South Africa’s status as the biggest and most developed legal market in the continent means it is still the destination of choice for foreign tie-ups
South Africa is by far the most developed legal market in sub-Saharan Africa. Although the local economy has slowed recently, the country’s leading position means there are already plenty of established law firms there. Several of the biggest firms have been around for well over a century and the oldest firm in the country, Fairbridges Attorneys, was established in 1812.
In the past few years the South African legal market has leapt forwards and secured its place as a must-be jurisdiction.
Almost 20 years ago White & Case became the first international firm to open in Johannesburg, followed by Fasken Martineau in 2003. Since then Eversheds , Norton Rose Fulbright, Baker & McKenzie and most recently Hogan Lovells have all opened offices or merged to launch in South Africa. Also, Linklaters has allied with Webber Wentzel and DLA Piper with Cliffe Dekker Hofmeyr.
This activity has created a multi-tiered market. There are three large firms – ENSafrica, Bowman Gilfillan and Werksmans – committed to remaining independent and are building their own pan-African practices in one way or another. The firms that are allied or merged with an international outfit are aiming to play in the same sandbox but from a slightly different perspective.
The remaining smaller firms –generally with far fewer than 100 lawyers – have varying strategies. Cape Town firm KapdiTwala and Johannesburg outfit Glyn Marais have links with Dentons’ Africa group, but most are still wholly independent, making them potential takeover targets for international firms hungry to use South Africa as a gateway to the rest of the continent.
List of firms
Key figures: SA
Life expectancy at birth:52
Unemployment rate (2012):24%
Source: World Bank, Statistics South Africa
Chief executive: Piet Faber
Total number of partners: 200
Total number of lawyers: 582
Total number of staff: 1,100
Top deals of 2013:
- Advised Shanghai Zendai on the acquisition of the 1,600 hectare Heartland property in Modderfontein from chemicals group AECI. The deal was valued at ZAR1bn (£55m).
- Advised Bidvest on the attempted acquisition of a 58 per cent stake in Adcock Ingram from Adcock Ingram minority shareholders, valued at ZAR6.54bn.
- Advised borrower and guarantor AngloGold Ashanti Holdings and guarantors AngloGold Ashanti Limited and AngloGold Ashanti USA in connection with a $750m (£451m) syndicated bridge loan facility. Cravath Swaine & Moore also advised.
ENSafrica may be a relatively new firm but it is steeped in history. Johannesburg’s Edward Nathan & Friedland (ENF) and Cape Town’s Sonnenberg Hoffmann & Galombik (SHG) – formed in 1905 and 1936 respectively – merged in 2006 to create Edward Nathan Sonnenbergs.
ENSafrica chief executive Piet Faber says the tie-up gave the new firm the scale to deal with elite projects and the scope of all the complementary practices the legacy firms lacked. It also lifted the firms out of the squeezed middle position.
Having led SHG since 1991, Faber was a driving force behind the merger, working closely with ENF senior partner Michael Katz, who is now chairman of ENSafrica.
Faber says the deal set the firm apart from the crowd, making ENSafrica a trendsetter in the South African legal market. “Some people have said that our merger was strategic and the others [that followed] were positional,” he says.
While the firm prides itself on its South African roots, it is keen to develop a wider African footprint. Since the merger it has moved into Uganda, Rwanda, Burundi and Mauritius via mergers with local firms and has its sights set on six more launches in the next two years. Again, these will be achieved by joining with existing firms that it already has relationships with.
Faber says the firm has taken a fairly strong stance against international alliances and networks, preferring to work with numerous international firms rather than tie up with one in particular.
This allows it to maintain relationships with City firms such as Allen & Overy , Clifford Chance and Slaughter and May as well as US players including Kirkland & Ellis , Skadden Arps Slate Meagher & Flom and Wachtell Lipton Rosen & Katz.
Chairman: Robert Legh
Total number of partners: 144
Total number of lawyers: 399
Total number of staff: 700
Networks/associations: Bowman Gilfillan Africa Group, Lex Mundi
Top deals of 2013:
- Advised CFR Pharmaceuticals on its proposed ZAR12.8bn acquisition of listed pharmaceutical company Adcock Ingram. The deal was called off in February 2014.
