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A foray to foreign shores such as Nigeria could reap rich rewards for UK law firms, says Andrew Holroyd
While many business sectors around the world look to shut up shop or downsize their overseas activity due to the current financial crisis, the legal sector in England and Wales is increasingly looking to extend its reach on a global scale as there are still big opportunities out there.
That is why the Law Society is embarking on a second trade mission to Nigeria made up of law firms and society representatives to help nurture the relationship between UK law firms and their Nigerian counterparts and businesses.
For law firms, diversifying through overseas activity can be an effective way of coming through this economic slowdown. Although the impact of the financial crisis has been felt in Nigeria, as it has in other African markets - despite predictions to the contrary - Nigeria remains an attractive market following reforms in the banking and insurance sectors. These saw an explosion of Nigerian banks on the international scene and they continue to perform strongly - in tandem with efforts to combat corruption at all levels.
It cannot be denied that Nigeria has not been exposed, albeit indirectly, to the fallout from the collapse of the debt markets. A reduction in foreign direct investment from overseas, drops in oil prices and the continued violence in the Delta region have made Nigeria less attractive than a year or so ago.
However, compared with the rest of the world, Nigeria is extremely well-placed and is even showing the shoots of recovery that economies the world over are dreaming of.
With opportunities in oil and gas, telecoms, infrastructure, construction and banking, as well as a growth in gross domestic product (GDP), Nigeria could provide a healthy market for international legal services.
The outlook for the year is positive for Nigeria, according to UK Trade & Investment’s (UKTI) own analysis, so now is a good time for UK lawyers to position themselves closely to Nigeria’s legal community.
According to UKTI forecasts, Nigerian equities are expected to recover rapidly in the first half of the year. The correction in the stock market, which saw the Nigerian Stock Exchange index fall by 45.7 per cent in 2008, presents opportunities for investors with an investment horizon of between one and five years.
Figures published in January show Nigeria’s GDP growth rates averaged around 6 per cent in 2008; this is expected to moderate to between 4.5 per cent and 5.5 per cent in the first half of 2009.
More recently the Nigerian government has approved the release of NGN323.2bn (£1.5bn) for various power projects aimed at achieving 6,000MW of power generation in the country by the end of 2009.
The central tenet behind this Law Society trade mission is that in order to compete in what is still a predominantly globalised world, law firms not only need the right market information at their fingertips, they also need the contacts and connections that you can only make by being there on the ground.
The society has developed a close working relationship with UKTI to give its members a clear understanding of the markets they hope to operate in, as well as to help UKTI itself develop a better understanding of how the legal sector works.
UKTI stands ready to give UK law firms the information they need to grow overseas in a strategic way and to be aware of any pitfalls in advance, which is why a UKTI market orientation session for law firms joining the trade mission will feature as part of the visit.
The trade mission is a golden opportunity for UK law firms to increase their activity in Nigeria, develop West African contacts and referral opportunities and learn how to operate successfully in the region. So firms of all sizes can benefit from this visit.
Law firms joining the trade mission will meet Nigerian firms and practitioners, as well as potential clients from the business community. The visit will incorporate a programme rich in networking opportunities, and will give firms time to arrange their own meetings as well.
Participation in the Nigerian Bar Association Section on Business Law Conference will be offered to visiting firms, and a business roundtable in Lagos will give firms an insight into opportunities in Nigeria’s leading business sectors.
There is sometimes a misconception that diversifying your practice overseas entails opening an office, hiring staff to work there and having a very physical presence in a market outside your own. Although there are benefits to this, it is not the only strategy.
As firms of all sizes tighten their belts in the recession, it does not mean they must give up on having a presence in other markets, or that they have to ignore the opportunities that exist in some of the world’s emerging economies. Developing links with Nigeria’s legal sector, and meeting businesses in the country and the West African region, could also help UK firms beat the slump.
Law firms with balanced international and domestic practices are best placed to weather the slowdown over the next couple of years.
As the UK’s second-largest market in Africa, and as Africa’s second-largest economy - as well as a growing recipient of overseas investment - Nigeria is not a country UK law firms should overlook when considering opportunities overseas.
Andrew Holroyd is a former president of the Law Society of England and Wales and a current Law Society council member