South Africa's Smaller Firms Face Ruin as Nation Extends COVID-19 Lockdown
"In a worse case scenario, many small firms will be forced to close their doors, and some will just abandon their offices," one lawyer says.
May 15, 2020 at 01:02 PM
3 minute read
Many South African law firms are teetering on the brink of ruin due to the extended COVID-19 lockdown, research has shown.
With an estimated 30,000 to 40,000 South African lawyers, most law firms in the region are small, consisting of one to 10 partners. Now, many are facing significant hardships as COVID-19 grips the nation. A nationwide survey of legal practitioners this month by Goldfields Attorneys Association, shows that 63% of respondents lost more than 60% of their income during April due to the lockdown.
"Our findings revealed that 24.4% of law firms were unable to pay any staff salaries, 40.3% could only partially pay salaries, and only 35.3% could pay the full salaries of all employees," said the association's co-chairman Martus de Wet.
The South African Black Lawyers Association (BLA) has requested the Legal Practitioners' Fidelity Fund (LPFF) to establish a R1 billion fund (nearly $54,000), to assist legal practioners and firms who are battling to survive the COVID-19 crisis.
"We have also asked the Justice Minister, the Law Society of South Africa, and other legal bodies to support our request, which is vital for the continued existence of the legal profession," says BLA president Mashudu Kutama.
The BLA supports all individual lawers, advocates and magistrates across all ethnic groups.
"[The LPFF] is currently sitting with reserves of R5 billion [nearly $270, 000], and is therefore in a position to do so," said Kutama.
"We are looking to seccure the funding in the form of grants distributed based on a means test conducted by a professional committee."
Many small firms have clients that are in the type of businesses that have not been allowed to operate during the lockdown, which has been going on for nearly seven weeks with no significant easing in sight.
Commercial firm Padi Incorporated Attorneys is such a firm, who's founder Thabo Padi said: "The whole process has left us bleeding."
He said that he guaranteed the salaries of his five lawyers and other 10 staff for the whole of March and April, the bulk of which he paid out of his own personal savings. The government Unemployment Insurance Fund (UIF) covered the other 30% of the bill.
"Unfortunately, the lockdown happened at the end of March, giving us no time to issue invoices," said Padi. "By the time we did, our clients' offices were closed and there was nobody there to pay them."
It will be a case of the survival of the fittest, said Kutama.
"In a worse case scenario, many small firms will be forced to close their doors, and some will just abandon their offices and their clients and walk away," he said, adding: "And those who remain will be left with large debts."
Read more
How Africa's Biggest Law Firms Are Bearing Up in the Age of COVID-19
Law Firms Across Africa Respond to the Spread of COVID-19
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllAs Uncertainty Continues Over PGA Merger, LIV Golf Hires Entertainment Industry Veteran as Legal Chief
Ted Olson, Legal 'Titan' and Former US Solicitor General Who Argued Bush v. Gore, Dies
Trending Stories
- 1New York’s Equal Rights Amendment Is a Big Deal
- 2Blue-Ribbon Panel Calls for Pay Bumps for NYS Commissioners, But Says No to Lawmakers, Elected Officials
- 3'Outstanding Cooperation': Feds Seek Leniency in Sentencing for Ex-FTX Executive Gary Wang
- 4'Grave Matter of Serious Consequences': Why a Missouri Judge Sanctioned a Top Kirkland & Ellis Attorney
- 5Large Group Leaves DLA Piper Affiliate in Brazil to Form New Firm
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250