04 April 2011 | By Joanne Harris
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The sheer size and diversity of the African continent necessitates a considered approach to practising there. Joanne Harris explores the manifold strategies employed by the international practices
For centuries European explorers have been heading to Africa in search of riches. These days, however, they tend not to travel in leaky wooden ships but in the latest jumbo jets, and for lawyers at least the riches are in the form of mergers and associations with local firms rather than in gold and silk. But in many ways it is still all about empire building.
The latest firms to expand their global empires in Africa are Norton Rose and SNR Denton. SNR Denton has had a network of referral relationships with firms in African countries for some time and in February this year it announced the addition of another 10.
Norton Rose, meanwhile, is preparing to add South Africa to its growing international presence. In November 2010 the firm announced a merger with Deneys Reitz, which is due to go live in June.
Martin McCann, Norton Rose infrastructure and commodities head, explains that the Deneys merger is designed to be a ”stepping stone” to the rest of the continent. This is particularly a benefit for the firm’s mining practice, he adds.
“We wanted our footprint to be in keeping with our ranking in London. It’s moving from operating for smaller, medium-sized companies to state-owned enterprises in China or Japan or Korea. Deneys Reitz gives us excellence on the ground that we’d struggle to find anywhere else,” he explains.
According to McCann, Norton Rose has historically worked alongside a variety of local African firms in multiple jurisdictions, but the Deneys merger is the first time it has formalised an African relationship.
The firm is following a handful of other UK outfits into South Africa. DLA Piper and Eversheds both moved into the country through associations with local firms. While DLA Piper’s associate firm Cliffe Dekker Hofmeyr continues to operate under its own name, Eversheds’ ally Routledge Modise integrated with the Eversheds brand in July 2009. This move prompted a full-scale dispute between the firm and the local law society, which Eversheds won earlier this year.
Although both DLA Piper and Eversheds have been in South Africa for a some time, local firms argue that their impact has been negligible.
“We haven’t seen as yet a major impact on the market,” says Piet Faber, chief executive at Edward Nathan Sonnenbergs. “If the idea’s to compete with local law firms on the ground in South Africa, time will tell how successful that will be.
“I don’t know what effect [the Norton Rose merger] will have on the local prices and also the earnings of the local partners.”
Faber points out that South Africa is a far more developed jurisdiction for legal services than the rest of Africa.
“I think we as a law firm here in South Africa are much closer to the typical magic circle firm in London or a Wall Street firm in New York and you won’t find that in the rest of Africa. That’s the value we think we bring to Africa. The only difference between us and the First World law firms is price,” he argues.
Lawyers at international firms agree.
“There’s a huge difference across the African continent as to the quality of the local law advice you find. South Africa’s a much more sophisticated jurisdiction,” notes Christian Taylor, a partner in Simmons & Simmons’ Africa team.
Price is potentially a contentious issue. One lawyer points out that firms such as DLA Piper and Eversheds will be able to exert more price pressure than smaller local outfits when it comes to mid-tier corporate deals.
It is the diversity of work and quality of lawyers available in different jurisdictions that has led most international firms down the network route.
Wynne’s win situation
At SNR Denton, Africa committee co-chair Geoff Wynne says the strategy was followed by legacy firm Denton Wilde Sapte.
“We’ve continued a strategy that Dentons had, which was to get to know good law firms in a jurisdiction and, if the timing looked right on both sides, to invite that law firm to join us as a formal associate. We’re able to advise on all sorts of transactions anywhere on the continent. It’s a very multidisciplinary piece,” Wynne says.
The latest additions to the network include an alliance with Portuguese firm F Castelo Branco & Associados Sociedade de Advogados, which gave SNR Denton a route into lusophone (Portuguese-speaking) Africa. Angola and Mozambique remain the focus for Portuguese firms, while anglophone and francophone firms tend to look at the rest of the country.
The right match
However, finding suitable association partners in most African countries can be challenging, according to many lawyers.
“[African firms are] becoming more sophisticated, but in our experience they struggle with two issues,” says Jean-François Mercadier, Paris managing partner at Canadian firm Heenan Blaikie. “When there’s a big project they’re not able to put the necessary number of people on a transaction. They’re sometimes also quite slow-moving - they have too much work to do.”