- Advised Marriott International on its ZAR2.02bn acquisition of the hotel management business of Protea Hotel Group.
- Acted for AfriSam in connection with a corporate and debt restructuring and the refinancing of its existing debt.
Although it has made much of its successful pan-Africa strategy, more than 80 per cent of Bowman Gilfillan’s revenue comes from South Africa and newly elected chair Robert Legh says the country is still key to future growth.
Bowman Gilfillan has had a good few years with consistent growth. Success stories are its banking and finance and renewable energy teams, which expanded on the back of increasing work.
The firm has a reputation for advising multinationals operating in Africa but Legh also wants to grow its domestic listed M&A practice.
Bowman Gilfillan is wedded to its independence for the time being. Legh says the firm works regularly with UK players such as Allen & Overy, Clifford Chance and Freshfields Bruckhaus Deringer , as well as Wall Street firms such as Cravath Swaine & Moore, Davis Polk & Wardwell and Sullivan & Cromwell . The firm is the South African member of global network Lex Mundi.
Bowman Gilfillan has recently invested in its operational side. Corporate partner Tammy Beira was appointed its first full-time knowledge management director and lawyers are being seconded into the team for short periods to improve precedents and training.
It is also building its business development team and recently hired a new head of business development.
Bowman Gilfillan’s partnership is designed to be flexible, with merit-based pay a key part of its modified lockstep.
Norton Rose Fulbright
Managing partner: Rob Otty
Total number of partners: 111
Total number of lawyers: 294
Founded: 2011 (merger date)
Top deals of 2013:
- Advised Barclays on its merger with Absa Group – now the Barclays Africa Group. Barclays sold nine African subsidiaries in a share deal that raised the bank’s majority stake in Absa from 55.5 per cent to 62.3 per cent.
- Acted for Barclays and Absa in relation to the Republic of Ghana’s $700m structured sovereign promissory note programme to finance the construction of seven hospitals.
Norton Rose Fulbright has been in South Africa for almost three years, following its June 2011 merger with domestic firm Deneys Reitz.
Deneys Reitz was founded about 90 years ago, although it only moved from being an insurance and mining specialist to a full-service practice in the 1980s.
The firm has three South African offices – Cape Town, Durban and Johannesburg – and a small office in Tanzania.
South Africa managing partner Rob Otty says the Tanzania office has been a remarkable success.
Otty is also enthusiastic about the firm’s Africa project more generally, saying it has expanded its client base across the continent and no work has been lost as a result of Deneys Reitz giving up its independence.
“It’s a stronger brand than the Deneys Reitz brand was. There’s no doubt about that, from both a client perspective and a profile perspective,” he asserts.
He says the firm’s energy, mining and corporate practices have particularly benefited from the tie-up. Although Otty is unable to give figures for how much work derives from South Africa compared with other offices, he says the market is becoming more global and the firm will follow clients to wherever they need advice.
Outside South Africa and Tanzania, Norton Rose Fulbright works with a range of local firms in sub-Saharan Africa. Countries of particular interest are Angola, Kenya, Nigeria and Mozambique but Otty says the nature of future expansion depends on client demand and opportunity.
However, a wider presence on the continent seems likely at some point. “There’s absolutely no doubt that the idea of having additional offices in the continent makes perfect sense,” Otty says.
Senior partner: David Lancaster
Total number of partners: 148
Total number of lawyers: 287
Total number of staff: 758
Networks/associations: Linklaters, Africa Legal Network (associate member)
Top deals of 2013:
- Acted for Barclays Africa Group – previously Absa Group – on its ZAR18.3bn acquisition of nine African bank subsidiaries from Barclays Bank Plc. Linklaters and other Africa Legal Network firms were also instructed.
- Acted for AfriSam on its refinancing. Offshore loan notes and a conversion of debt to equity was completed in late 2012 for ZAR10bn, while senior debt was refinanced in February 2013 for about ZAR6bn.
- Acted for the International Finance Corporation and a syndicate of lenders on the development of the Khi Solar One Tower CSP, the first large concentrated solar power project in sub-Saharan Africa. Linklaters was also instructed.
