The Pretoria High Court has ruled that the Legal Sector Code, a set of Broad-Based Black Economic Empowerment (BEE) rules for law firms, was promulgated unlawfully. The judgment means the code, which required firms to reach 50% black ownership, including at least 25% black-women ownership, and set representation targets of up to 50% for black managers, partners and directors, cannot be enforced until the minister revisits it.
Legal firms that brought the case, led by Denys (formerly Norton Rose Fulbright) and joined by Bowmans, Webber Wentzel, Werksmans and the trade union Solidarity, argued that the code was introduced without proper ministerial judgment. They said the thresholds, applying to firms with annual turnover of R5 million for companies and R3 million for attorneys, were too low and would force many small practices to meet rigid transformation targets.
According to the court, Minister of Trade, Industry and Competition Parks Tau failed to apply his mind and exercise the statutory discretion required under the Broad-Based Black Economic Empowerment Act. The minister had told the court that he merely rubber-stamped the code and left the “nitty-gritty” to the legal profession. The judgment made clear that a minister’s constitutional mandate is not just to sign off on policy but to independently evaluate the material and satisfy himself that the legal requirements for promulgation have been met.
“Public power exercised to advance transformation must comply with the Constitution and the empowering legislation,” the court said, adding that consultation and technical expertise cannot replace the minister’s own judgment. As a result, the court ordered the code to be set aside and sent back to the minister for a fresh decision, but it stopped short of striking the code entirely. The court also ordered the minister to pay the applicants’ costs.
For law firms, the immediate impact is relief from the new ownership and management targets while the code is being redrafted. Smaller firms that would have been caught by the lower turnover thresholds can continue operating under the previous BEE framework. Larger firms, however, still face pressure to meet transformation goals, but they can now argue that any future code must be issued following proper ministerial discretion.
The ruling sits within a broader debate over BEE policy in South Africa. Over the past decade, the government has used BEE to address historic inequities, but critics argue that some targets amount to quotas and can burden businesses, especially smaller ones. This case highlights the tension between transformation objectives and procedural fairness. While the court did not comment on the merits of the transformation goals themselves, it made clear that the process of setting those goals must respect constitutional limits.
Legal practitioners and SME owners in the sector should watch for a revised code. The minister is expected to undertake a new assessment, which may involve further stakeholder consultation. Until then, firms can focus on their existing compliance obligations without the added pressure of the contested targets.
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The Legal Sector Code was originally published in September 2024 and set out a five-year roadmap for firms to move toward 50 % black ownership, with at least 25 % held by black women, while also targeting up to 50 % representation for black managers, executives, partners and directors. Crucially, the code carved out exemptions for law firms with annual turnover of R5 million or less and for attorneys earning R3 million or less, meaning those smaller practices would have been subject to the same rigid transformation obligations as larger entities. Those thresholds were lower than previous BEE rules, intensifying concerns about the impact on small-scale practitioners.
Solidarity, the trade union that joined the litigation, argued that the “targets” effectively amounted to racial quotas, a point echoed by the intervening firms who stressed that their objection lay not with transformation itself but with the unlawful manner in which the code was imposed. Denys, Bowmans, Webber Wentzel and Werksmans all maintained that a lawful process was essential for any credible transformation agenda. The plaintiffs highlighted that the code’s design, rather than its objectives, risked undermining the sector’s ability to comply without breaching constitutional principles.
Under the Broad-Based Black Economic Empowerment Act, a minister must independently assess the material before signing any code, a duty the court said was not fulfilled when Parks Tau described his role as merely “rubber-stamping” the document. The judgment clarified that consultation, technical expertise and stakeholder input may inform the decision, but they cannot replace the minister’s own judgment. Remittal therefore requires the minister to revisit the code, evaluate the evidence, and satisfy himself that all statutory criteria for promulgation have been met before re-issuing it.
Going forward, the minister must issue a fresh decision on the Legal Sector Code, but the court made clear that the extensive consultative work already undertaken does not have to be restarted. The ruling leaves the code in limbo pending a proper ministerial assessment, and the applicants’ costs have been awarded to the plaintiffs. Firms can therefore continue to rely on the pre-existing BEE framework while awaiting the minister’s next step, which will determine whether the five-year transformation targets are reinstated or revised.
