The allure of Africa: The Canadian law firm advantage

When it comes to foreign lawyers, Africa is unique. That's because, by all accounts, foreign lawyers are welcome on the continent.

So much so that Cecilia Akintomide, Secretary General of the African Development Bank, recently told the International Lawyers for Africa, who had gathered to celebrate secondments completed by African law students to law firms and in-house legal departments in the UK, that the ability of many of the continent's countries to sustain high economic growth was dependent on the strength of their legal infrastructure. The support of foreign lawyers, she added, was important to ensure the fairness of resource exploitation and help safeguard the values that made growth sustainable.

Indeed, when Eversheds LLP launched its Eversheds Africa Law Institute (EALI) initiative in 2013, firms in 14 countries quickly signed up. The program, similar to that organized by other foreign firms operating in Africa, is aimed at giving local access to training and knowledge sharing. Canadian lawyers are particularly welcome.

“Quite apart from Canadian lawyers' mining expertise, Canadian firms have a distinct advantage because they have the capacity to work in francophone jurisdictions — and this is so even with US clients, who can find that language is a barrier,” says Thomas Laryea, a London-based Dentons partner with a specialty in Africa. “Canada also doesn't have colonial baggage, which Africans like because it avoids optical and historical issues.”


As well, national Canadian firms practise both civil and common law, giving them at least a basic familiarity with the legal systems of the many African nations whose laws have European origins.

“The duality of our legal system has been very helpful in Africa,” says Charles Spector in Dentons Canada LLP's Montreal office.

Ironically, Heenan Blaikie LLP, which is in the process of winding-up, was a firm that made the most of that duality. Some years ago, the firm established an office in Paris, which had grown significantly and which was aimed primarily at reinforcing and broadening the firm's historical strength in Africa. At press time, the fate of the lawyers in the Paris office was not known. What is known, however, is that Heenan Blaikie founder Peter Blaikie has attributed the firm's demise to some controversial business dealings in Africa involving former partner Jacques Bouchard. He left in late 2011, but not before some clients had “blacklisted” the firm.

In contrast to Africa, many jurisdictions around the world – when and if they welcome foreign lawyers at all – have welcomed them only begrudgingly, with regulatory hurdles and even litigation as greeting cards. (See “A world of competition,” page 63)

Africa is different. While there are some restrictions, many relating to citizenship and qualifying locally, foreign law firms for some time have had relatively little difficulty establishing a physical or other presence in Africa.

That's a good thing for lawyers: the growth of legal markets has more or less stagnated in the developed nations where law firms have derived the bulk of their revenues. Africa is the second-fastest growing region in the world, has a population of one billion in 54 countries, total GDP in excess of $2 trillion and expected GDP growth of more than 5 per cent through 2015.

As for those who believe that in economic terms “Africa” is an abbreviated way of saying “South Africa,” recent figures from Business Day indicate that Nigeria's GDP rose to $432 billion in 2013, representing 65 per cent growth since 2010 and overtaking South Africa as the continent's largest economy. Further stimulating the appetite for Africa is a wave of investment from Asia and a growing interest in consumer goods and retail.

“When compared to North America and even South America, Africa has a huge upside,” says Mark Wheeler of Borden Ladner Gervais LLP's Toronto office.

Dentons was the first foreign firm to open an African office when it moved into Cairo in 1964; the office is now staffed by about 10 lawyers. Baker & McKenzie opened there in 1986. White & Case was first to South Africa, establishing a Johannesburg office in 1995.

Eight years later, Fasken Martineau DuMoulin LLP became the first Canadian firm to follow, setting up shop in Johannesburg in 2003, then merging with the country's Bell Dewar Inc. some nine years later. The combination makes for over 80 lawyers who give Fasken Martineau one of the most significant legal contingents in Africa.

At the time of the Dewar merger, Fasken Martineau's managing partner, Toronto-based David Corbett, told Lexpert [see UpFront, Nov/Dec 2012] that there were “few international firms that have a substantial presence in Africa” and that “the competition now is not great.”

Perhaps, but even as Corbett spoke, things were changing. As the UK, with India and China, ranks among the top three investors in Africa, British-based firms have been among the most aggressive on expansion, and US-based firms are following.

In June 2011, Norton Rose (now Norton Rose Fulbright), which has a substantial presence in Canada through its recent mergers with legacy firm Ogilvy Renault LLP and Macleod Dixon LLP, joined with South African-based Deneys Reitz. Deneys has three offices in South Africa and one each in Casablanca and Dar es Salaam, giving Norton Rose upward of 260 lawyers on the continent.

