Rise Of The Boutique
The grip of the largest or most well-known law firms in Africa, particularly in Nigeria and South Africa, around the most high-profile and lucrative of mandates is still strong, but weakening.
2020 will see further erosion in the propensity for prestige clients to flock to the most established law firms. This is partly due to the continued reticence for larger firms to embrace the flexibility and cost efficiencies clients are increasingly looking for. A more potent reason, however, is that this ‘flexibility gap’ is being filled by smaller, younger and more entrepreneurial law firms which are providing quality service at a reduced cost - combined with a dose of client-centricity - that hasn’t been experienced by African clients before.
Not only are legal services providers such as Legalese (South Africa), Duale, Ovia & Alex Adedipe (Nigeria) and Bytelex Advocates (Uganda) claiming tier-one clients from ranked firms they are also setting themselves up for long-term success by securing the business, and more importantly, loyalty, of a glut of tech-focused start-ups from across the continent. Not all of these will become the next Amazon or Facebook, but some will. And, these firms which are ‘rolling the dice’ and supporting this space with accessible and cost-effective solutions will win big in the long run.
New and fixed-fee products
To counterbalance my ‘Big Law’ bashing I must give a nod to both local and international firms which are expanding their ALS (Alternative Legal Services) offering in Africa, mostly South Africa. Such solutions are typically deployed to handle document-intensive, repetitive or review-based work by pairing legal expertise and technology to save both client time and money. Stand out performers here include Herbert Smith Freehills and Webber Wentzel. I would love to see this offering expand beyond South Africa but am currently unconvinced that the necessary demand and client pressure will manifest significantly across the next 12 months.
Another key development is that of outsourced GC/in-house legal function solutions. SME businesses, which make up the vast majority of African commerce (up to 90% according to the International Finance Corporation(1)) are woefully under-lawyered either through lack of access to in-house resources or inability to afford external legal counsel (law firms).
Even high growth businesses with pan-African potential are struggling to support their compliance, governance and operational requirements through the provision of proper legal advice. It’s solutions such as an outsourced legal function which can solve these problems and also engender those entrepreneurial law firms willing to develop novel solutions to businesses with significant growth and revenue potential well into the future. These solutions typically operate through an initial ‘health check’ of an organisation’s structure, processes, standard documents etc. and then moves to a retainer-based agreement whereby a set amount of legal requirements (IP registration, employment contracts, NDAs etc.) will be covered by the law firm within a fixed fee.
It is these types of cost-predictable, accessible and flexible solutions which are desperately needed to help drive growth and access to justice across the continent for both SMEs and larger enterprises. With the looming impact of the ACFTA the need to source affordable and efficient legal services across multiple jurisdictions is going to be greater than ever. It is those law firms who move to embrace a new approach to legal services, and those clients who pursue this, who will benefit most.
Legal Tech
Is Africa on the cusp of a 2020 Legal Tech explosion? Not quite… and not yet.
Africa Legal recently launched an annual Legal Technology Survey to try and find answers to the current questions around the adoption of legal tech in Africa and the aspirations for its future use.
Any predictions for a Legal Tech renaissance in 2020, particularly within corporate legal departments, were somewhat dampened by a finding that 50% of in-house counsel surveyed predicted that tech investment would either stagnate or decline across the next 12 months within their organisation. Expectations within law firms are, however, more upbeat with no private practice respondents believing that investment would decline and 55% of respondents predicting an increase.
The relative infancy of legal tech adoption is also illustrated through the areas of focus for tech purchasing, with the likes of Matter Management and Data Management far outstripping AI and E-Discovery. This isn’t any bad thing as the old adage of ‘walking before you run’ is never truer than in a legal-tech context! Best we choose our battles wisely and sensibly rather than fully buying into the hype swirling around this area and getting our fingers truly burnt - not to mention our wallets!
With just 21% of in-house respondents indicating a focus on technology to assist with the management of external counsel, one must question whether this indicates a mismatch between expressed displeasure at the status quo with regard to the in-house/private practice power imbalance or simply a lack of understanding as to what technology is actually available to address this imbalance and how it can work.
As a firm believer in the power of ‘home grown’ African legal tech to drive engagement and uptake rate, it is somewhat disappointing that only 21% of in-house respondents indicated a willingness to purchase such solutions presently. All is far from lost, however, with 55% of law firms confirming a willingness to purchase and 64% of in-house sitting in the ‘maybe’ camp alongside 40% of law firms. The ‘maybes’ are very much there to be convinced and such statistics should provide ample motivation for Africa’s legal tech businesses to ramp up their audience engagement and marketing efforts!
In conclusion, rather than 2020 being the year of blossoming for African legal tech we should manage our expectations and be happy with many fresh green shoots and more fertile than ever soil with a true ‘explosion’ likely less than three years away.
To make the most of Africa Legal in 2020 (and test my predictions!) be sure toSIGN UP HERE and remember to select to receive our weekly e-newsletter.
References