1 November 2010 | By James Swift
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Following the Spanish example, Portuguese firms are expanding into countries with a common language, which spells opportunity in Africa.
Portugal, much like the UK, is running on a tight budget these days, and investment opportunities are thin on the ground. Fortunately, a world of opportunity exists in Portuguese-speaking Africa, and Portugal’s law firms are making sure that they are well placed to get in on the action.
There are five Portuguese-speaking - or lusophonic - countries in Africa: Cape Verde, Guinea-Bissau, São Tomé and Príncipe, Angola and Mozambique. Portuguese history in these countries dates back around 500 years, when Portugal ruled them as colonies.
Angola, Mozambique and Cape Verde are the main target markets for Portuguese investors and for other international investors too, for whom Portuguese law firms can be invaluable guides.
Guinea-Bissau, meanwhile, is one of Africa’s poorest countries and São Tomé is one of its smallest. Consequently, there is less interest in these countries, although São Tomé is due a windfall after reserves believed to add up to billions of barrels of oil were discovered off its coast.
Examples of Portuguese law firms manoeuvring themselves to help investors in Africa have come thick and fast recently, particularly in Mozambique.
Abreu Advogados, which has had a foothold in lusophone Africa since 2007 when it tied up with local firm FBL Advogados, signed an exclusive cooperation agreement with Mozambique firm Ferreira Rocha & Associados, an occasional collaborator with Clifford Chance on pitches and seminars in the region, earlier this month.
“We believe that there’s a lot of Portuguese investment in Angola and Mozambique, and the flow to Mozambique in the past few years has been increasing,” says Abreu Advogados managing partner Pedro Pais de Almeida. “So it’s all about following clients. It’s an exclusive relationship for Mozambique: we’ll use them exclusively in Mozambique and they’ll use us on the same basis in Portugal.
“Portugal has a budget problem and therefore Portuguese companies are trying more and more to invest abroad. Mozambique, being Portuguese-speaking and with a legal system that is very similar to the Portuguese civil code, is a relatively easy place to do business. We’re watching the other [African lusophone] countries but have not decided to move forward anywhere else.”
The China connection
PLMJ, Portugal’s largest firm, has also recently made an alliance with the aim of boosting its presence in Africa. The firm already has partnerships in Mozambique with MGA Lawyers & Consultants, and in Angola with GLA Lawyers, and it has complemented these, tying up with Chinese firm Dacheng Law Offices in September 2010, with an eye on the increasing investment in Portuguese-speaking Africa by Chinese companies.
“The link [between China and Portugal] is twofold,” says PLMJ co-managing partner Manuel Santos Vítor. “On the one hand we think investment which originates in China into Portuguese-speaking African countries will develop. On the other we think opportunities could arise in South China, which originate from Portuguese or Brazilian investors. But mostly we’re focused on Africa. Talk to anyone involved in the region and they’ll attest to the explosion of development that has come with Chinese investment.
“There are new buildings everywhere,” says one Portuguese lawyer. “It’s really amazing to see 10 buildings being raised at the same time, and there are hundreds of Chinese workers here.”
And according to Vítor, PLMJ’s relationship with Dacheng has already borne fruit and the firms are working together on a number of projects in Africa. None of these deals could be disclosed, but again Mozambique looks likely to be the main driver for the relationship.
In June 2010 Mozambique’s Prime Minister Aires Aly visited China with a portfolio of 26 projects - including a $600m (£375m) dam in Moamba and a $104m modernisation of Maputo International Airport, budgeted at $1.2bn.
According to statements made by Aly in the press the visit went well, with many of the proposed projects expected to see the light of day. The two countries have been close for some time, since the 1960s when China supported Mozambique’s left-wing Frelimo party in its fight against Portuguese colonialism.
Portugal has also taken measures to smooth the way for its investors in Africa, cancelling almost $400m worth of debt that Mozambique owed to Lisbon in 2008 and, in 2010, creating a fund with around e124m (£109m) in its coffers, known as the Fundo Português de Apoio ao Investimento em Moçambique, to support public and private investment projects - particularly energy-related projects - in Mozambique.
Banking on collaboration
And Portuguese involvement in Mozambique goes further.
