03 November, 2005

Open Letter To The Minister of Justice

Dear Minister Mabandla, In 1979, when you completed your LLB degree at the University of Zambia I was 7 years old. It was in the middle of apartheid era. When I completed my LLB degree years later South Africa was a very different place - in my second year Nelson Mandela became President, in my final year a representative Parliament enacted the new Constitution. Our democracy was born. Because people like you fought for it! But the fight is not over yet… Ten years after liberation most South Africans can simply not afford to enforce the rights guaranteed in our Constitution - legal fees are simply too high. The legal profession remains mainly white and male. The uneven geographical distribution of lawyers remains. Paralegal practitioners still lack recognition. The public remains uninformed about their legal rights. Why? Because… The laws and rules that govern our profession have lost track of time and reality. During the last three decades, most countries like the UK, USA, Hungary, Canada, France, Japan and Ireland have liberated their legal professions by scrapping rules against advertising, fixed fees and competition. Other professions have also taken bold steps to ensure their relevance and retain their changing clientele. Our legal profession has changed little. Years ago Louis Brandeis said that if we desire respect for the law, we must first make the law respectable. Albert Einstein, better know for his contribution to physics than to law, once stated that nothing is more destructive of respect for the law, than passing laws that cannot be enforced. Recently Henry Kissinger observed, “the illegal we do immediately, the unconstitutional takes a little longer.” These three learned gentlemen commented on the most important pillars of any democratic legal system: respect, enforceability, and constitutionality. These are totally absent in the laws and rules that govern South Africa’s legal profession. Let me explain… Law firms, touting and promoting legal services Locally and internationally, the many benefits of truthful advertising and marketing are well documented – advertising informs consumers, it fuels competition, keep prices low. Advertising furthermore plays an important role in consumer protection. It is even a basic human right –since our Constitutional free speech right also protects so-called commercial speech. In the same year that you completed your LLB degree, five apartheid-era Supreme Court judges had the unique opportunity to review the unreasonable and self-serving Law Society touting rules in Cirota v Transvaal Law Society. They held that the court cannot look on transgressions of the marketing rules as “unimportant” and stigmatised touting as “a practice that cannot be dealt with leniently”. They agreed that law firm advertising is” the most disloyal and despicable conduct towards other members of the profession”. To this very day, the Law Society Rules consider touting (referred to as “advertising” in other professions) as unprofessional, dishonourable and unworthy conduct on behalf of a legal practitioner. For example, Ruling 3 of the Law Society of the Northern Province’s states that: “[n]othing in these guidelines shall be construed as authorising an attorney to tout, directly or indirectly, for work of a kind commonly performed by a practising attorney. Without limiting the generality of that expression, "touting for work" by a practising attorney will include the following: 1) soliciting custom or work directly from any person; 2) entering into an arrangement with any person, whether an employee or not, for the introduction of clients to the attorney; and 3) making unsolicited visits or telephone calls or sending unsolicited letters or printed material to any person, (other than to an existing professional connection) whom the attorney knows or should reasonably be expected to know has an existing attorney/client relationship with another attorney, where such conduct is carried out with a view to, or is calculated to, establishing an attorney/client or correspondent relationship with such person.” Who in a law firm may have business cards? (IT managers and paralegals are obviously excluded), newsletters, public comments by attorneys... these and other issues are regulated and restricted by the Law Society Rules in pedantic and desperate detail. Even the use of stationary could be “unprofessional or dishonourable” if it does not befit the “dignity, prestige and status” of the legal profession. While outsiders may consider these and similar rules as either funny or pathetic, I consider them embarrassing! Two years before the 1979 Cirota decision, the judges of the American Supreme Court also had the opportunity to express themselves on the issue of “touting”. But, unlike the South African Supreme Court (which had rather little regard for constitutional rights such as free speech back in 1979), the US judges had to determine if the touting prohibitions of the Arizona State Bar were valid in terms of the First Amendment of the American Constitution (free speech). Then Judge Blackmun delivered the judgment in Bates v State Bar of Arizona and made the following sobering comments still valid today: “The heart of the dispute before us today is whether lawyers also may constitutionally advertise the prices at which certain routine services will be performed. Numerous justifications are proffered for the restriction of such