Although most African firms remain small and, by European or US standards, relatively unsophisticated, things are slowly changing.
“I think a number of local firms in Africa are waking up to the opportunities provided by inward investment,” asserts Simmons’ Taylor. “Not many have sufficient weight or visibility to market themselves to clients, so they come and market themselves to us.”
From the international perspective firms need to decide exactly where they want to be present and why. Some lawyers criticise wide networks.
“I think there are many at the moment whose tactics seem to be a slightly colonial flag in the ground,” argues McCann. He explains that in jurisdictions outside South Africa Norton Rose is happy to team up with a local counsel who is part of an association with another international firm.
Anthony Giustini, co-head of Clifford Chance’s Africa group, says the magic circle firm has a varied approach to the continent. A team of lawyers at the firm is dedicated to building Clifford Chance’s ability to ”deliver legal services in every market in Africa”, says Giustini.
“That will result, and has resulted, in privileged relationships with associate counsel. We’re going to take a mixed approach to the continent going forward. We’re going to pick and choose what’s best for our clients,” he explains, adding Clifford Chance is not ruling out opening African offices in the future.
Eversheds is taking a similar attitude, with its South African arm shortly to be complemented by a cooperation arrangement in Morocco that is likely to lead to a full-blown Casablanca office in the future, as reported by The Lawyer (28 March). Africa team co-chair Boris Martor reveals that Eversheds is looking at the continent country by country. “In terms of presence, we’ll see where we get to,” he says.
The large South African firms are doubtful of the value of tying up with international practices. Jonathan Lang, head of Bowman Gilfillan’s Africa group and a former Allen & Overy partner, believes international tie-ups tend to benefit international firms more so than the local players.
However, the approach to the rest of the continent taken by Bowman Gilfillan and fellow South African firm Werksmans Attorneys is very similar to that employed by international outfits such as SNR Denton. Bowman Gilfillan has formal associations with firms in Nigeria and Kenya and more informal relationships in other countries.
“I’m very much of the view that if more partners want a network of 15 countries by the end of the year I could do that,” asserts Lang. “The real challenge is getting the really good people to join you. One of the secrets of a successful alliance is that there’s got to be something in it for both parties.”
Werksmans director Pieter Steyn chairs the Lex Africa law firm alliance. Lex Africa operates in a similar manner to the global Lex Mundi alliance, with a single member from each country. The alliance currently has around 30 members. Steyn explains that Werksmans will work on a transaction alongside a fellow alliance member, as the governing law is often South African.
“The network’s become more important with the increasing work in Africa. What differentiates Lex Africa from other networks is that we all know each other personally,” Steyn adds.
Those local firms that have plumped for the more exclusive association arrangements, though, are bullish about their tie-ups. At Clyde & Co’s associated Tanzanian firm Ako Law, managing partner Kibuta Ongwamuhana says the two firms work closely together, presenting themselves to clients as one outfit.
“We sit side by side in the same premises, we do business promotion together; they’re largely in charge of marketing,” he explains.
Ongwamuhana says Ako has benefited from the association in a number of ways over and above picking up work from Clydes’ client relationships.
“I think the prime benefit has to be also the skills that we otherwise wouldn’t have. As we work side by side with Clydes our people learn from them, and over time we expect that skills transfer will leave a lasting benefit to the local firm,” he says.
The relationship sees Clydes send trainees to Tanzania for six-month rotations and their Ako counterparts on secondment in London. The strategy has helped to improve Ako’s billing arrangements, making them more efficient, while time-recording has been integrated into Clydes’ system.
Ako has also become much more European in its approach to marketing. It is now used to the concept of sending out updates and briefings, which Ongwamuhana thinks has grown the business.
“We’ve benefited tremendously from their marketing techniques - just putting out updates and information about milestones that we achieve as a firm in time brings in more business,” he insists.
But Ongwamuhana warns that entering into such an association must be closely thought through.
“The local firm needs a great sense of direction as to what it wants to achieve from such an association. The local firm needs to have a very good knowledge of the market,” he stresses.
Local African firms in many countries are likely to have to consider these issues as work continues to boom on the continent. Likely jurisdictions for international firms to focus on include Nigeria, Kenya and Tanzania, all of which offer substantial business opportunities.
One thing, however, is certain: the attention of the world will stay firmly on Africa for a long time yet.