Why Big Law is Betting Big on Africa

For Andrew Darwin, a statement he recently heard from a colleague encapsulates the opportunities and challenges of the African law market.

“Ethiopia has a population of over 100 million,” he said. “Their biggest law firm has about 20 people.”

In other words, there is a tremendous potential for legal work, but the market for such services is under developed. Big Law, however, is starting to take note.

At the end of June, DLA Piper — where Darwin is partner and managing director of their developing markets — acquired firms in Senegal and Tunisia. In total, DLA Piper is present in 19 African countries.

Over the past decade, corporate law firms have been scaling up their Africa based practices. As African economies grow, regulatory framework develops and the need for corporate lawyers has surged. Companies in energy, infrastructure, telecommunications and mining need help navigating local and national law, which can be fraught with problems involving compliance, politics and cultural differences.

Many African countries suffer from a lack of qualified lawyers. South Africa serves as a hub for corporate law firms on the continent. According to statistics from the Law Society of South Africa, the country has per capita population of lawyers of 1 to about 2240 people. In other countries, the situation is much worse. A University of Pennsylvania law school study found that Zambia, a country of nearly 13 million people had only 731 lawyers in private practice.

Despite such under-representation, there is plenty of opportunity for Big Law.

A collection of mixed denomination South African rand coins sit in an arranged photo in Johannesburg, South Africa, on Thursday, June 22, 2017. South Africa’s inflation rate rose for the first time this year in May after food-price growth quickened from the slowest pace since December 2015. Photographer: Waldo Swiegers/Bloomberg

A collection of mixed denomination South African rand coins sit in an arranged photo in Johannesburg, South Africa, on Thursday, June 22, 2017. Photographer: Waldo Swiegers/Bloomberg

Already, large firms based in the U.S., Western Europe and U.K. have won contracts advising multinational corporations and governments on everything from mining rights to beverage production. Herbert Smith Freehills advised the government of Cameroon on the construction of the Nachtigal Hydroelectric Project. The legal disputes surrounding mining the colossal deposits of iron and aluminum ore in Guinea have provided work for DLA Piper and Norton Rose Fulbright. Ambitious construction projects like Tanzania’s Bagamoyo Port — which is slated to be the biggest in East Africa — or the seven country North-South Corridor railroad project, should provide further legal work for firms involved in infrastructure.

Lawyers practicing in Africa say South Africa has the highest concentration of Big Law outposts. Norton Rose Fulbright has over 200 lawyers working in Johannesburg, Durban and Capetown, their website says. Baker McKenzie has more than 60 lawyers in its Johannesburg practice. DLA Piper has offices in Casablanca, Morocco and Johannesburg, but is able to cover more ground through its partnerships with local firms in countries like Mozambique, Angola and Rwanda. Others, like McDermott Will & Emery, don’t have a listed brick and mortar shop on the continent but maintain strong working relationships and a cohesive understanding of local law to remain competitive.

“We’re a firm that doesn’t have to go to local counsel for questions,” said Jean-Claude Petilon, co-head of McDermott’s Africa practice.

Pedestrians walk along a roadway back-dropped by the Sandton district skyline in Johannesburg, South Africa, on Thursday, June 22, 2017. South Africa’s inflation rate rose for the first time this year in May after food-price growth quickened from the slowest pace since December 2015. Photographer: Waldo Swiegers/Bloomberg

Pedestrians walk along a roadway back-dropped by the Sandton district skyline in Johannesburg, South Africa, on Thursday, June 22, 2017. Photographer: Waldo Swiegers/Bloomberg

Petilon started working in African affairs for McDermott Will & Emery in 2013, but he has been practicing law across the continent since the mid-1970s. Petilon, who co-heads the firm’s Africa practice, served as a legal advisor to the presidency of Mobutu Sese Soko when the Democratic Republic of the Congo was still called Zaire. Petilon helped arrange Mohamed Ali’s famed “Rumble in the Jungle” fight in Kinshasa in 1974, he said.

“When I first started working in Africa, the law wasn’t very well defined. Most of the law was done by agreements — establishment conventions,” he said. Over the decades he worked there, Patilon watched countries beef up legislation and was able to participate in drafting laws surrounding telecommunications, mining and energy in countries like Chad, Togo and Madagascar.

Many of the legal systems of post-colonial African countries are based upon the country that colonized them, Darwin explained. Those relationships bind the legal communities together. “Lawyers in Francophone countries are members of the local bar and the Paris bar. These historic relationships are important.”

