International law firms in the UK and US have been chewing for
many years on the chestnut of how to position their firms to
capture the international legal services market in Sub-Saharan
Africa. The answer for most firms has been to remain cautious
– unlike in Eastern Europe and Asia – by opting
to service clients from the big existing hubs, particularly London
Now that the big South African law firms have entered the wider
African legal scene, they too are grappling with the problem, this
time viewed from the south, Johannesburg. Early indications are
that they may be willing to take a bolder attitude.
A perpetual dilemma for law firms is that, on the one hand,
opportunities for commercial lawyers in Africa abound. This is
underpinned by the continent's huge mineral wealth (including
offshore oil and gas discoveries), and massive potential for
infrastructure investment, particularly in energy and telecoms,
which are ideal territories for big firms. On the other hand,
Africa is highly fragmented jurisdictionally, posing practical
problems: how do you service clients, with appropriate
market-knowledge and know-how, in over 50 different
Fragmentation also affects the economics of any law firm's
Africa strategy, since few jurisdictions boast sufficient economic
activity to generate a meaningful number of transactions which can
carry high legal fees. Indeed, the bread and butter of transactions
in African economies is well below $100 million (Ł66m), with
the vast majority of transactions being a small fraction of
Faced with this tension, most top firms have kept cool and
relied on their recognised industry experience and large resources
rather than pursuing tie-ups or establishing offices in Sub-Saharan
Africa. A few London and Lisbon-based firms have formed
associations in some African jurisdictions, including South Africa.
These seem to be primarily referral and branding mechanisms, with
the benefit of enhanced local presence and contacts. Two
international firms operate small independent offices in
Johannesburg as platforms for African business but have not sought
South Africa 's economy is the largest in Africa, and this
is reflected by the size of its law firms, the largest of which
have professional staff complements well into the 100s and 200s. In
Nigeria and Kenya, the nearest rivals, 10-partner firms are
considered big. But most South African firms have been slow to
seize opportunities in Africa – a residue of the
country's economic and political isolation under apartheid and
That is changing rapidly and South African firms are now
following their clients into the continent – and many
claim African expertise. Some have pursued association models and
two firms (Deneys Reitz, through its Africa division Africa Legal,
and Bowman Gilfillan) have established closely integrated tie ups
(mergers face regulatory difficulties) with local firms in East
Africa. Other large South African firms are on the prowl for
possible targets, while others are still formulating their Africa
strategies. Given the small size of local economies and the limited
number of good firms, tie-ups that make sense must surely be
Two key factors differentiate the South African attempt at
tackling Africa: first, the cost bases of South African firms are
comparatively low, allowing them to compete profitably for big and
small transactions - a competitive advantage over large London
firms. Second, these firms are dominant in South Africa, a key
jurisdiction in Africa both in its own right but also in terms of
the growing influence of its banks and corporates in the rest of
the continent. South Africa is a key jurisdiction which, if
cracked, can help open the doors to the rest of the continent.
Law societies and practitioners throughout Africa have been
observing the recent surge of interest by international law firms
carefully and, in many quarters, with some scepticism. Many believe
that tie-ups and associations are not self-evidently a good thing
for local legal industries. Many law societies remain highly
However, even sceptics might ultimately be persuaded of the
benefits of internationalisation if they see it benefiting local
training and bringing increased revenues for local lawyers. The
best strategy for those law firms seeking associations in Africa
will be to prove that internationalisation can be beneficial from
wherever it's viewed.
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