price advertising.” “Early lawyers in Great Britain viewed the law as a form of public service, rather than as a means of earning a living, and they looked down on "trade" as unseemly. Eventually, the attitude toward advertising fostered by this view evolved into an aspect of the ethics of the profession. But habit and tradition are not in themselves an adequate answer to a constitutional challenge. In this day, we do not belittle the person who earns his living by the strength of his arm or the force of his mind. Since the belief that lawyers are somehow "above" trade has become an anachronism, the historical foundation for the advertising restraint has crumbled.” “It appears that the ban on advertising originated as a rule of etiquette and not as a rule of ethics.” “The State Bar places particular emphasis on the adverse effects that it feels advertising will have on the legal profession. The key to professionalism, it is argued, is the sense of pride that involvement in the discipline generates. It is claimed that advertising will bring about commercialization, which will undermine the attorney's sense of dignity and self-worth.” “Advertising is also said to erode the client's trust in his attorney: Once the client perceives that the lawyer is motivated by profit, his confidence that the attorney is acting out of a commitment to the client's welfare is jeopardized. And advertising is said to tarnish the dignified public image of the profession.” “The assertion that advertising will diminish the attorney's reputation in the community is open to question. Bankers and engineers advertise and yet these professions are not regarded as undignified. In fact, it has been suggested that the failure of lawyers to advertise creates public disillusionment with the profession. The absence of advertising may be seen to reflect the profession's failure to reach out and serve the community: Studies reveal that many persons do not obtain counsel even when they perceive a need because of the feared price of services or because of an inability to locate a competent attorney. Indeed, cynicism with regard to the profession may be created by the fact that it long has publicly eschewed advertising, while condoning the actions of the attorney who structures his social or civic associations so as to provide contacts with potential clients.” “Advertising is also said to have the undesirable effect of stirring up litigation. The judicial machinery is designed to serve those who feel sufficiently aggrieved to bring forward their claims. Advertising, it is argued, serves to encourage the assertion of legal rights in the courts, thereby undesirably unsettling societal repose.” “But advertising by attorneys is not an unmitigated source of harm to the administration of justice. It may offer great benefits. Although advertising might increase the use of the judicial machinery, we cannot accept the notion that it is always better for a person to suffer a wrong silently than to redress it by legal action. As the bar acknowledges, "the middle 70% of our population is not being reached or served adequately by the legal profession." “Among the reasons for this underutilization is fear of the cost, and an inability to locate a suitable lawyer. Advertising can help to solve this acknowledged problem: Advertising is the traditional mechanism in a free-market economy for a supplier to inform a potential purchaser of the availability and terms of exchange. The disciplinary rule at issue likely has served to burden access to legal services, particularly for the not-quite-poor and the unknowledgeable. A rule allowing restrained advertising would be in accord with the bar's obligation to "facilitate the process of intelligent selection of lawyers, and to assist in making legal services fully available." “It is at least somewhat incongruous for the opponents of advertising to extol the virtues and altruism of the legal profession at one point, and, at another, to assert that its members will seize the opportunity to mislead and distort. We suspect that, with advertising, most lawyers will behave as they always have: They will abide by their solemn oaths to uphold the integrity and honour of their profession and of the legal system. For every attorney who overreaches through advertising, there will be thousands of others who will be candid and honest and straightforward” Today, most democratic nations and even the authoritative Organisation for Economic Co-operation and Development (OECD) agree with the views of Judge Blackmen and his colleagues. According to the OECD report titled “Competition in Professional Services” released in 2000, restrictions on the advertising of legal services are “one of the most severe restrictions on competition in any organised profession”. The Report concludes that: “Studies about attorney advertising have illustrated these quality and price effects. Muris and McChesney tested the claim that legal firms following a strategy of advertised lower prices will necessarily produce lower-quality services, and found it unsupported. Rather, they concluded that legal “clinics” used advertising to obtain greater volume and hence lower average fixed costs, so they could charge lower prices without reducing quality. Others have documented how restricting attorney advertising affect prices. A study by the staff of the US FTC concluded that fees for a number of routine legal services were higher in cities where the time, place and