Press Release
Eversheds (South Africa) accuses Law Society of anti-competitive behaviour
1 December 2009
Local law firm Routledge Modise Incorporated, which has been practising as Eversheds since the 1st of July this year, has laid a complaint with the Competition Commission relating to an attempt by The Law Society of the Northern Provinces (The Law Society) to prevent it from practising under the Eversheds name.
At stake is the company’s ability to compete equally for business in the large public, corporate and commercial sectors.
Routledge Modise Incorporated became a member of Eversheds International Limited in April 2008 and practised under “Routledge Modise in association with Eversheds” until formally changing its practising name to Eversheds on the 1st of July 2009. It advised The Law Society of the change in practising style on the 26th of June 2009.
Terry Mahon, chairman of Eversheds in South Africa, explains that, although the South African operation is a separate legal entity and cost centre, as a member of Eversheds International, it forms part of one of the world's largest legal firms which has 47 offices spread across 29 countries, including the United Kingdom, Europe, the Middle East, Asia and Africa. Inasmuch as it forms part of the international firm, it was important for the local company to use the Eversheds brand. A further driver for the decision was that the Eversheds brand has huge international credibility making it attractive to international companies requiring legal services in South Africa, local offices of multinationals which use Eversheds as their global counsel and large South African companies who want a globally supported law firm as their legal service provider.
“By changing to an instantly recognisable global practising style, we are able to compete on an equal footing against international law firms entering the local and African market”, Mahon says. “International law firms either have small South African offices trading under their global brands and are not registered with the local Law Society, or they provide services in South Africa by sending in ad hoc professionals on a matter-by-matter basis. Because of their internationally recognised brands, they often have a competitive advantage when pitching for business in spite of their fairly limited local resources. We are also up against international accounting firms which provide legal services under global brands, such as Deloitte or KPMG”, he says.
The Law Society has called upon Eversheds to cease using the name Eversheds based on its interpretation of the Attorneys' Act and its own rule 89.13. Mahon disagrees: "We have been unable to establish any rational basis for the existence of rule 89.13 and believe it to be arbitrary and unconstitutional in addition to being anti competitive. Furthermore, if Eversheds had its office in Cape Town or Durban, there would be no issue around the name change as there is nothing in the rules of either the council of the KwaZulu Natal Law Society or the Law Society of the Cape of Good Hope to preclude a law firm from using a name such as Eversheds, provided the consent of the Law Society is obtained", Mahon says. Mahon's views are supported by senior and junior counsel who also agree that rule 89.13 does not apply to a company and that the rule only applies to legal practitioners practising under their personal names or in a partnership.
He adds that "by restricting the company's ability to compete, the Law Society's name prohibition falls foul of the Competition Act and is also against the spirit of the General Agreement on Trade Services (GATS) to which South Africa is a party".
Mahon also believes that The Law Society is selective in the way in which it applies its rules. It has previously approved the use of an international brand as part of the name of another high profile South African firm and has not taken steps against other law firms whose practising styles do not "consist solely of the name or names of any of the past or present members of the firm”.
Mahon further cites that The Law Society is selective in its approach to the enforcement of its rules. In 2007, it called upon the company to change its letterhead in line with rule 89.20 which is to the effect that only attorneys should be listed on the letterhead of an attorneys' practice. “When we pointed out that certain of their own council members, including the chairman of their Ethics, Rules and Guidance Committee, had letterheads which did not comply with the invoked rule, The Law Society replied that we must take it up with the persons concerned or lay a formal complaint. No such complaint had been received regarding our letterhead. It has also chosen not to enforce the rule against other firms”, says Mahon.
To date, The Law Society has declined to meet to discuss the name change. The minutes of their relevant council meeting reveal that the only council member who submitted a written and motivated position on the issue agreed with Mahon's interpretation. One member was strongly opposed to the name change, while other council members did not appear to have strong views on the matter.
With his company declining to accede to an ultimatum from The Law Society to cease using the name, Mahon believes the matter is likely to proceed to litigation. “When we requested them to indicate what prejudice they, the public or the legal profession had suffered, they declined to furnish any details, merely saying that the question was not appropriate”, Mahon says.
He points out that The Law Society has applied for exemption of its professional rules from the provisions of the Competitions Act. The Law Society has indicated that the application for exemption is a "precautionary measure and does not constitute an admission" that its rules are anti competitive. "By applying for exemption, they concede that it is arguable that their rules are anti competitive", Mahon says.