In September 2011, Allen & Overy LLP became the first magic circle law firm to open in Africa when it established an office in Casablanca. Clifford Chance moved into Morocco the following year.

In 2008, Eversheds allied with South Africa's Routledge Modise, but the merger dissolved in January 2013 over client conflicts. Recently, however, Eversheds merged with African firm Mahons Attorneys, giving Eversheds offices in Johannesburg, Cape Town and Mauritius. Eversheds also entered into a joint venture with Tunisia's El Heni and has announced that it intends to expand to Morocco, Ghana and Kenya.

For its part, Routledge Modise merged with Hogan Lovells in December 2013, while White & Case increased its Johannesburg contingent from two to five lawyers not long ago. Linklaters, BLP and Freshfields Bruckhaus Deringer LLP are among other firms that have announced they will be expanding or reviewing their African strategies. From the US, Shearman & Sterling LLP has stated that it will open an office in Africa, but have not said when.


Finally, US-based Orrick, Herrington & Sutcliffe LLP is planning to open on the continent by ramping up its existing African practice, for which Paris is currently the base. Among the locations Orrick is considering are the Ivory Coast, Senegal, Ghana and Togo in West Africa, as well as Kenya, Tanzania and South Sudan — with the wide range of options evidencing the rapid growth of the continent's legal market beyond South Africa. Orrick is not considering South Africa because it considers the country's legal market too competitive already.

This may explain why Corbett's 2012 prediction that other Canadian-based firms would eventually follow Fasken Martineau by establishing a physical presence in Africa has not crystallized yet.

But there are other reasons: it's difficult to formulate a focus in a region that has more than 50 jurisdictions and measures some 8,000 kms from head to toe. Candidates for good office locations abound, depending on a firm's interests, experience and strategy: South Africa, Namibia, Botswana in the south; Kenya, Uganda, Tanzania and Mozambique in the east; Nigeria, Ghana and Cameroon in the west; and Morocco and Egypt to the north.

“It's very important to remember that Africa is a huge place, so a civil war in Mali doesn't reflect on Tanzania, for example, as a reasonable place to do business,” BLG's Wheeler says. “You need a country-by-country analysis.”

It's equally difficult to formulate a strategy. Firms working in Africa have chosen a range of operational models, including proprietary hubs in key jurisdictions (Fasken Martineau, Norton Rose Fulbright), alliances of various sorts with local firms (Dentons, DLA Piper), or managing work from Europe or elsewhere (a host of Canadian-based and other firms).

The arguments for and against one strategy or another are not new. Proponents of having a physical presence argue that proprietary offices are the best assurance of uniform quality and brand protection; critics say it would take several offices to cover a continent where Lagos is further from Johannesburg than it is from London.

The alliance or network enthusiasts emphasize the wide geographical coverage that the strategy confers at quite low cost, and the effective interplay of local and international advice; critics say that branding suffers, that arrangements are easily terminated, and that loyalties may not run deep. They cite the Eversheds experience, and the fact that three Dentons alliances, in Botswana, Namibia and Mauritius, terminated the relationship, with two of the three local firms moving to DLA Piper's extensive African network.

Similarly, there are pros and cons for running African operations from abroad, which all Canadian-based firms but Faskens have done. Protagonists of this approach point out that some international firms with local offices do most of the work out of Paris and London in any event, and that having local offices doesn't equate to having more experience or expertise than foreign-based lawyers with African specialties.

As the African legal market continues to mature, this may be a harder argument to sustain. What is clear is that whatever strategy is chosen, Africa's size and diversity necessitates regular reassessments.

Regardless of their strategy, there's no doubt that Canadian firms have a heightened interest in Africa, where the fastest growth to date has been in the energy, infrastructure, mining and commodities, and agriculture sectors. These are all areas in which Canadian lawyers excel, and these are the markets they are pursuing.

“Three years ago, three or four Canadian law firms were at the mining conference in Cape Town,” says Jay King in Cassels Brock & Blackwell LLP's Toronto office. “Last year there were twelve.”

But they are approaching Africa in different ways: Fasken Martineau and Norton


Rose have their own offices; Dentons uses the associated firm strategy; Heenan Blaikie drove its African practice from Paris; Stikeman Elliott LLP has a London office; Blake, Cassels & Graydon LLP has the potential advantage of the proximity of its associated offices in the Gulf; and Cassels Brock and BLG rely on their Canadian operations, using local firms when necessary to manage African business.

Fasken Martineau's approach makes sense for the firm, which has the largest international footprint of any Canadian-based firm. As well, Fasken Martineau is among the world's pre-eminent mining law firms and has been representing mining clients in Africa for decades.

