Page 6 - Transformation Report.indd
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2.  The Transformation


                                                          Landscape




                                                   2017 saw the full impact of the  Amended BEE Codes realised.
                                                   Although most law firms managed to postpone verification under
                                                   the Amended BEE Codes, by 2017, they had no choice but face their
                                                   first verification under the Amended BEE Codes.

                                                   For smaller firms, the Amended BEE Codes appears to have provided
                         Law firms are             a substantial advantage by lifting the annual turnover threshold
                                                   to qualify as an Exempted Micro Enterprise or “EME” to R10 million.
                effectively required               This elevated threshold now accommodates more law firms than
                                                   the previous R5 million threshold and affords automatic recognition
                  to achieve level 2               as level 4 BEE  contributors. For  law firms  with turnovers above  R10
                                                   million, the Amended BEE Codes have posed a far greater challenge
              or 3 BEE recognition                 as increased BEE targets, minimum thresholds for Ownership, Skills
                                                   Development and Supplier and Enterprise Development, and
                   levels despite the              compulsory measurement across all the scorecard elements, have
                                                   seen most firm BEE levels fall, or, even quite frequently, see firms face
                       challenge this              being BEE non-compliant.

                poses for most law                 One may be forgiven in having predicted that the benchmark for
                                                   what constitutes a ‘good’ BEE level would be moderated by the
                                      firms        impact  of  the  Amended  BEE  Codes.  Such a  prediction  did  not
                                                   however account for the dramatic impact of increased procurement
                                                   targets under the various sectoral BEE charters and the Amended
                                                   BEE Codes. The pressure on corporates and financial institutions to
                                                   address their procurement has negated the probability of lower BEE
                                                   levels being acceptable. Such institutions recognise that to meet their
                                                   own compliance requirements, they need to be more aggressive in
                                                   compelling  suppliers  and  service  providers  to  achieve  higher BEE
                                                   levels or risk losing work.

                                                   Law firms are now required to aim for a level 2 or 3 BEE recognition
                                                   despite the challenge this poses. To achieve higher than automatic
                                                   level 4 recognition, EME’s will be compelled to verify under the QSE
                                                   Scorecard. Given the high cost of compliance and the need for
                                                   black ownership and black professionals under the Amended BEE
                                                   Codes, these factors will undoubtedly have a large role to play in the
                                                   future viability of many law firms.

                                                   The result of these combined pressures have necessitated greater BEE
                                                   support and planning assistance to Group firms and a heightened
                                                   awareness by firms of the importance of accelerated transformation
                                                   plans for their firms in a legal and BEE-compliant manner.
















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