Webber Wentzel is one of South Africa’s oldest firms, tracing its roots back to 1868. But the past 20 years have seen the greatest development, with a 1994 merger with Bowens and a 2008 tie-up with Cape Town’s Mallinicks.
Last year Webber Wentzel formed an alliance with Linklaters. The two firms had worked together for some time but the alliance formalised the relationship. Senior partner David Lancaster points to a number of transactions that the two firms have worked on together and increased collaboration in other areas.
He adds that the alliance has improved both firms’ ability to share best practice and learn from each other, although he admits Webber Wentzel has been the greatest beneficiary in this regard.
One of the issues the two firms have been discussing is price and the use of legal process outsourcers. Webber Wentzel, says Lancaster, has been moving away from commoditised work but clients still want the firm’s involvement if third-party service providers are involved in deals.
Lancaster maintains that the danger of losing referral work because of an exclusive arrangement with an international firm was not an issue as the firm did not get a huge amount of referrals anyway.
The alliance meant that Webber Wentzel’s membership of the Africa Legal Network changed, with the firm now an associate rather than full member. But it continues to refer work to the network’s member firms.
The firm is now focusing its efforts on the oil and gas sector. Webber Wentzel recently recruited a senior team, including the general counsel of PetroSA and a partner from UK firm Bond Dickinson, to boost its capabilities in the sector.
“Although most of the oil and gas finds are outside South Africa, some of them are very close,” Lancaster says. “We think it will be as important for South Africa as mining was 100 years ago. They’re both game-changers.”
DLA Cliffe Dekker Hofmeyr
Chief executive: Brent Williams
Total number of partners: 116
Total number of lawyers: 237
Total number of staff: 611
Networks/associations: DLA Piper
Top deals of 2013:
- Acted for Mvelaserve Holdings on Bidvest’s acquisition of two stakes in the company, together worth more than ZAR781m.
- Advised Distell on its $244m acquisition of all the shares in Burn Stewart Distillers from CL World Brands and Angostura.
- Acted for RCL Foods on its ZAR4bn acquisition from TSB Sugar Holdings of all the issued ordinary shares in TSB Sugar RSA and TSB Sugar International, and of TSB Sugar’s ZAR7.5bn acquisition from Industrial Partnership Investments of RCL Foods.
Like many of South Africa’s largest firms, Cliffe Dekker Hofmeyr is the product of a merger. Although in its current guise the firm has existed only since 2008, when corporate practices Cliffe Dekker and Hofmeyr Herbstein & Gihwala joined forces, its roots go back to 1853, when Cliffe Dekker legacy practice WE Moore & Son was established.
With offices in business and legislative capitals Johannesburg and Cape Town and financial hub Sandton, the firm is known mainly for corporate, disputes and projects work, although its business is structured around 13 core practice groups. Its lawyers also specialise in specific sectors such as product liability, private equity and Black Economic Empowerment (BEE). Cliffe Dekker Hofmeyr itself is a level three BEE firm.
Although the firm does not have any offices outside South Africa, it has had an exclusive alliance with DLA Piper since legacy firm Cliffe Dekker linked up with the international firm in 2005. This made it one of the first South African firms to sign such an agreement.
While the deal saw Cliffe Dekker Hofmeyr and its fellow African members ostensibly remain independent, with each keeping its name and remaining separate financially, it precludes the local firms from working with other international players.
According to Cliffe Dekker Hofmeyr this is not a disadvantage, with the alliance giving it access to DLA Piper’s global network and its Africa group.
The firm moved into new Johannesburg premises in 2010 and has since been developing its IT infrastructure and document management systems.
It made a number of key hires in the past year, taking on Webber Wentzel disputes partners Adine Abro, Sonia de Vries and Munya Gwanzura following that firm’s tie-up with Linklaters.
Routledge Modise/Hogan Lovells South Africa
Chairman: Lavery Modise
Total number of partners: 38
Total number of lawyers: 158
Total number of staff: 250
Networks/associations: Part of Hogan Lovells, member of International Lawyers for Africa.