manner of advertising were restricted. The price of legal services for an uncontested divorce, for example, averaged $33 more in cities with restrictive advertising regulations. That basic conclusion has been confirmed by others. These results are consistent with findings from other professions, that restricting advertising increase price but does not improve quality” “Where restraints on commercial dimensions of professional practice have been relaxed, prices are lower and new services appear in response to consumer demands. Ten comparative studies about price effects all showed that stricter regulation against competitive practices led to higher prices for services. This experience argues for extending reforms more broadly, because it shows that the professions’ exposure to market discipline can be increased while maintaining quality, performance standards and necessary consumer protections.” “Abolition of advertising restrictions has benefited consumers. The removal of price advertising restrictions appears to have resulted in lower prices and increased demand for some professional services. In the United States the relaxing of advertising restrictions appears to have facilitated the growth of alternative service providers and led to greater price competition and perhaps an increase in demand for some kinds of legal services. A Canadian study concluded that price advertising by professionals would improve consumer access to services, lower fees and increase efficiency and innovation.” Thankfully South Africa today is much more like the United States in 1977. We now have a new Constitution, a Bill of Rights and a Constitutional Court that ensure that all laws comply with the Constitution. Today our Minister of Justice is a black female, something not even remotely possible in 1979. South Africa is indeed a changed country. Or is it? On 9 June 2005 Desai J referred to the Cirota judgment as current authority on the status of the Law Society’s advertising prohibition: “ The scheme implemented by the respondent was a way of touting and displays a high level of disloyalty against other members of the profession. The practice of touting by legal practitioners is a serious contravention and should be eradicated” Twenty six years and a new Constitution later, nothing has changed for the legal profession or its clients. It’s not right. Cost of legal services and access to the law The fact that most South Africans cannot afford legal services was yet again confirmed by the findings of the Discussion Paper on the Transformation of the Legal Profession: “The broad middle class of South African society, although not indigent, is not able to afford the fees which practising lawyers charge” “A lawyer who operates under a sunshade on a sidewalk or under a tree in a rural village has no overhead expense and does not need to charge the same fees as a lawyer who occupies an expensive suite of offices and employs a large staff contingent. The Law Societies and Bar Councils have taken no account of this reality - practitioners who charge low fees have traditionally been regarded as being guilty of unethical conduct. This is a policy which needs to be reviewed. Deregulation would mean that the market would dictate the fee and practitioners would be able to offer appropriate services at competitive rates.” In terms of the Law Society Rules, it is “unprofessional, dishonourable and unworthy” for a lawyer to offer legal services at fees lower than those fixed by the Law Society. During the last four years, our firm has invested heavily in technology to automate our daily operations and keep overheads down. As a result we are in a position our lower of fees and reach out to those who can’t afford legal services. Unfortunately, doing so is prohibited by the Rules. In the Report mentioned above, the OECD finds that: “Even if only ‘recommended’, fee scales are a mechanism by which professionals’ incomes can be maintained at consumers’ expense”. Twenty six years and a new Constitution later, nothing has changed for those who cannot afford high legal costs. It’s not right. Black economic empowerment The Discussion Paper also concludes that: “The legal profession does not represent the diversity of South African society. The number of black lawyers in private practice and in the public service sector is comparatively low, as is the number of women. Black people and women are almost entirely absent from the ranks of senior partners in large firms of attorneys and senior counsel at the Bar. They were, accordingly, also largely absent from the controlling bodies of the Bar Councils and Law Societies until recently, when steps were taken to make these bodies more representative”. Furthermore “[d]isadvantaged law graduates experience difficulty in entering the legal profession and establishing themselves as successful legal practitioners”. Affirmative action and black economic empowerment are designed to address these and similar problems. But not in the legal profession. Section 23(1)(a) of the Attorneys Act “only natural persons who are practitioners and who are in possession of current fidelity fund certificates [may be] members or shareholders [of law firms]” The Law Society Rules give further effect to the chilling provisions of section 23 by branding the sharing of offices with non-practicing members and even receiving assistance from non-members as unprofessional conduct. As a result, many BEE deals in the legal profession fail to