A detailed and highly informative report by Redstone Consultants, African and International Law Firms: Friends or Foes concludes that African law firms are on the rise, are ambitious, and have invested in strategic thinking. Global law firms are also increasingly recognising opportunity in Africa.
The report is based on interviews with African law firms in 12 jurisdictions covering West, East, Central and South Africa.
However, in Africa Law firms ‘lack quality’ – report alleges (30 June 2016) the Law Society’s Gazette say a report by Redstone Consultants concludes African law firms are “unresponsive”, “overstretched” and “supported by ‘poor infrastructure’”.
I would like to look at some very exciting developments covered in the Friends or Foes report. For those of us who may be thinking about expanding our horizons, Africa should come into our thinking as a location for investing, or building connections with local firms.
Why is Africa a great location for law firms?
Average real GDP over the the whole of the African continent has been growing at a rate of 4.4% per year over the past five years, and productivity has grown at a compound annual rate of 1.7% over the same period. This isn’t a “flash in the pan” – Africa achieved similar growth over the previous ten years.
Africa also benefits from a professional highly educated workforce, a developing infrastructure, good connections with European and North American cities and low overheads.
The demand for lawyers comes from consistent economic growth based on rich natural resources, a growing manufacturing industry, growing credibility as a location for business, and an increasing number of affluent individuals – Africa’s 50 most wealthy have a combined net worth of 74.5 billion US dollars.
There is potential to invest wisely in an area experiencing growth in demand for professional services, and to make the most of a continent with enormous potential for further economic growth.
What do we need to know about the operating environment?
Redstone Consultants say:
“African law firms are only too well aware of both the opportunities and the threats of being based in the world’s fastest growing economic region. Three quarters of them describe themselves as either very or fairly optimistic about growing their business over the next 12 months.”
Global firms with a long track record of working in Africa have woken up to an increasing threat of being overtaken by new entrants. UK and US firms are applying more management focus to the region. While this is happening, African firms are seeing simultaneously more opportunities for growth and yet more competition.
There is a constant tension between whether the international players can be regarded as friends to partner with and invest in – or competitors who will take the best work and leave Africans with slim pickings. South Africans are in the middle – prey to the Global firms and maybe predators in the rest of the Continent.”
So, not for inexperienced new entrants – competitive, and edgy. Knowing your competition, how they work and who they work with could be vital before setting up a branch office or investing in Africa.
Investing in local firms
But there is also the option to work with and invest in law firms who are already established in Africa – a partnership with a local law firm may assist them with developing international credibility, and to retain work which is currently being referred out of Africa to international law firms:
Many African firms are still limited by the reach of their brand and reputation. Half of our African respondents believe that clients often instruct international firms on matters which could well be handled locally
And on relationship building between international and African law firms, the report reveals a fascinating trend:
“Several of the London firms commented to us that the larger more established firms in countries like Nigeria and Kenya are becoming “arrogant” and “complacent”. London firms are frustrated at the lack of responsiveness, absence of loyalty and unwillingness to develop any relationship for the longer term.
In consequence a significant number of Global firms are choosing to focus their attention and referral business on the next tier down of firms. There they report experiencing a better service and willingness to develop relationships.”
Where are the top-rated African firms located?
The location of law firms who are ranked and rated by Legal 500 and Chambers and Partners African listings is revealing – predominantly we have law firms who are international players such as Linklaters and Clifford Chance, and who have offices either within Europe or South Africa, but not within the remainder the African continent.
Out of 66 office locations for the firms listed in Legal 500’s African summary listing and rankings, only 10 (15%) are in Africa, excluding South Africa. None are in Nigeria, one of Africa’s most buoyant economies.
If you’re looking for a new international location with minimal international competition, Africa has great potential – either as a new location for an office, or for investment or developing a partnership arrangement with a local law firm.
However, knowledge of the operating environment is obviously crucial – look before you leap, and consider developing relationships with established second tier law firms as a safer alternative to setting up your own office, and as a means of getting to know the operating environment before making a long term investment.
Comments from African lawyers or international firms with an office in Africa are particularly welcome – please use the comments box below.