Local Firms in Africa Lament the Influx of International Giants
Domestic firms on the continent say 'we need to create a level playing field to allow African firms to also grow'.
November 16, 2023 at 05:47 AM
7 minute read
Law Firm CompetitionIn the past, the bulk of international firms' dealings in Africa was just assisting clients—usually foreign investors—with deals and projects in the region, while operating from their Paris or London offices. But now, these firms are keen on forging a place for their brands in the local market.
As global firms vie for a slice of the African pie, their methods of growth vary: forming alliances with multiple local firms for referrals and resource sharing; merging with existing firms; and, the most daunting of it all, launching an office.
For firms such as Clyde & Co, Baker & McKenzie, White & Case and others inclined to establish a physical presence, South Africa, Egypt and Morocco were the most preferred locations because of the level of international trade going on those places. Some later expanded to other countries based on regulatory considerations.
DLA Piper, Dentons and CMS, following a Swiss Verein structure, merged with key players in the space. The model is often criticised for lack of financial integration and potential erosion of local firms' brand identity but seems to have been commonplace and has worked in different African regions.
For instance, Nigeria, one of the countries lawyers described as impenetrable for international firms at a time, now has a couple of firms that are in alliance with global giants.
DLA Piper added a Nigerian law firm to its 15-strong African alliance network in 2017 and Dentons combined with another with three offices in the country in 2021.
Dentons' Africa Region CEO, Noor Kapdi, recently stated that these mergers—now in 13 African countries—are part of the firm's vision to create a preeminent Pan-African law firm, owned and operated by Africans.
The international firms' expansion into Africa has been largely successful and there seems to be no end to the run yet.
Law firms headquartered outside of Africa make up 13 of the largest 50 firms in Africa by headcount, according to Law.com International rankings. DLA Piper Africa, Dentons, Norton Rose Fulbright South Africa and CMS all feature in the top 12, more than 100 lawyers.
|'Cannot Compete'
Although industry experts agree that the presence of these firms enhance expertise in some practice areas, one cannot rule out the competition between local firms and their foreign counterparts. Some partners on the continent are afraid the market will be dominated by foreign firms in the coming years.
"Our professionals are still relatively nascent and cannot really compete with the established foreign firms in terms of their connection and the knowledge of some areas of practice," said Fauz Twaib, a senior partner at Tanzanian Rex Attorneys.
The implication, according to him, is that most lucrative businesses will go to foreign law firms or their partners.
"This may not have an impact on the law firm that partners with the foreign law firm but the other local firms would certainly lose out completely to the foreign law firms when they come in and only results in the leftovers; where there isn't much lucrative business and even the local law firms that partner with foreign law firms usually work as subcontractors or some sort for foreign law firms," he explained.
This may have far-reaching economic consequences according to the managing partner at Olaniwun Ajayi, Tominiyi Owolabi, who noted that a large share of the fees payable to indigenous firms are taken by offshore firms.
"Walls are coming down everyday around the world and I'm not necessarily preaching that walls should be erected. The only point we make is that we need to create a level playing field to allow African firms to also grow," said the Nigerian firm leader.
This also points in the direction of a global phenomenon that has already played out across different markets. The UK market has gradually been infiltrated by U.S.-led firms. Likewise, many of the largest firms in Asia and the Middle East are not headquartered in those regions.
Nevertheless, some are convinced that there will always be a place for local firms because of the dynamic nature of the African market.
"There are certain countries where I would say the local law firms will probably be among the most influential and really be driving a lot of decision making," White & Case's Adegoke said.
|Power Imbalance
Domestic African firms also warn there can be complications to joining forces with international firms.
Twaib mentioned that some offshore firms do not accord their local colleagues the same respect as they would in their own jurisdictions.
He said; "I know of an incident where a very senior local professional found himself subjected to the supervision of a junior Lawyer in the firm's foreign jurisdiction on a matter relating to an opinion on Tanzanian Law."
CMS's Weston acknowledged some firms' imposition of culture but said his organisation ensures that every of its partner firms have a voice and a deciding seat at the table.
To make everyone's voice count, he said that each of the firm's offices, including the London office, has just one vote on the organisation's board.
"And that's really how we've evolved over the last five years," he said.
Weston emphasised that the future of the African legal market is for those that go into partnership with the big guns.
"I think the future is really quite exciting and it can be very, very good for the local law firms to join international firms at this stage and get integrated into global organisations so they can benefit from from the support they'll get and the interaction with big global international clients investing in Africa, which I think is going to continue and increase in the future."
But Owolabi of Olaniwun Ajayi believes strongly that there is sufficient legal capacity on the continent and firms need to focus on building African champions. To achieve this, he mentioned the need for capacity building and intra-African alliance.
"If we are fragmented and just small firms all over the place we lack the capacity to compete. And mind you as I said, the idea is not to chase away offshore work, it is a global world, walls are coming down. It is to complement the offshore players."
|International Growth Continues
In the meantime, international institutions show no sign of slowing down their growth in Africa.
Linklaters' head of Africa Group, Justin Faye, noted the buoyancy of the market was an important factor in the firm's decision to form an alliance with South African Webber Wentzel 10 years ago.
"There are major opportunities across the continent including in relation to mining, infrastructure and renewables. With this comes the growing need to support clients in mitigating risks and navigating the complex issues that exist in the strategic deals and projects we assist them on across the continent," he said.
Although the firm is not considering a further expansion at this time, it has expressed interest in strengthening its ties with its African allies.
White & Case's new head of Africa practice, Deji Adegoke had also talked of the firm's intention to solidify its African presence and tap into the opportunities in the regions, citing oil discoveries in Tanzania and developments in the Namibian mining sector.
Other firms have doubled down on their strategies to get more out of the market.
CMS executive partner, Duncan Weston announced the organisation's robust business plan for Africa and hinted on moves to select partner firms in Nigeria and Egypt in addition to about 150 of its lawyers already working in the region.
He told Law.com International: "More recently, what we've done is; we launched a business plan for Africa as a whole on the back of our knowledge of the markets and the ones we are most familiar with. And in that business plan, we set out a process whereby we would enter markets and find firms to join CMS over a time period."
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllLaw Firms Mentioned
Trending Stories
- 1Regulatory Upheaval Is Coming. How Businesses Prepare and Respond Will Separate Winners and Losers
- 2Cravath Elevates 7 to Partnership, Up From Last Year
- 3Kline & Specter Hit With Lawsuit From Another Former Associate
- 4USPTO Director Kathi Vidal Announces Resignation Ahead of Administration Change
- 5As Gen AI Acceptance Grows, Lawyers Race to Mitigate Risks
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250