Firms in north-west Africa’s Morocco and Algeria hubs are seeing a greater influx of international clients into the French-dominated market
Francophone countries in Africa cover a vast swathe of the north-west of the continent, stretching from Morocco and Algeria in the north to the Democratic Republic of the Congo (DRC) on the Equator.
The countries share a colonial history and a legal system based on that of France – but while there is clearly plenty of opportunity for investors in many of these jurisdictions, when it comes to law firms most of the firepower remains concentrated in Morocco and Algeria.
Economically speaking, these two jurisdictions are by far the largest in francophone Africa. Historically, they have been a magnet for French firms and French clients looking to exploit the historic links, but things are changing. The arrival of Allen & Overy, Clifford Chance and Norton Rose in 2011 and Baker & McKenzie’s entry into Casablanca last year are proof of increasing interest in the region by non-francophone firms, and also of a changing client base.
Morocco continues to be the focus for French and Anglo-Saxon firms alike. Norton Rose’s Casablanca managing partner Alain Malek points out that the jurisdiction is the most developed in legal terms thanks to a more sophisticated and stable regulatory environment than in neighbouring countries.
“There is in Morocco a real domestic market with mature clients asking for legal services of a standard such as that delivered by international law firms,” Malek adds. “Those clients have the type of matters requiring a specific level of expertise and will pay the price.”
Malek adds that the Moroccan authorities have been developing the country’s business landscape, with the government employing more civil servants who understand what investors need.
“The legal market in Morocco is growing every year because the Moroccan economy is also growing every year,” notes UGGC & Associés’ Casablanca managing partner Patrick Larrivé. “Companies need more and more legal advice. Moroccan companies need more advice to negotiate their agreements with foreign counterparts, especially as those foreign counterparts usually use their own legal advisers.”
Larrivé stresses that Moroccan companies are demanding the same level of legal advice as that provided to international investors.
In Algeria the market for international legal advice remains small, restricted by bar rules affecting how firms operate. Only a handful of foreign firms are present in Algiers – CMS Bureau Francis Lefebvre (BFL), Gide Loyrette Nouel, Lefèvre Pelletier & Associés and US firm Thompson & Knight – but the local market is also small.
Lefèvre Pelletier partner Vincent Lunel says the local legal system in Algeria is “less sophisticated” than that of France and even Morocco, and also that firms must be prepared to work at a different level than in their home jurisdictions.
“Algiers is a difficult city,” he says. “It’s more of an adventure than to go to Casablanca. We’re not practising in Algeria at the same hourly rates as we are in Paris and clients appreciate that.”
CMS BFL partner Samir Sayah agrees that Algeria is a tricky market to be in. He points out that few lawyers focus on corporate law and says hiring is always a problem.
“Other firms would like to behere in Algeria, but it’s quite difficult to build a team on the ground,” he says.
Beyond the French connection
In both countries, lawyers are observing a subtle shift in where their work is coming from.
“It used to be mostly a French market, but that’s no longer the case,” observes Lunel of Algeria.
Norton Rose’s Malek says corporate work is increasingly coming from investment funds based in the Gulf region, while in the mining and infrastructure sector there are a number of South African, Australian, Canadian and Brazilian companies coming to Morocco.
Allen & Overy (A&O) Casablanca managing partner Hicham Naciri also points to the Gulf as a source of work, as well as Spain and other parts of Europe.
In Algeria, Lunel says more instructions are coming through from China, Germany, South Korea and the US, particularly in oil and gas, while work is picking up from Spain, which also has a historic link to the country and has its own domestic economic issues.
He says much of Lefèvre Pelletier’s instructions in Algeria involve foreign companies investing in state-owned companies, although delays are common thanks to significant state interference.
Sayah says CMS BFL has moved from focusing on tax to a wider offering with clients from across Europe, working in the region.
However, local transactions continue to represent a high proportion of work for firms. According to Larrivé, around 60 per cent of UGGC’s work in Casablanca is derived from Moroccan companies, while Naciri gives a similar estimate for A&O.
In Algiers, Sayah notes that the Algerian state is committed to spending billions on infrastructure in the next few years, generating plenty of activity for the few firms in the jurisdiction. The balance of the work is connected to investment elsewhere on the African continent, much of it – but not all – in other francophone states.