“Africa is relevant to Canada because of the TSX's prominence in terms of raising money for the mining industry,” Corbett says. “Pretty much all the money for mining is raised there, in Johannesburg or in London — and we now have significant offices in all three centres.”

The firm opened in South Africa intending to use Johannesburg as a base to service mining clients throughout Africa and African clients seeking capital in Canada and the UK. Over time, however, Fasken Martineau's vision expanded.

“What we discovered after we had been in South Africa for a while was that there were opportunities to do all kinds of local work as well as opportunities in the energy, telecom and infrastructure sectors,” Corbett says. “But we also discovered that there are certain businesses where Africans want to do business with Africans, and to achieve that, we needed more boots on the ground.”

The merger with Dewar satisfied that need. The combination produced a full-service business law practice in South Africa and a broad practice on the rest of the continent, including mandates in the well-developed life sciences industry, fuelled by pharmaceuticals stepping up their presence and sales in Africa.

“Overall, we're talking M&A, securities, IP — you name it,” Corbett says.

Norton Rose and Dentons may not be Canadian-based, but they both have very strong Canadian arms that practice Canadian law. Although they have chosen to pursue African opportunities in different ways, the extent to which Canadian legal expertise can flourish in Africa is evident from the role that their Canadian lawyers are playing on the continent.

“There's no doubt that Canadian firms have contributed a strong resource presence to the global firms with whom they've merged,” says Richard Stock of Catalyst Consulting, a Canadian-based legal consultancy whose clients are law departments and law firms.

Legacy firm Norton Rose has been advising clients in Africa for more than a century, a history that no doubt contributes to its significant on-the-ground presence there.

“African industry growth trends are a perfect match for our key sector strengths in financial institutions, energy, infrastructure, mining, commodities, transport, technology and innovation, and life sciences and healthcare,” says Montreal-based Norman Steinberg, Global Co-chair of Norton Rose Fulbright and Chair of Norton Rose Fulbright Canada. “If we talk to a Canadian or other client about implementing a transaction in Africa, we're in a position to provide instantly seamless service.”

A review of a transactional list spanning the last two years and provided by Norton Rose Canada reveals that its lawyers have represented Canadian and African public and private mining, oil and gas, offshore production and LNG companies operating in Africa. Both inbound and outbound work is involved, and the sphere of operations in Africa includes Nigeria, Tunisia, Zambia, Namibia, Morocco, Kenya, Ghana, Sudan, the Democratic Republic of Congo, Sudan, Djibouti, Liberia and Mali.

The nature of the services provided embrace debt and equity financing involving US, Canadian and South African lenders; M&A; Canadian and African joint ventures; production-sharing agreements; political due diligence; exploration permits; and project development.

“Our global presence enables our Canadian arm to manage transactions across the developing axes of growth between Africa and Canada,” Steinberg says. “Inbound investment from Africa is also on the rise.”

Dentons, whose lawyers have worked in every country on the continent and whose African work is focused on mining and infrastructure, has chosen the alliance approach to developing business on the continent. Apart from its Cairo office, the firm has relationships with “associate firms” in some 20 jurisdictions in Africa. The associate firms are independent but share branding and client development efforts with Dentons.

This approach allows Dentons to integrate local advice with the expertise of about one hundred of their own African team based in London, Paris and Washington, Calgary and Montreal. Laryea expects the relationships to mature as African business grows.


“The general trend is toward a tightening of associated relationships, which are moving more and more to exclusivity,” he says. “I would be surprised if we didn't see fuller integration with international offices in five years' time.”

Indeed, apart from their participation in training programs with international firms, Africa's lawyers are improving their standards to levels commensurate with lawyers from developed countries. In late January, for example, AB & David, a West Africa law firm whose head office is in Accra, Ghana, became the first firm on the continent to receive the international law management quality mark, “Lexcel,” from the Law Society of England and Wales.

Among Canadian firms, Blakes has an African group which seems to operate solely from Canada. Although the firm has outposts in the Gulf, the African portion of its website does not reference them.

Sébastien Vilder of Blakes' Montreal office joined the firm two years ago after practising for 12 years in Paris, where he worked on various financing and energy projects in Africa. He was a natural fit for the firm's Africa Practice Group, which operates with select local firms throughout the continent. The group advises companies operating or seeking to do business in Africa on finance transactions, project development, private equity and funds matters covering various industry sectors including power, water, transport, mining, oil and gas, financial services and telecoms. The firm also counsels sponsors, private investors, commercial lenders and development agencies on their investments and transactions in Africa, as well as providing advice on legal reform in West Africa.

