Monday, 16 December 2013

Growing interest in the legal services sector across Africa: The 6 Curiosities

This Leo has had one of those moments when topical issues, in his mind, have been languishing in the draft section of Blogger for over a week or so due to common occurrence. [Ardent bloggers will relate to this. At least, it's all well and good as fellow Leos have been reporting (e.g. see here) on matters far more important]. He then asked himself: since readers would easily get the gist, why not just click the 'Publish' button? 

A while back, this Leo shared two events which, in his view, demonstrate a growing and determined interest in Africa's legal services sector. This trend is worth discussing as the mergers or alliances keep on coming (Afro Leo notes the recent report that Hogan Lovells will merge with South Africa's Routledge Modise and another merger involving Eversheds). The essence of this swift commentary is to engender readers (some of whom may well have on the ground knowledge of its true scale) anonymously or otherwise for comments and better enlightenment. Although this trend involve U.S. law firms with presence in the UK, this Leo is looking at this with just the UK, South Africa, Nigeria, Ghana at the back of his mind.

The thoughts here originates from last month's post which highlighted the activities of the LSID. Launched in 2007, the LSID helps its members develop their international business and build global relationships and profile. The LSID operates across the globe including Africa but currently lists presence in Ghana, Nigeria and South Africa. (Afro Leo is not surprised but notes that other African countries are also of interest). The other entity referenced in that post is the Nigerian Bar Association (NBA) Section on Business Law - a specialist division of the NBA. 

Any benefits?
Despite being obvious that LSID seeks to unlock (what some might consider) far flung promising markets for its members, this Leo assumes that, surely, something is given in return. One aspect that warrants attention is the point that legal and judicial capacity building remains an issue across many, if not all, parts of Africa. (Afro Leo reminds this Leo that this is similar in other jurisdictions too. Even the UK appears to conduct health checks on its civil justice system every decade or there about - often with costs in mind) The interest which the LSID has shown in Africa as well as the complementing activities of entities such as ILFAAJFA4ID, (all UK-based) may well help the cause. (In the area of IP, one may consider  Light Years IP and PIIPA in the same bracket). In particular, the work of the ILFA catches this Leo's eyes - although some may also see it as relationship-building strategy. 
Curiosity 1: Would African jurisdictions stand to gain something tangible and beneficial in terms of legal/judicial capacity building?

Encouraging, but which way?
It is indeed refreshing to see the LSID reaching out and encouraging its members to tap into the business opportunities in the African jurisdiction (That is the benefit of membership fees, says Afro Leo). Legal practice regulation permitting, (and as this Leo understands) foreign law firms typically gain access by setting up within a local law firm (as already stated above, the number of international law firms with an Africa practice is increasing) or working under a referral/network scheme. The business model would, undoubtedly, differ from country to country and available expertise.
Curiosity 2: Which model is best suited or would be most beneficial for African law firms?

What's in it for IP?
Focusing on Nigeria, Afro-IP is gladly aware that the NBA (Section on Business Law) is interested in IP [see here (no.1), here (no.2), here (no.3) and here (no.4) as reported by fellow blogger, Chijioke Ifeoma Okorie]. (This Leo notes the argument in post no.4 that local law firms do not actually do the heavy lifting when it comes to certain IP work - a subject for another post or discussion) Readers will also remember this piece on African patent firms - in which this Leo briefly commented on the activities of well-known international law firms across Africa in the area of IP law and practice. That piece may go to demonstrate that there is potential in the African market for IP work (albeit currently very little).
Curiosity 3: Do international law firms see a more likely than not potential for huge IP work across Africa in the next decade?

Concerns?
Like in almost everything, there will be concerns. This Leo had the opportunity to speak to a few law firms from 2 African countries who say they would rather stay independent than end  up being controlled by a foreign law firm. (This Leo is guessing that the international firms also have their concerns - not least, on issues surrounding quality assurance and loyalty). In a globalised economy, some choose to liberalise their legal sector (e.g. see the UK here and here); whereas others, including Nigeria, currently prefer otherwise. Everyone wants prosperity and each country (and its stakeholders) will have legitimate reasons (e.g. protecting local market) for choosing a course of action.
Curiosity 4: What issues are of most concern to African law firms in mergers or alliances? 

Conclusion
This Leo feels that UK law firms are better placed to benefit the most, in an efficient manner, than their U.S. counterparts . The legal system in some African countries are closely aligned with the UK and the travel distance is shorter (between the UK and some African countries, e.g. Nigeria and Ghana) than the U.S.

As economies (including middle-class consumers) continue to grow across Africa, more business opportunities will open up for lawyers in different areas of practice - not just in the typical banking, natural resources or infrastructure. For IP practitioners, the work may arise from the creative, fast-moving consumer goods and pharmaceutical industries. Like the saying often goes in service-based industries: 'We go where our clients go'. For example, well-known global advertising agencies are spreading across Africa. Global law firms are following suit and South Africa leads in terms of first entry in Africa's legal services sector.  It seems that some of the global firms still see South Africa as a hub to access other lucrative parts of the continent.

Cautiously and finally, this Leo does not believe that there is a first-mover advantage to be had in the legal services sector - especially on the continent. Rather, there may well be an advantage to be the third or even fourth-mover (if such principle exists anyway). We all know that business is all about accepting risks. 

This Little Leo would like to hear from the horse's mouth.

Other curiosities:

(5) Is this indirect market entry strategy of going into South Africa still relevant today? (Especially, when some South African law firms are equally interested in expanding into other African countries)

(6) Are other entities representing lawyers across the African jurisdictions proactive like the NBA or are they sceptical of the merger/alliance trend?


Further reading:
The Law Society and NBA sign a Memorandum of Understanding, see here
U.S. law firms look to Africa for business, see here

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