Africa is rapidly becoming the most magnetic part of the world for companies, investors and their advisors. However, African law firms are increasingly angry at the way global legal firms disregard or disrespect their knowledge and expertise, believe the global elite to be ‘fee-hogging’, and see them as ill informed about the realities of doing business in their country.
That is the stark message from a new 18-month study conducted by specialist global professional services consulting firm Redstone Consultants.
Redstone’s report – African and International Law Firms: Friends of Foes – was launched on Sunday 22 February at a special panel debate at Lincolns Inn on the eve of the Global Law Summit. Panel members included:
– Andrew Jones, Head of Africa, Linklaters
– David Ofosu-Dorte, Managing Partner, AB & David, Ghana
– Richard Macklin, Board Member UKMEA, Dentons
– Robert Legh, Chairman, Bowman Gilfillan, South Africa
– Bob Palmer, Head of Africa, CMS Cameron McKenna
Steve Blundell of Redtone said: “Our report, based on discussions and interviews with 15 global law firms and 36 firms from 12 African nations has taken 18 months to research. We have seen the market change in that short period of time.
“Global firms have long recognised the opportunities in Africa, but the last 18 months alone have seen African firms grow by 25% or more. The competition is hotting up.”
The Redstone report finds global firms divided into three camps: those that want to conquer, those that want to pillage, and those that want to partner.
Steve adds: “Our report shows that African law firms can find the experience of dealing with the global firms both a frustrating and rewarding experience. African firms believe the global law firms remain ill informed about the realities of doing business in their country. They believe this limits the global firms’ performance for clients, often creating opportunities for the African firms.
“African firms get angry when global firms disrespect or disregard their expertise and knowledge. Putting juniors onto projects to manage African relationships underscores that impression. And African firms still get a small slice of project fees, believing the global firms to be ‘fee-hogging’.”
Steve concludes: “African firms are, however, ambitious and have invested considerable time and expense into considering their own strategy. They are experiencing the challenges of rapid growth and change. They want to preserve their distinctive cultures, whilst improving management structures, accountability and systems.”
African and International Law Firms: Friends of Foes – key findings
-Global firms have recognised the Africa opportunity. Many over the past 18 months have established an Africa management group with Board level backing to defend and grow business in Africa
-Africa firms are capitalising on both FDI and rapid growth within Africa – most seeing growth rates of 25% or more.
-African firms, except those in South Africa often experience Global firms as ill informed about the realities of doing business in their country. They believe this limits Global firms’ performance for clients – though often creating opportunities for the African firms. Supporting this finding, EY, in their 2014 ‘African Attractiveness Report’ observe a ‘stark and enduring’ perception gap between those who are already doing work in Africa and those who aren’t.
-African firms get angry when Global firms disregard or disrespect their expertise and knowledge. Putting juniors onto projects to manage the Africa relationship underscores that poor impression.
African firms still get a small slice of project fees. They experience some Global firms as “fee hogging”. Some Global firms are investing much more in a more balanced relationship but the African firms are currently poor at working out which firms are going to behave in which manner.
-African firms are highly dependent on referrals from international law firms but:
They don’t refer work back – instead passing it to other African players when they can’t service it
Most are reluctant to be tied too closely to any one firm, preferring to cast the net wide.
-Global firms experience most African firms as “reactive” in their relationship management
As a result, many Global firms experience them as being “disloyal” and complacent.
With the exception of South Africa, African firms’ willingness to refer work to other African firms is largely unaffected by that firm’s ties to an international firm or network
-Global firms mostly don’t encounter African firms as competitors – but African firms instance projects they have won from Global firm clients in areas such as project finance and telecoms.
-African firms recognise that Global firms wield much greater brand clout. They are looking to promote their own brands, both with international law firms and with the international institutions.
African firms see Global firms as their greatest competitive threat – African firms from outside their jurisdictions are not seen as a great threat yet.
-African firms are increasingly interested in developing or joining networks of firms in Africa. But Global firms report that international clients are unconvinced that these networks have substance. South African firms are pushing to be masters of some of these pan-African networks.