International law firms and the South African legal job market

December 1st, 2014
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By Dale Verster

Influx of international law firms

Over the past few years there has been a surge of international law firms opening offices in South Africa. Global firms such as Dentons, Hogan Lovells, Clyde & Co, Norton Rose Fulbright and Linklaters are among the many law firms that have recently launched a presence in Johannesburg, Cape Town and Durban – either in their own right or as a tie-up with a local player, and more often than not, driven by a client’s need to have a credible presence in the market.

While the international investment in South Africa is an enormously positive development to the local and the broader African markets and economies, new players in the country stand to have a significant impact on the legal job market landscape for local lawyers.

Law industry in South Africa

With the influx of international firms will also come best practices, offering an invaluable opportunity for local lawyers to learn from the best and draw from their skill sets, knowledge capital and resources.

The appetite of these firms to open shop reflects the demands and needs of their global clients. This will translate into growing investment opportunities, increasing available finance for African businesses, providing access to new markets and products, improved infrastructure, lowering transaction costs, greater employment and entrepreneurial opportunities as well as a host of other mutually beneficial outcomes.

It is also possible that over time it could level the landscape as big firms are targeted for their specialist teams. We are increasingly seeing new entrants poach entire teams from local firms to start up boutique practices into specialist areas. The former continues their practice area despite the loss and the space becomes more competitive.

If the market shows signs of becoming more fragmented, it will in turn lead to an increase in the number of boutique firms launching into specialist areas.

Job market

While the influx of established global players will most certainly offer local lawyers a wider choice and potentially more attractive career options, it could very well also make the job market more volatile. Enticed by the allure of a new, fresh challenge, senior team leaders may choose to move and entice an entire team to move with them.

At a more junior level, more work will mean an increased demand for fresh juniors and support staff. In turn these people will benefit from richer career development opportunities in the form of possible secondments to other international offices and exposure to their best practice regime.

While salaries and bonuses at levels below partner or director are unlikely to be heavily influenced, industry leaders will likely find themselves in high demand to head up new offices. Consequently packages could rise as current firms clamber to hang onto their star performers. Commercial areas of law like banking and finance are the most affected, already showing big moves and signs of more to come.

International law firms typically go after lawyers with a reliable book of business, proven leadership skills and experience running a practice semi-autonomously. South Africa is a small market and having a respected name in the market goes a long way, especially considering such a person has to be able to attract a competent team of professionals to service client needs.

Expat and international lawyers

An increased international presence could possibly open up more avenues for expat South African lawyers to return home into a new South African office. In order to attract the top talent, however, firms will have to be prepared to negotiate as expat lawyers from Commonwealth countries are already in high demand, especially in the fields of banking and finance, project finance and energy.

Conversely international firms may look to relocate foreign lawyers into a director’s position in the short- to medium-term, as it may be beneficial for operational requirements. However, from a business development perspective, foreign lawyers in high positions may struggle, as it is unlikely they will be able to bring a client base with them.

Conclusion

South Africa is the gateway to Africa on many fronts but it is still a country with unique challenges. It would be foolhardy to try and establish a presence without acquiring professionals with local knowledge – both in terms of legal professionals and operational requirements.

Dale Verster BSc (Polymer Chemistry) LLB (Stellenbosch) is a director at GRMSearch in Johannesburg.

This article was first published in De Rebus in 2014 (Dec) DR 17.