The Nature of Law Firms in Botswana
Most Law firms in Botswana if not all, operate as unincorporated organisations- either as sole traders or partnerships. The term unincorporated organisation describes any organisation which is not a legal person, separate and distinct in law from its members. It is an organisation which is not a corporation, corporate entity or artificial legal entity.
In Botswana, most law firms take the form of sole traders or partnerships. A sole trader law firm is an individual who offers legal services in return for payment. In the context of distinguishing a sole trader from an employee, a sole trader is referred to as an independent contractor. The individual who is the sole trader in a law firm is the party to contracts, owns all the property used in the law firm and receives all the income and profits from the business. The individual who is the sole trader in the law firm is also the person sued if anything goes wrong in the course of business of the law firm. If a judgment is obtained against the law firm, all of the sole trader’s assets personal or used in business are available to settle or pay that judgment debt. The individual cannot be an employee of the law firm because he cannot contract with himself.
The same principles apply to a law firm formed by partnership though slightly different because more individuals are involved. As already pointed out above, partnerships are not legal persons or entities distinct from the partners. A partnership is an unincorporated association. A partnership cannot own legal property, the property is owned by partners, and the partnership cannot enter into a contract. Contracts even those that appear on the surface of the contractual document to be with a law firm, are in fact contracts with the individuals who are the partners in the law firm.
The unincorporated status of partnerships makes the external rules that apply between law firms and third parties critically important. In default of agreement to the contrary, partners have authority to bind the other partners in the firm to contracts: partners are agents of one another. Every partner in a law firm is liable, jointly with the other partners, for all debts and obligations of the firm incurred while he is a partner. This liability extends to cover wrongful acts or omissions of any partner acting in the ordinary course of the partnership business. A partner’s liability is unlimited. A partnership is automatically dissolved every time there is a change of partner.
To operate as a sole trader, partnership or company really depends on the legal practitioners themselves and whether out of choice or ignorance, the status quo seems to work well for them.