Top deals of 2013:
- Advised First Uranium Corporation on its ZAR3.5bn disposal of Mine Waste Solutions to AngloGold Ashanti. Legacy Fraser Milner Casgrain (now Dentons) also advised First Uranium and ENSafrica acted for AngloGold.
- Acted for Telkom SA on KT Corporation’s acquisition of a 20 per cent stake in the company, valued at ZAR5bn. ENSafrica, Dm5 and Kim & Chang were also involved.
Johannesburg firm Routledge Modise has had some ups and downs while gaining a presence on the international scene. Having become a member of Eversheds International in 2008, trading under the name Routledge Modise in Association with Eversheds, the firm took on the UK firm’s name and brand the following year. But the Law Society of the Northern Provinces argued the move had broken the Attorneys Act and the firm was ordered to reinstate its original name.
After such an inauspicious start it came as little surprise when the firms announced an end to their alliance in 2012, citing conflicts and differing strategic goals.
Following a hunt for another international partner, in January this year Routledge Modise merged with Hogan Lovells.
Chairman Lavery Modise says the fact that Hogan Lovells had several clients with an African presence was a big draw, adding: “During an extensive analysis and discussion we came to the conclusion we were a good fit with them.”
Although the two firms are not integrated financially – profit-sharing is not allowed in South Africa – they have stated that they are to all other intents and purposes a merged entity.
Known mainly for corporate, employment, litigation and real estate work, Routledge Modise has a strong focus in the natural resources, mining and telecoms sectors.
Chairman: Des Williams
Total number of partners: 99
Total number of lawyers: 152
Total number of staff: 403
Firm founded: early 1900s
Networks/associations: Lex Africa
Top deals of 2013:
- Advised Mitsubishi Heavy Industries (MHI) on the global integration of thermal power operations with Hitachi. Nishimura & Asahi , Noerr , Wierciński Kwieciński Baehr and Zepos & Yannopoulos also acted for MHI.
- Acted for a Chinese consortium on the ZAR5.3bn acquisition of Palabora Mining Company from Rio Tinto and Anglo American.
- Advised Glencore Xstrata on its secondary listing on the Johannesburg Stock Exchange, the largest such listing since British American Tobacco in 2008.
In 1993 Werksmans founded pan-African network Lex Africa and the alliance continues to be an important strategic tool for the firm. Due to its size the firm has played a leading role in the network’s development and, with smaller members asking for more secondment opportunities and knowledge-sharing, Werksmans is likely to continue this leading role.
Chairman Des Williams says that for the time being the loose alliance works well for Werksmans, although like its large South African peers it is examining how it develops its pan-African presence in the coming years.
“The question for us is whether, in relation to Lex Africa member firms, we build on what we’ve already got and whether there’s a need to get closer and have a more formal relationship with firms in the network, either with some of them or all of them,” says Williams.
Banking and finance is a current growth area for the firm. Werksmans recently tempted back two lawyers from a group which went to Dewey & LeBoeuf in early 2012, moving on to Baker & McKenzie following Dewey’s collapse. Chris Moraitis and Astrid Berman are both finance partners (or directors)and join a growing team. Last year Werksmans hired Natalie Scott as a director in the banking team, from a senior in-house role at Nedbank Capital.
Renewable energy and competition are also a focus.
Williams adds that five years on from their launch, Werksmans’ three Cape Town offices – in Cape Town, Stellenbosch and Tyger Valley – are performing strongly.
Adams & Adams
Chief executive: Dario Tanziani
Total number of partners: 59
Total number of lawyers: 127
Total number of staff: 550
Intellectual property firm Adams & Adams opened in 1908.
Although the firm promotes itself as also offering commercial, property and litigation advice, IP is its strong suit. This was underlined in 2012 when it took over South African rival Bowman Gilfillan’s IP practice, gaining 59 new members of staff including 19 lawyers. This, according to the firm, makes it the biggest specialist IP firm in Africa and across the southern hemisphere, and the firm now houses 64 patent/trademark attorneys, including partners.
