South African Legal Issues – keeping lawyers busy
The post-recession global economy is in a state of complete turmoil at the moment and, as a consequence, the South African legal market has been somewhat negatively affected. This is according to Mike McLaren, a Senior Associate in the Corporate and Commercial practice at Cliffe Dekker Hofmeyr business law firm.
“We have definitely seen fewer listings on the JSE Limited (the South African stock exchange) and slightly fewer mergers and acquisitions in the market. That being said, South African firms have been somewhat shielded from the market instability when compared to our American and European counterparts, and most firms have seen sufficient deal-flow to sustain, and indeed, grow their businesses,” he says.
However, he says that domestic investment is definitely on the increase. “The South African Government announced earlier this year that it, and various state-owned enterprises, will spend approximately eightbillion rand over the next three years on constructing and commissioning new power stations, road networks, dams and water supply pipelines, rail and ports facilities, schools, hospitals and government buildings.
“The energy industry in South Africa, and in particular the renewable energy industry is also keeping lawyers very busy,” he says. “This sector is gaining serious traction after a period of relative inactivity. Electricity capacity shortages have been prevalent in the South African economy over the past few years, which has prompted a renewed commitment by the South African Government to create, or procure the creation of, new generation capacity. The draft integrated resource plan published in 2010 indicates that South Africa requires not less than 50,000 megawatts of new generation capacity in order to meet the projected demand over the next 20 years. In the immediate future, bids have been submitted by independent power producers under phase 1 of the National Energy Regulator's REFIT (renewable energy feed-in tariff) IPP procurement programme, which is aimed at procuring the generation of 3,725 megawatts of electricity from renewable energy sources within the next 2 to 3 years. As such, energy lawyers and finance lawyers alike are currently mandated on numerous transactions in the energy sector.”
McLaren adds that globalisation in the legal industry, the ever-increasing appetite of companies from established economies to enter into emerging markets such as South Africa and other emerging African economies, and the need to align one's business practices with international best practice dictates that the major commercial law firms and, only to a slightly lesser extent, niche legal practices are currently the most successful business models for law firms in the South Africa. In addition, affiliations to international law firms or legal networks are becoming essential for South African law firms to be sustainable and indeed prosper. As such, one of the largest challenges facing South African law firms is which business model to adopt in order to maintain a sustainable legal practise.
