Herbert Smith Freehills
Africa Group director Patrick Leyden said that the African market is rife with opportunities for law firms. It's home to 30% of the world’s mineral resources and it requires a huge amount of infrastructure investment, he told Australasian Lawyer.
HSF became the latest international firm to set-up-shop in Johannesburg late last year. Previously the firm’s Africa practice had been serviced between London and Paris, depending on the jurisdiction and language.
“You’ve got a vast area to deal with, you’ve got a number of different languages, English, French, Arabic, Portuguese and you’ve got a number of different legal systems that change from country to country,” Leyden said of the African markets.
“You’ve got some that are based predominantly on civil law, and others are based heavily on common law systems and this is alongside sharia law and also customary law.
“From country to country, it's very different to operating in regions like the European Union where you’ve got common laws applicable to that European Union.”
After the pre-GFC commodities boom, markets in Africa took a big hit. African markets are now seeing a huge amount of demand from China as commodity prices sit at their lowest in decades, Leyden said now is the perfect time for law firms to be in Africa. But doing business in the African markets isn’t without hurdles.
“It's very important to understand the nuances in the local law and I think there you need to consult with good local counsel to understand to nuances,” Leyden said.
“In Africa, there is generally a wider range of regulatory issues to consider. They are things like exchange control, where African jurisdictions generally limit the ability to move funds in and out of the country.
“This becomes critical to consider because this will affect money coming in and coming out.
“It’s all very well to invest your money into a particular jurisdiction but you need to understand if you can get the money out through interest payments on loans or on dividends when you’re a shareholder in an African registered company.”
Another major consideration, Leyden said, is that the government generally plays a bigger role in particular projects so it's important not to be seen to be acting against government policy.
“It’s all about managing and mitigating the risk,” Leyden said.
“[A lot] of our clients want[ed] an actual footprint on the African continent and Johannesburg is a good place to be, a lot of the multinationals that operate in Africa are based in Johannesburg.
“It’s a good launching point into Africa.”