International law firms have discovered Africa. Now what do they do?
Dealflow into Africa has been on a steady upswing in recent years, with most activity in the natural resources sector. (According to Mergermarket, in the first half of 2013 there were 102 African M&A deals announced, worth a combined $15 billion, a 10 percent increase in volume and 18 percent rise in value compared with the first six months of 2012.) While U.K. and U.S. firms’ offices in London and Paris remain important hubs for picking up mandates, some firms—mostly British—are looking at ways to put resources on the ground, either in the form of new offices or as formal ties with local practices.
Most recently, in October, U.K. firm Eversheds announced the latest incarnation of its African strategy. Having split with South African ally Routledge Modisse in early 2013 over a client conflict, the firm said it would open its own offices in Morocco, Tunisia, Ghana, Kenya and South Africa. Among the clients Eversheds has advised on African-based work are Tyco International Ltd., FMC Technologies Inc. and African Development Bank Group. It also announced the launch of the Eversheds Africa Law Institute, an initiative to strengthen existing ties with certain local firms and undertake joint projects such as shared training programs. So far, 15 firms from 14 countries—including Eduardo Vera-Cruz Advogados in Angola, Perchstone & Graeys in Nigeria and El Hussein Ahmed Salih Law Firm in Sudan—have signed up to join the institute.
According to Boris Martor, head of Eversheds’ Africa group, the new approach reflects the realities of a diverse African market where some jurisdictions, such as Sudan and Mozambique, are not mature enough to justify an office, and others, such as Nigeria, have local firms that may be more reluctant to commit to an exclusive arrangement. Although at press time Eversheds had yet to open any of the five planned offices, Martor said the firm would like to have “something achieved in the next few months.”
Another U.K. firm that has started to piece together an African presence is Clyde & Co, which opened offices in Libya and Tanzania in 2012. While Libya remains dogged by ongoing security risks, Clyde & Co partner John Morris reports that the country has proposed infrastructure investments worth around $400 billion, ensuring a lucrative pipeline of work in the oil-rich country. The firm hired Albudery Shariha, the former general counsel of the Libyan Investment Authority, as a partner to help launch the eight-lawyer office, which has handled work for the Libyan Railway Board and for power company APR Energy.
Tanzania may not offer the same sort of prospects, but its capital, Dar es Salaam, provides a stable platform for an East African base, and there are increasing opportunities in the country’s gas sector. “It’s very easy to establish associations in 20 different countries but that’s rather meaningless,” insists Morris. “We want our own regional hub offices and then very close relationships with local firms in neighboring countries.”
Clydes and Eversheds have joined a growing band of international firms, led predominantly by the U.K. practices, that have opened on the continent in the last few years. Allen & Overy and Clifford Chance both launched in Morocco in 2011. Although the offices remain relatively small—around 30 fee-earners in Allen & Overy’s outpost and fewer than 10 at Clifford Chance—both serve as hubs for work across North Africa. Also in 2011 their U.K. rival Norton Rose merged with Deneys Reitz in South Africa and added an office in Morocco. Others, such as DLA Piper, have formalized ties with a group of local alliance firms spread out across the continent. “The benefit we get from our network is that we align with the most competent firms so quality and responsiveness are assured and it means that our clients get comfortable working with Africa-based firms,” says Joseph Tato, head of DLA Piper’s U.S. projects and infrastructure practice and formerly head of Dewey & LeBoeuf’s Africa group.
As with any new overseas market, however, uncertainties persist. In September, Herbert Smith Freehills confirmed that it was scuttling plans to open an office in Guinea. Stéphane Brabant, Herbert Smith’s Paris-based Africa head, says there was “nothing specific” in the firm’s decision not to go ahead with the launch but that “it was best not to open in the context of what we want to do in Africa.”
Herbert Smith has been one of the most successful international practices in targeting Africa work from natural resources and infrastructure projects and a growing number of M&A and financing mandates. According to London-based partner Martin Kavanagh, 7 percent of Herbert Smith’s revenues come from Africa-related work acting for the likes of mining giant Rio Tinto. Despite the change of course over Guinea, some sort of on-the-ground presence remains on the agenda.
“A network in our own name would be a challenge, and we’re still actively looking, but only where we can offer a product of the same standard as elsewhere in the world,” says Kavanagh. Increasingly that challenge is one which international firms are rising to meet.