Important notice regarding Fidelity Fund Certificates in respect of the Legal Practice Act and its rules
01 Oct 2018
Section 84(1), (2) and (3) of the Legal Practice Act 28 of 2014 states that:
(1) Every attorney or any advocate referred to in Section 34(2)(b), other than a legal practitioner in the full-time employ of the South African Human Rights Commission or the State as a state attorney or state advocate and who practices or is deemed to practice –
(a) for his or her own account either alone or in partnership;
(b) as a director of a practice which is a juristic entity, must be in possession of a Fidelity Fund Certificate.
(2) No legal practitioner referred to in subsection (1) or person employed or supervised by that legal practitioner may receive or hold funds or property belonging to any person unless the legal practitioner concerned is in possession of a Fidelity Fund Certificate.
(3) The provisions of subsections (1) and (2) apply to a deposit taken on account of fees or disbursements in respect of legal services to be rendered.
The implementation of the remaining Chapter 2 of the Legal Practice Act, on 1 November 2018, will see the Law Societies cease to exist on 31 October 2018 with the Regulatory functions assumed by the Legal Practice Council, and through delegated authority, the Provincial Councils.
Legal practitioners are generally expected to start applying for their Fidelity Fund Certificates in respect of the ensuing year by the 01 October of a year. Due to the anticipated changes as aforementioned, it is planned that the applications process for the 2019 Fidelity Fund Certificates will commence on 01 November 2018, thus ensuring compliance with the Legal Practice Act and its Rules. In order to remain compliant with both the Act and its Rules, we encourage Legal Practitioners to apply for their certificates during November 2018.
In order to obtain a Fidelity Fund Certificate in terms of the Legal Practice Act and its Rules, legal practitioners must satisfy the following requirements:-
- The annual contribution of R345.00 (VAT inclusive) payable by the applicant to the Council for the issuing of the certificate;
- Proof of completion of the Practice Management Training before applying for the first Fidelity Fund Certificate, subject to the provisions of Rule 27.1 of the Legal Practice Act Rules;
- Timeous submission of the trust account audit report/s (in respect of all practices in which the legal practitioner is either sole practitioner/partner/director); approved by the Council; and
- The completed application, which now also includes the Attorneys Insurance Indemnity Fund risk questionnaire.
The system used for the application process is currently undergoing enhancements to ensure alignment with the requirements as set out above, and is planned to be available to accept applications effective from 1 November 2018.
PREPARATION FOR THE 2019 FIDELITY FUND CERTIFICATES APPLICATIONS
In preparation for the application process, legal practitioners are reminded to be ready with the following information in respect of all practices that they are linked to as either sole practitioner/partner/director:
- Trust account/s balances for the previous four quarters ended (31/12/2017; 31/03/2018; 30/06/2018 and 30/09/2018) for the following accounts:
- Section 86(2) – to be reported individually for each s86(2) account held by the practice per financial institution
- Section 86(3) – to be reported individually for each s86(3) account held by the practice per financial institution
- Section 86(4) – total balances to be reported per financial institution
A breakdown of the reported balances e.g what portion was for conveyancing/litigation/estates/commercial/etc. in terms of values.
Please note that this breakdown is compulsory.
- Estates – total balances to be reported per financial institution
- Properties (other entrusted assets) – total balances to be reported
CONTACT DETAILS FOR THE LAW SOCIETIES
|Law Society||Email address||Telephone Number/s|
|Law Society of the Northern Provinces (LSNP)||email@example.com
|012 338 5861
012 338 5915
012 338 5916
|Cape Law Society (CLS)||firstname.lastname@example.org||021 443 6700|
|KZN Law Society (KZNLS)||email@example.com||033 345 1304|
|Free State Law Society (FSLS)||firstname.lastname@example.org
Please also take note of the following changes in respect of the sections for the trust accounts:
s78(1) becomes s86(2); s78(2)(a) becomes s86(3) s78(2A) becomes s86(4)
(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)