Adams & Adams, which was founded by the sons of a Church of England vicar who moved to the Transvaal in 1875, is headquartered in Pretoria but also has offices in Johannesburg, Durban and Cape Town. It has associate offices in Angola, Burundi, Mozambique and Tanzania (including Zanzibar) and an African Intellectual Property Organisation (OAPI) office in Cameroon.
Plans are afoot to expand further across the continent with more office launches in the near future.
Shepstone & Wylie
Managing partner: Nigel Woodroffe
Total number of partners: 42
Total number of lawyers: 66
Total number of staff: 140
Durban-headquartered Shepstone & Wylie is one of the few truly independent firms left in South Africa, as it is not affiliated to any other firms.
Its practice covers all areas of commercial law and domestic issues such as conveyancing.
Shepstone has offices in Cape Town, Johannesburg, Pietermaritzburg and Richards Bay.
Managing partner: Blaize Vance
Total number of partners: 30
Total number of lawyers: 85
Top deals of 2013:
- Advised investment company Helios Investment Partners on its joint venture with BTG Pactual in relation to a $3bn joint venture between BTG and Petrobras International Braspetro. The joint venture will encompass Petrobras’s subsidiaries and portfolio of production and exploration assets in Angola, Benin, Gabon, Namibia, Nigeria and Tanzania. Loyens & Loeff provided Dutch law advice.
- Advised Oando Energy Resources on its acquisition of shares in Oando Qua Ibo and Oando Reservoir and Production Services.
- Acted for the lenders in the IPP Peaking Power Generation Projects, creating two open cycle gas turbine facilities developed by GDF Suez.
Canadian firm Fasken Martineau moved into South Africa last year when it merged with Bell Dewar.
The merger built on an existing capability in African work and South Africa, focusing predominantly on Francophone Africa. The firm originally launched in Johannesburg in 2003 with a hire from White & Case but maintained a small presence until the Bell Dewar tie-up.
In Africa Fasken focuses on mining, energy and project finance, corporate and litigation.
The merged firm made immediate moves to increase its South Africa presence when it picked up employment partner Melanie Hart from DLA Cliffe Dekker Hofmeyr last August. The hire was backed up in November when Fasken increased its Africa capabilities in London with the appointment of Sidley Austin partner Elizabeth Uwaifo and UniCredit in-houser Francis Nwokedi as banking and finance partners.
One to watch:
Managing partner: Noor Kapdi
Total number of partners: 3
Total number of lawyers: 5
Total number of staff: 8
Top deals of 2013:
- Advised state-owned diamond mining company Alexkor on a deed of settlement related to a Richtersveld land claim matter and on a co-operation agreement with Eskom relating to the supply of coal and on various environmental matters.
- Acted for Rhino Resource Partners on the preparation and lodging of applications under the Mineral and Petroleum Resources Development Act.
- Advised Total South Africa on direct agreements required to be signed in the context of a project finance arrangement, environmental compliance in a number of Southern African jurisdictions, and fuel supply and franchise arrangements.
Cape Town energy firm KapdiTwala is a relative newcomer in the South African legal market, having been founded by former Kritzinger & Co managing director Noor Kapdi and ex-Cliffe Dekker Hofmeyr director Zithu Twala in 2011.
The pair were joined as partners by Bowman Gilfillan lawyer Shahid Sulaiman in 2012, creating a 100 per cent level-one Black Economic Empowerment (BEE) firm.
The firm also works to redress the inequalities thrown up inadvertently by BEE, handing project-related work to retired white consultants, who Kapdi says cannot easily be employed due to equality legislation.
Although Kapdi took time out of the law in the 1990s to work as an investor at private equity house Krew Investments, KapdiTwala does not have a strong private equity focus. Kapdi points out that the private equity market in South Africa is too immature to support a law firm. Instead, the firm focuses on energy, mining, infrastructure and transport and the various financing packages that come with these areas.
It was the firm’s energy bent that brought it into contact with Dentons, ultimately leading to a formal association between the two.
“Two years ago we were introduced by common client Total,” says Kapdi. “We do about 80 per cent of Total’s commercial work in this country and it has been a Dentons client for 80 years. Dentons was interesting to us because it’s one of the largest energy practices in the world.”