The race for global supremacy in the legal market is on, and Kenya doesn’t want to be left behind,
Latest reports indicate that two of the country’s top legal companies plan a merger likely to have wide ramifications on the future of Kenya’s legal profession and practice. Hamilton Harrison&Mathews (HHM) and Oraro and Advocates Company are set to conjoin pending approval from relevant authorities, according to media reports.
“Once we get the green-light, the new firm will be bigger and better, allowing more lawyers to specialize,” HHM partner Richard Omwela told the Sunday Nation. The new stable will house 50 lawyers.
However, this latest development was unexpected. In an interview with publication three months ago, the 12,000-member Law Society of Kenya (LSK) didn’t see it coming.
“As a profession we do not have high rates of acquisition and mergers in terms of law firms. We are not even seeing big partnerships being formed and I think it is a question of the reality has not sunk in our profession currently on the benefits of large law firms. Also, we do not have adequate knowledge to manage a partnership,” said Eric Mutua, LSK chair.
Things may be slow here in Kenya. But the rate of acquisitions, mergers and partnerships is picking up very fast elsewhere. Law firms are going global, tapping new markets and expanding in the face of economic downturn.
According to the internationally reputable newspaper Wall Street Journal, “there were 88 mergers of law firms in the U.S. last year—the most since legal consulting firm Altman Weil Inc. began tracking such deals in 2007. Most of last year’s combinations involved relatively small acquisitions.”
The fusion of Squire Sanders and Patton Boggs into Squire Patton Boggs created a 1,700-lawyer entity with offices in 22 countries
“Mergers happen in all kinds of different circumstances and formats. Sometimes mergers are between equals: firms with similar revenues, profits figures and global footprints. Sometimes there’s a clear dominant partner. Sometimes a merger is nothing more than a bail-out, with one firm saving another from going bust. So if a firm is in merger talks, that can mean it’s hugely successful, on the brink of collapse or anything in between,” says chambersstudent.com newsletter.
According to news reports, Norton Rose opened in Australia, South Africa and Canada following mergers with local firms. Now Norton Rose Fulbright takeover of Canada’s Armstrong Mitchell in June last year has put it in global top 10 legal practice, with 3,800 lawyers.
“The broader Africa practice stands to benefit from sector strengths, but also access to foreign direct investment coming in from their client base. It also provides us with additional intellectual capital in areas like oil and gas and in the rail sector, which is not yet fully developed in Africa. The overlaps and synergies are exciting for us,” said Rob Otty MD of Norton Rose South Africa
According to www.lawgazette.co.uk, “merger activity among the top-100 UK firms reached record levels in 2013 – the second consecutive year that the record has been broken”.
But the critical question is, do mergers actually work?
“The 2008 merger that produced New York’s Dewey & LeBoeuf LLP created a firm with 1,300 lawyers world-wide. But both sides went to the altar saddled with debt, including more than $140 million in combined retirement obligations. As demand for legal services dropped during the economic downturn, the new firm failed to make headway, then sank further into debt amid sweetheart compensation deals meant to keep rainmakers from leaving,” says Wall Street Journal.
“Teaming up with a weaker firm can drag down both sides if underlying problems, such as runaway expenses or unproductive partners, aren’t addressed quickly. On the other hand, a merger between two firms with equivalent financial strengths can devolve into power struggles.”
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