DLA Piper is committed to building a physical presence in the African countries they operate in, Darwin said. They are trying to stay away from the traditional “fly in and fly out” model that some firms operate in. Instead, they’re investing in younger local lawyers and training academies.

“These are medium to long term investments,” he said, “but we want strong and reliable expertise on the ground.”

The Hillbrow Tower, operated by Telkom SA SOC Ltd., stands near residential apartment blocks at dusk in Johannesburg, South Africa, on Tuesday, July 25, 2017. South Africa is evaluating assets it could sell to pay for this month’s 2.2 billion rand ($169.5 million) bailout of unprofitable carrier South African Airways, Finance Minister Malusi Gigaba said in letter to parliament. Photographer: Waldo Swiegers/Bloomberg

The Hillbrow Tower, operated by Telkom SA SOC Ltd., stands near residential apartment blocks at dusk in Johannesburg, South Africa, on Tuesday, July 25, 2017. Photographer: Waldo Swiegers/Bloomberg

The firm’s strategy has been to pursue litigation and contract work. DLA Piper was picked by the government of Guinea as an adviser on a dispute regarding the Simandou mine, considered to be one of the largest sources of iron ore in the world. They have also represented Samsung in Nigeria and the government of Ghana against a Malaysian telecommunications company.

“The markets vary enormously. South Africa has a sophisticated legal market. In other markets, it’s a small profession and at a very early stage,” Darwin said. “It’s a hugely diverse place and you can’t lose sight of that.”

Corporate legal work in Africa can require a deep understanding of the local political and cultural landscape. Firms hire people like Witney Schneidman, a veteran of the U.S. State Department under the Clinton administration, the World Bank and Brookings Institution, to help navigate this complex terrain. Schneidman has spent nearly 40 years working in international development on the African continent. He now serves as an international advisor on Africa for Covington & Burling LLP.

“The firm understands that many of its client’s issues aren’t legal issues,” he said. “In many respects, it’s best to stay out of the courts.” In Nigeria, it can take seven years for the Supreme Court to issue a decision, Schneidman explained. Some of their client’s needs are best dealt with through political maneuvering in Washington and on the ground. “If you can get an amicable resolution it can be in everyone’s interest.”

Working with outdated regulations poses a particular challenge to operating in Africa for Covington & Burling’s clients. On one instance, Schneidman recalled, a client working in the non-alcoholic beverage industry was forced to comply with regulations that hadn’t been updated since 2006.

Infrastructure is an important growing sector and one that Darwin sees as an economic driver for his firm and others. In 2016, DLA Piper and a Kenyan affiliate called Iseme Kamau & Maema won Transportation and Infrastructure Team of the Year at the African Legal Awards for its work on the transportation and distribution of medical equipment to 94 hospitals across Kenya. DLA Piper has worked on other projects connecting communities across the continent.

“Africa needs 95 billion dollars a year to address this infrastructure deficit. As these resources become available, there’s a tremendous need for law firms to do the different contracts and other aspects that are required for power purchase agreements in the power sector,” Schneidman said. “These infrastructure projects are all around: roads, airports, ports, powerlines and dams.”

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A currency dealer uses a mobile phone as he counts bundles of naira banknotes for exchange on the ‘black market’ in Lagos, Nigeria, on Wednesday, July 26, 2017. Photographer: Tom Saater/Bloomberg

Economic development has also brought with it a demand for a higher quality of life. “The need to have electricity in your home and drinking water is very demanding.” Petilon said, “There are a lot of infrastructure projects for drinking water and energy happening now.”

Law firms expanding their Africa coverage often run into obstacles. The diversity of the continent requires an expertise in different legal systems. Law firms may be expected to operate under a system based on English law on one project and under Sharia law on the next one. Simply getting paid for billable hours can also prove to be a problem.

“You may have to be more patient than you’d normally be if you’re dealing with a European government. Sometimes it takes longer to get paid.  Sometimes with government officials, the approval process can be painstaking. It is not like working for U.K. or German government,” Darwin said.

Overall, the legal environment is still evolving, but practicing law in Sub-Saharan Africa is still grounded in building relationships, Petilon explained. “There’s a human aspect we don’t necessarily have doing French law or U.S. law. Personal relationships are very important. There’s a lot of psychology involved in negotiating agreements.”

Write to the reporter at maxsiegelbaum@gmail.com.

Write to the editors at csullivan@bloomberglaw.com and gabefriedman@outlook.com.

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