LSB reads riot act to in-house attorneys
Oarabile Mosikare | Friday December 16, 2016 16:21
In a memo written to all practitioners LSB says the Legal Practitioners Act (LPA) provides that it is a misconduct for an attorney to assist in any way a non-attorney to charge, recover or receive a fee or derive any remuneration for performance of a legal service. “In this regard, Council specifically notes that the problem at hand was prevalent in the legal insurance and lending sectors.
“In respect of the legal insurance industry, in-house attorneys employed thereat, do not only assess viability of claims and prospects of success, but routinely proceed to provide the legal service required by the insured,” reads the memo. Regarding the lenders, it says in-house attorneys as a matter of course prepare and register mortgage bonds on the pretext that the bonds are required by and in favour of the lender (the employer) and therefore they are doing work for the employer and not a third party.
Council’s position is that notwithstanding that a bond is in favour of the lender, an instruction to prepare and register a bond is at the instance by the borrower who gives the power of attorney. As a result of the challenges, Council would like to bring to the attention of all in-house Counsel that Section 33 of the LPA provides that only a “practising legal practitioner” shall be a member of the Fidelity Guarantee Fund. Legal practitioners are defined as legal practitioners who are entitled to practice.
Only legal practitioners who hold a Practicing Certificate are entitled to practise. In terms of Section 45 (1) legal practitioners practising on their own account or in partnership, are required to open or operate a trust account. In-house attorneys cannot, therefore open a trust account.
In terms of Section 30 (1) (e), audited financial statements confirming that the accounts of the trust account have been properly kept, is one of the prerequisites for the granting of a Practicing Certificate by the Registrar.
The Society says in-house attorneys cannot meet this requirement, as they cannot operate a trust account. “Section 37 enjoins the secretary to issue a Fidelity Fund Certificate to any person whose name is on the roll and is not suspended from practice.
This provision cannot however be read in a vacuum, but must take account of the provisions of Sections 33 and 36. Further it requires that such person should be able to practice, which in-house attorneys as per above cannot do, as they cannot meet the requirements of Section 30 (1) (e).
The Council has therefore resolved that in-house attorneys are not members of the Fidelity Guarantee Fund and cannot be issued with a Fidelity Fund Certificate. In-house attorneys would not be issued with letters of support for issuance of practising certificate by the Registrar.