materialise and our profession stays white and male. Corporate governance To ensure good corporate governance, the King II Report provides internationally accepted guidelines for South African businesses. These include, amongst others, suggestions that companies should employ so-called non-executive directors. Such a director is “[a]n individual not involved in the day to day management and not a full-time salaried employee of the company or of its subsidiaries.” King II suggests the following: Non-executive directors bring an external judgment on issues of strategy, performance, resources and standards of conduct and evaluation of performance to the board. Courage, wisdom and independence should be the hallmark of any non-executive director acting in the best interests of the company. The role and function of a non-executive director is increasingly onerous and demanding. Non-executive directors should be individuals of calibre and credibility, and have the necessary skill and experience to bring judgment to bear independent of management, on issues of strategy, performance, resources, transformation, diversity and employment equity, standards of conduct, and evaluation of performance. Imagine what value and contribution non-executive directors could have for law firms. Such directors may be ex-judges, senior advocates, ex-magistrates, corporate lawyers or even people with non-legal qualifications, such as marketing and ICT. In today’s marketplace, a significant portion of law firm management has nothing to do with the law. But yet again and for reasons long lost in time, law firm are prohibited from appointing non-executive directors who are not attorneys. Unlike other professions, our governing laws prevent the implementation of most corporate governance guidelines. Those few law firms committed to good corporate governance and BEE have to create so-called legal consultancy firms as vehicles for BEE and governance. It’s costly, cosmetic and frustrating. It confuses our clients and dilutes our trade names. We fool nobody but ourselves. It’s wrong. Availability of legal information The general “[l]ack of information about the availability of legal services” is identified as a significant problem that undermines attempts to improve the public’s access to legal services and the courts. Access to information plays such an important role in correcting the effects of apartheid, that it is even enshrined as a basic human right in our Constitution. Yet, various provisions of the Law Society Rules restrict the free flow of legal information. For example, Ruling 13.4 provides that “attorneys may only communicate recent legal developments to current clients” and nobody else. Why should I be disbarred or fined if I am willing to create free legal material and distribute it to those who cannot afford it anyway? It’s wrong – morally, ethically and legally! Competition The anti-competitive provisions of the Attorneys Act and the Law Society Rules are well documented. The absolute extreme and measures employed to protect practicing attorneys from competition and even valid criticism is probably largely the main reason for the public’s negative perception of the legal profession. Ruling 5.2 states that an attorney may not compare the quality of his or her services with those of another, and may absolutely not criticise another attorney’s opinion, services or actions. For uncertain reasons, successful attorneys are prohibited from disclosing or publicising such in any format. As the old Russian proverb goes: “Lawyers are the only men in whom ignorance of the law is not punished.” Why do we protect bad attorneys from peer review and criticism? Why hide away our good lawyers? Why? Conclusion Louis Brandeis said that if we desire respect for the law, we must first make the law respectable. Albert Einstein once stated that nothing is more destructive of respect for the law, than passing laws that cannot be enforced. Henry Kissinger observed, “the illegal we do immediately, the unconstitutional takes a little longer.” The Attorneys Act and the Law Society rules are not respectable, not properly enforceable and generally unconstitutional. They suppress competition and creativity. They maintain a colonial system long ago rejected my most other countries and professions. They restrict transparency and peer review. They ensure that most South Africans never see the inside of a court or a law office. Regulation of a profession should be directed at consumer protection. At the moment, the Attorneys Act and the Law Society Rules protect some attorneys to the detriment of young, female and black attorneys. Consumer considerations are subject to preserving a colonial order where transparency, peer review and openness are frustrated and undermined at all costs. It’s wrong. Your predecessor has tabled various versions of a new law to liberate our profession. Its implementation is long overdue. The status quo is undermining those very issues you fought for most of your life. Every day you delay, is an opportunity lost. Twenty six years and a new Constitution later, the time has come. Repeal the Attorneys Act. Dissolve the Law Societies. Implement the Legal Practitioners Act. Liberate the legal profession. There is twenty six years of catching up to do! REINHARDT BUYS CAPE TOWN NOVEMBER 2005

1 Comments:

Anonymous Anonymous said...

You have guts young man. History is on your side! Good luck!

03 November, 2005  

Post a Comment

<< Home