summit, in Sandton, on October 23.

The summit was conceptualised by the NEF and convened in partnership with the Legal Sector Charter Council to unpack the implications of the Legal Sector Codes (LSC), gazetted by Trade, Industry and Competition Minister Parks Tau in September 2024 in terms of Section 9(1) of the Broad-Based Black Economic Empowerment Act and to punt the transformation agenda.

Alleging ongoing exclusion of black professionals in the legal profession, Dayimani announced an initial R1-million contribution to the Legal Sector Transformation Fund (LSTF), which is provided for in the LSC.

The LSTF will be used for skills and enterprise development initiatives for black legal practitioners in specialised areas of legal practice, helping them compete for valuable contracts from both the private sector and government.

Dayimani said the pledge reflected the NEF’s belief that transformation required investment in addition to policy directives.

“Transformation of the legal profession cannot be achieved through regulation alone. It requires resources, partnerships and intentionality. This R1-million allocation is a catalytic gesture, a call to action for others to join in expanding this fund so that transformation in the legal sector moves from principle to practice,” he said.

He added that the NEF would work with partners to mobilise additional resources from organisations responsible for the skills development mandate, ensuring that the LSTF grew into a national vehicle for inclusion.

“We are treating this as an initial allocation. The need is far greater, and transformation must be financed with the same urgency as it is legislated,” Dayimani said.

Alongside the skills development initiative, the NEF also launched the R50-million Professional Services Fund (PSF) to provide working capital and growth finance to black-owned law firms and other professional service providers.

Dayimani said capital remained the greatest barrier to growth for black firms.

“Law firms and other professional firms often struggle with cashflow and access to working capital. This prevents them from increasing their job creation potential and their capacity to absorb young entrants into the profession,” he said.

The PSF will provide funding from R250 000 to R5-million a firm, with financial instruments such as term loans, bridging finance, and revolving credit facilities; investment decisions based on the strength of mandate letters or contracts; back-office support for financial statements at no cost; and mentorship, turnaround services, and market linkages to help firms scale and thrive.

The LSC introduce specific and time-bound transformation targets over a period of five years, which would effectively force:

• 50% black ownership and 25% black women ownership within five years;
• 50% management control representation for black practitioners;
• 3.5% skills development spend on training black candidates, particularly women, youth, people with disabilities, and those from rural areas;
• 60% target for briefing of black advocates of which 30% for black women advocates; and
• 80% target for procurement of legal services from black firms and advocates for the public sector.

Several large law firms, such as Bowmans, Webber Wentzel and Werksmans, are currently involved in litigation to have the LSC set aside.

Concerns cited include that it does not recognise how large law firms operate in practice; that it sets unrealistic ownership targets; that it disregards the transformation initiatives undertaken by large law firms; that it excludes non-lawyers when evaluating the management composition of large firms; that it focuses too narrowly on what firms spend on briefing black advocates while ignoring what is spent on other black-owned service providers; and that it fails to take into account the role that large law firms play in attracting foreign direct investment.

Critics have also contended that the LSC applies to less than 5% of law firms, thereby excluding the majority of firms from its transformational requirements. This, it is argued, undermines the core purpose of the LSC.