“As well as the government establishing credit lines and setting up a fund to help Portuguese companies investing in infrastructure in Mozambique there’s a new bank been established, which has Mozambican shareholders on one side and [Portuguese state-owned bank] Caixa Geral de Depósitos (CGD) on the other,” says Ana Rita Almeida Campos, managing associate at Furtado Bhikha Loforte Popat & Associados (FBLP), Mozambique relationship firm of Vieira de Almeida & Associados (VDA).
The bank, Nacional de Investimentos, is based in the country’s capital Maputo and has $500m in share capital, 49.5 per cent of which is owned by CGD. According to Almeida Campos, the purpose of the bank is to further “commercial partnerships between Portuguese and Mozambican companies, contributing to the growth of commercial links between the economic players of the two countries as well as to the increase of export flows”.
VDA has been tied up with Mozambique firm Furtado, Bhikha Loforte Popat & Associados (FBLP) since June 2009; it is the firm’s first strategic tie-up in Africa.
“We have been working together on several projects, a lot of telecoms and energy projects,” says Almeida Campos, who moved to the office in November 2009. “I’m here to consolidate the partnership and follow Portuguese clients investing in Mozambique, which is increasing because African countries are seen as a good alternative [to the depressed Portuguese markets] and we see companies looking to exploit business that [is not available] in Portugal anymore.”
In the past six months the firm, through its partnership with FBLP, has advised Portugal Telecom on a public tender for the third mobile phone operator licence in Mozambique, provided legal advice to Mozambique’s national road administration ANE for the concession to build and maintain the Tete bridge over the Zambezi river and advised Portugal’s postal service CTT Correios de Portugal on the incorporation of a Mozambican express mail company.
“We have also been working in Cape Verde and Angola but only on a case by case basis, and we don’t have any presence there yet,” says Almeida Campos. “Angola is more attractive in terms of profits but Mozambique is a much more pleasant place to live and to invest in. Everything runs smoothly here and there’s less corruption, but the returns on investments are lower because the country doesn’t have oil or diamonds. However, around two months ago oil was found and now they are looking to see if can be commercialised.”
VDA and FBLP share a similar branding but are prevented from going the whole hog and setting up a branch office by local bar rules. According to one Portuguese lawyer practising in Mozambique, the rules surrounding foreign lawyers have become a prickly and political subject, no doubt exacerbated by the increased investment that is driving Portuguese firms towards the jurisdiction.
“We have this issue at the moment because the local bar association is now deciding how to live with foreign lawyers working in Mozambique,” says the Portuguese lawyer. “The Law Society is focused on working on it because the current framework is not very clear. While foreigners are not allowed to act as lawyers in the country and can’t appear in court, to a certain extent we can act as legal counsel. But the statute is not very clear and some say foreign lawyers are only allowed to operate like in-house counsel while others interpret the rules as allowing lawyers to be consultants in general.”
The general rule for Mozambique is that only lawyers registered with the bar association can practise law and, at the moment, only foreigners having a Mozambican degree can register unless there is a reciprocity agreement between Mozambique and their country.
But there is an exception to the rule in that people undertaking legal consultancy work who have a law degree - from any jurisdiction - and who work under an employment agreement are not required to register.
“The understanding of some is that the exception covers all foreign practitioners that are actually employed by law firms in Mozambique,” says the Portuguese lawyer. “But apparently, the bar association understands that it only applies to in-house lawyers - those having an employment agreement with private companies - thus leaving out all foreigners doing legal consultancy work in local law firms, making them illegal.”
But Mozambique is praised by Portuguese lawyers, despite its uncertain bar rules, as a well-developed jurisdiction - one much easier for foreign lawyers to work in than the more resource-rich Angola.
“We’ve had an office in Mozambique since 1998,” says Manuel Castelo Branco, managing partner of Iberian firm Cuatrecasas Gonçalves Pereira, which also has offices in Casablanca. “We’ve now got 23 lawyers there, all of whom are from Mozambique. When we started it was with two Portuguese lawyers and one from Mozambique, but the country has developed to the point where now there’s no need for Portuguese lawyers, we just need local lawyers.
“In Angola it’s more difficult for Portuguese firms because of bar association regulations that do not allow foreign law firms to be registered. So we have correspondence agreements with local lawyers when we work in Angola.”
To work around this and give clients continuity, PLMJ effectively sponsored and helped to establish Angolan firm GLA Lawyers, which is staffed by a number of former PLMJ lawyers, by providing financial and technical assistance, even sending its head of IT to help set up the office.