Malek says that Morocco and Tunisia “but also Ivory Coast, Cameroon, Equatorial Guinea, DRC and Senegal” are active, with less work in Mauritania and Gabon.
“The legal market is booming thanks to a steady workflow in traditional sectors in Africa,” Malek adds, pointing to mining, oil and gas. “This is combined with workflow from new sectors and the needs of new states for infrastructure. Also, a growing number of countries have attractive domestic markets with an increasing ability to expand into neighbouring states. Clients tend to use international law firms more frequently for their African matters, while African specialists are increasingly able to offer added value.”
Naciri has seen a similar trend, accentuated by the move he and his team made from French firm Gide in September 2011.
“We had a good position in the Moroccan market, but for large transactions we were previously only used as local counsel. It’s a big change we’ve observed in the past 14 months,” he says.
Naciri believes clients are turning to the A&O office in Casablanca now for lead roles on transactions in Morocco and the wider region, rather than being asked for just local advice. He points to a recent deal for Maroc Telecom as an example, in which A&O led work across a number of other francophone countries such as Mauritania, Gabon, Burkina Faso and Mali as well as Morocco.
“Clients are looking for firms that are familiar with the laws in the region,” Naciri notes. “They’re also looking for teams able to work in French, English and Arabic. This is where we may have added value.”
The dominance of the French firms has certainly lessened, but some think that firms such as CMS BFL, Gide, Lefèvre Pelletier and UGGC still have a slight advantage in their in-depth knowledge of the legal systems in francophone Africa.
“The law is similar to French law,” says Larrivé. “These are the same principles, the same concepts – it’s not a Xerox but it’s close.”
Naciri, who has experienced life in both a French and an Anglo-Saxon firm, says things are changing.
“For a while there was an idea you had to be a French firm to work in these countries because of the history of the region, but the world has changed and the structure of the firms has changed too,” he says.
“International firms have changed the game.”
Being on the ground is crucial, say lawyers, although there are differing opinions over whether you need to be in each jurisdiction.
“It would be a mistake to consider it a region whereby if you’re in one country it will work for others,” asserts Lunel.
Larrivé disagrees. “Sometimes, we ask local firms to provide information on local law, but we’re able to manage almost 100 per cent of transactions in the region,” he says of UGGC’s Casablanca office. “It’s not necessary to have offices in both Algeria and Tunisia – we can commute.”
“On the transactional side – drafting the documentation, negotiating deals, structuring the deals – you don’t necessarily need to be present in Algeria,” agrees A&O’s Naciri.
While CMS BFL’s Sayah says he has clients in Tunisia and Morocco as well as Algeria, he admits that from Morocco it is probably easier to access the rest of the Mahgreb, or north-west African, market.
Naciri says A&O plans to expand its regional reach from Casablanca into the wider region.
“For the time being we have a leadership position in the Moroccan market,” he says. “Our challenge is to become a credible player in the region and to be in a position to staff most transactions from Casablanca.
“We need to consolidate these plans and act as a hub. That’s something we’ve started and is working well but we have to probably hire more resources with a knowledge of sub-Saharan laws, countries and regulatory environments.”
Indeed, most firms seem to be focusing as much on the wider sub-Saharan region as other francophone countries from their hubs. Libya is mentioned by many as a place with significant potential.
“We feel that MENA together with sub-Saharan Africa is going to be the new China,” predicts Lunel.
Larrivé adds: “I’ve been working here for more than 15 years and I think the legal market in Africa is going to continue to grow – this is the next attractive continent in the world.”
Firms moving into Algeria or Morocco should be warned that setting up there is not easy, but it is worth the effort.
“When you understand how it works, it’s a good market,” concludes Lunel.
Key figures: Morocco
GDP (2011): $100.2bn
Annual inflation (October 2012): 1.8%
Population (December 2012): 32.8m
Life expectancy at birth: 72
Unemployment rate (third quarter 2012): 9.4%
Source: World Bank, Haut-Commissariat au Plan
Key figures: Algeria
GDP (2011): $188.7bn
Annual inflation (October 2012): 9.9%
Population (January 2013): 37.8m
Life expectancy at birth: 73
Unemployment rate (2011): 10%
Source: World Bank, Office Nationale des Statistiques