Major legal battle ensues as new firm threatens to disturb conveyancing

2 Oct 2017

The Law Society of South Africa, argued that the Proxi Smart model threatens to disturb protection of the public.


A new kid on the block, Proxi Smart, has sent the South African legal fraternity into panic mode with a plan to snatch from lawyers a significant portion of conveyancing work.

The firm registered in 2015 has crossed swords with the Law Society of South Africa (LSSA) in a David versus Goliath like battle that is set to unfold in court. A lot is stake in the way of the Uber like wars.

Conveyancing, the branch of law concerned with the preparation of documents for change of property ownership is a highly lucrative business for lawyers. The 2016 survey of the attorney profession in South Africa stated that “Conveyancing (which tops by far), commercial and family law appear to be the top three focus areas for most law firms.”

New business model

Proxi Smart has come up with a newish business model that wants to designate a significant portion of conveyancing work as ‘non reserved’ work that can be done outside a law firm by non-lawyers. In this model lawyers will come in at certain intervals and at the tail end as overseers.

Proxi Smart is a non-law firm that specialises in “administrative tasks associated with property conveyancing.” Such tasks include mainly the collation of information required in property conveyancing using software that interfaces with a partnering law firm.

This is positioned as making things easier for lawyers who will only focus on ‘reserved’ work. But the LSSA is having none of that.

Responding to our questions, Walid Brown, the Co-Chairperson of the Law Society of South Africa, argued that the Proxi Smart model threatens to disturb protection of the public. “The LSSA opposes the application as the current process which places a conveyancer in charge of the transfer, protects the public against any negligence and, therefore, harm. The model proposed by Proxi Smart will not have the protection of the Attorneys Fidelity Fund.”

No basis in law

The LSSA has maintained that “Proxi Smart’s attempt at creating a distinction between ‘reserved work’ and ‘non-reserved work’ has no basis in law.” It adds that the full conveyancing process is regarded as professional work performed by conveyancers. These are legal professionals who are regulated by strict statutes. “This should remain so in the interest of the public,” says the LSSA.

And so the LSSA has advised its members against participating in the Proxi Smart model. Doing so would amount to breaking the LSSA code.

Proxi Smart is taking the fight to the LSSA, by summoning it to court. The LSSA has filed its answering affidavit and went further into filing a counter-application.

The LSSA “seeks orders declaring the Proxi Smart model to be in contravention of various rules, regulations and legislation…” Simply put, the LSSA seeks to declare Proxy Smart business model as unlawful.

Major legal battle

The scene is set for a legal humdinger. It will feature a host of legal institutions as respondents. There are thirteen respondents in the matter including the Justice Minister, the Chief Registrar of Deeds, the Attorneys Fidelity Fund, the four statutory provincial law societies, the National Association of Democratic Lawyers, the Back Lawyers Association, the Black Conveyancers Association, the Minister of Rural Development and Land Reform and the National Forum on the Legal Profession.

The matter is set down for hearing on 6 to 8 February 2018 and the parties have requested that the matter should be heard by a Full Bench.

The LSSA has pointed out that the Proxi Smart battle comes at an unfortunate time. The legal profession, says the LSSA is in transition due to the impending Legal Practice Act. There are also changes expected in the deeds registration process informed by the Electronic Deeds Registration Systems Bill.

The LSSA contends that Proxi Smarts application is misconceived because “the Deeds Registries Act (DRA) does not define or even use the words reserved work.”

“The logical inference is that the legislator never intended to divide the functions performed by a conveyancer, and that the DRA was drafted from the premise that all documents and supporting documents must be submitted to the relevant deeds registry by a conveyancer and had to be drafted, created or secured by a conveyancer or a member of her/his staff working under direct supervision and control of the conveyancer.”

Brown, said “Currently conveyancers take full responsibility for the entire conveyancing process. A member of the public has one point of reference for her/his conveyancing matter.

“Conveyancers are all practising attorneys regulated by the statutory, provincial law societies. It is in the interests of the public that it should remain so, as members of the public using the services of conveyancers have the protection of the Attorneys Fidelity Fund in the unlikely event that moneys kept in trust by a conveyancer in the course property-related matters, may be stolen. In addition attorneys are covered by the Attorneys Insurance Indemnity Fund in the event of negligence. This provides another layer of protection for the public.”

Proxi Smart could not be reached for comment.

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