“We wanted to make sure our clients felt they were getting the same level of service that they got from us in Portugal,” says Santos Vítor.
Even though Mozambique is a developed jurisdiction there are still major differences when it comes to practising there, particularly with regard to what clients expect from their lawyers. Like Cuatrecasas, PLMJ has no Portuguese lawyers in Mozambique and operates through tie-ups instead, although the firm is keen to stamp its personality on the work it does there.
“We are trying not only to bring our way of providing services to clients at all levels by bringing in technology systems, implementing standard procedures and sharing professional knowhow, but also to increase the level of services by sharing our management skills and promoting international training and exchange programmes with local lawyers,” says the head of PLMJ’s Africa desk Tiago Mendonça de Castro.
“But this can’t be simply imposed and the results can’t be achieved if one does not understand the cultural gap, practical differences and local practices.
“We, as lawyers, should not be the client’s business partner. The only way to defend a client’s business and its best interests is by always keeping our independence. We strongly represent a party but always avoid being a part of the deals. We may be costly but we always act as pure lawyers who are paid for the hours of work we do rather than depending on the success of the deal.”
PLMJ’s Africa strategy is primarily focused on Angola and Mozambique.
“In Luanda [Angola] the city is still chaotic and it looks like a building site where it seems as though all the roads, buildings and infrastructure are being rebuilt or erected at the same,” adds Mendonça de Castro. “It makes quite a contrast with Maputo, where the traffic is regular, buildings are being restored one at a time and the whole atmosphere makes the city feel cosy and comfortable, a bit like a small Portuguese town.
“We’ve managed to get an interesting portfolio of major clients making cross-investments using Portugal as a platform, especially to and from Angola and Mozambique.”
A wider view
Although Guinea-Bissau and São Tomé are considerably less well known than the other Portuguese-speaking countries in Africa, that is not to say that they hold no value for firms. Raposo Bernardo is one a few players in the region that has established ties in each of the five lusophonic African countries.
“We have established associations with local lawyers and coordinate their activity from Lisbon, where we have country managers and also local lawyers travelling between here and Africa,”says Raposo Bernardo partner Manuel Esteves Albuquerque.
“We set up in around 2003 and started in Angola and Cape Verde. After that we decided to associate with offices in Mozambique, Guinea-Bissau and São Tomé. We are quite busy in Cape Verde, working with the national bank and on energy projects, and we are in the process of incorporating a bank there. Also, we try to ensure that we have cross-action between offices and lawyers in these jurisdictions.”
And although Raposo Bernado’s model of being in every Portuguese-speaking African state is not yet the norm, it might become more popular in the near future. Portuguese firms have been given a natural competitive edge in these five jurisdictions through a shared language and culture. And as domestic markets continue to offer minimal investment opportunities emerging jurisdictions such as Africa will become more important, and the Portuguese footprint in Cape Verde, Guinea-Bissau, São Tomé and Príncipe, Angola and Mozambique, is likely only to deepen.
“Language is crucial when you think about the internationalisation of legal services,” says Mendonça de Castro. “What we have seen in the past decade is major Spanish law firms such as Uría Menéndez and Garrigues expanding in Spanish-speaking countries in South America and then moving to a second phase of expansion in Europe - in London, Lisbon, Warsaw and so on.
“We, as Portuguese, have tried to internationalise our services to Portuguese-speaking countries that have always been historic and natural markets for us - Angola and Mozambique but also Brazil, Cape Verde and São Tomé - where it’s much easier to discuss construction contracts, conduct PPP processes, assist on public bid procedures or interpret legislation that is written in the same language.”
Portuguese/Lusophone Africa tie-ups
Abreu Advogados: Angola, FBL
Advogados; Mozambique, Ferreira
Rocha & Associados.
Abreu & Marques: Angola, Nilton
PLMJ: Angola, GLA Lawyers;
Mozambique, MGA Lawyers &
Raposo Bernardo: Angola,
Alexandre Pegado & Associados; Cape Verde, Júlio Martins Júnior Advogados; Guinea-Bissau, Carlos Pinto Pereira Advogados;
Mozambique, PCS Lawyers;
São Tomé and Príncipe, STP Legal.
Rui Pena Arnaut & Associados:
Angola, Maria Manuela Morais Cunha Advogados.
Vieira De Almeida & Associados:
Bhikha Loforte Popat