“We've been involved in a great many deals, but the region still has a lot of potential for steady growth in legal work,” Vilder says. “There are a ton of opportunities in various sectors, but one thing lawyers and clients need is patience, because deals related to Africa get done very slowly.”

Before its dissolution, Heenan Blaikie had a long history in Africa, but its situation was unique: while the firm did not have an African presence on the ground, it operated a substantial office of some 20 lawyers in Paris, an international hub for African projects.

Heenan's mandates covered a broad spectrum and demonstrated the breadth of opportunity for Canadian firms. The mandates included advising on major projects, counselling companies seeking to do business on the continent, and representing various governments and state-owned enterprises on such diverse matters as reform of the mortgage sector in Egypt, reform of procurement legislation in Djibouti, and privatization of the telecom industry in Senegal. The firm also offered advisory services in the areas of government relations, project finance and financial services, judicial and legal reform, and international dispute resolution.

Indeed, Heenan's practice spanned some 20 African countries and extended to a wide range of industries, including natural resources, energy, forestry, real estate, agriculture and telecoms.

Some of Canadian firms, however, see their lawyers' role as more limited. “It's all about Canadian resource investment in Africa and chasing inbound investment into Canada, that's where we can play,” says Jay Kellerman, Managing Partner of Stikeman Elliott LLP's Toronto office.

Cassels Brock has a similar approach. “Our focus on Africa is predominantly mining,” King says. “As time goes on, more and more clients are acquiring projects or interests in African resource companies, and there's a lot of legal work involved. So we're become more and more engaged and getting up to speed on their concerns.”

As it turns out, there's plenty to do for mining clients: Cassels Brock acts as a conduit to local counsel on environmental or permitting issues, assists with M&A and financing and increasingly has become involved in compliance issues relating to anti-corruption legislation. “Bribery and the like is something of which our clients have to be particularly aware in Africa,” King says.

Despite the current downturn in mining, Cassels intends to stay the course in pursuing business and developing expertise in Africa. “It's a bit challenging right now, but when it comes back we want to be right on top of it,” King says.

Wheeler is equally frank in describing his firm's approach as an industry, as opposed to a regional, approach. “Much of what we do is ensuring that Canadian or other mining clients who venture into Africa are in a position to go public in the Canadian market when they get their exploration results,” he says.

That includes working with local counsel to apply for and maintain mineral rights in various countries, joint-venture agreements, M&A, various negotiations and anti-corruption concerns.

Whatever their approach, Canadian firms seem well aware that the growth potential for legal work in Africa is more than a passing trend.

“The world has discovered the importance of Africa,” says Steinberg.

Julius Melnitzer is a freelance legal-affairs writer in Toronto.

A WORLD OF COMPETITION

In a world where an uncertain economy has subdued growth in many places, legal markets have maintained, perhaps increased, their high level of competitiveness. It's rare that you hear anyone anywhere complain about a shortage of business law fi rms or lawyers. Jurisdictions like India have followed a tortuous route to liberalizing their legal markets, limiting foreign fi rms' opportunities for as long and as best as the local Bar associations could manage, including resort to the courts.

Even in Asia, where the legal market is expected to almost double in size by 2017 to an estimated US$215 billion from the current US$109 billion, making it the world's second-largest regional market, the threat of competition from foreign lawyers looms large as an obstacle to liberalization. Germany is frequently cited as a country where foreign law fi rms dominate certain legal markets.

The ubiquitous fear of the competitive threat from foreign lawyers was quite clear at the Inter-Pacifi c Bar Association's 2013 annual conference in Seoul. All the members of a panel moderated by Mark Stinson of Fasken Martineau's Toronto offi ce and composed of lawyers from India, Singapore, Malaysia, Hong Kong and South Korea agreed that liberalization was perceived as a serious threat to incumbent practices in their countries.

The general agreement on that subject is somewhat surprising, given that the fi ve countries are at different points along the liberalization curve: Hong Kong is relatively wide open, South Korea is on the verge of becoming absolutely so, Singapore and Malaysia are perceived as being somewhere in the middle and have recently moved to liberalize further, and India has technically not yet liberalized, allowing only visiting consultations by foreign lawyers to India-based clients.

However that may be, the demand from global fi rms is huge: some 25 foreign fi rms have already entered or plan to enter the South Korean market, which is moving to a situation that Hee Chul Kang, a founding partner of Yulchon LLC, South Korea's largest fi rm, has described as a market where “no area of practice will be ring-fenced” as against foreign fi rms, who will even be allowed to practise domestic law.