Faskens’ Managing Partner: South African expansion is about following the clients

The big news in legal business in Canada this week is Fasken Martineau’s recently announced merger with South African law firm Bell Dewar. Bell Dewar has 76 lawyers, all based in Johannesburg.

Lexpert recently ran a piece about the potential for global law firm mergers in Canada. In that feature we talked about Faskens’ growth as the Canadian-based law firm with the most lawyers outside of Canada:

Five Canadian firms – Blakes; Davies Ward Phillips & Vineberg LLP; Torys LLP; and Stikeman Elliott LLP – have offices in New York. Fasken Martineau DuMoulin LLP, Gowling Lafleur Henderson LLP and McCarthy Tétrault LLP have offices in London. Fasken and Heenan Blaikie LLP are in Paris; Fasken is also in Johannesburg; McMillan LLP is in Hong Kong; Davis LLP has an office in Tokyo; and Miller Thomson LLP recently signed an affiliation agreement with FIDAL, France’s largest business law firm with 1,200 lawyers. Fasken has clearly been the most aggressive among this group, setting up a greenfields operation in Johannesburg and merging with … local firms in London and Paris, where the firm provides a wide range of local law services.

Lexpert caught up with David Corbett, Firm Managing Partner of Fasken Martineau, to ask about the rationale for their recent merger, which takes their South African office beyond a “greenfield” operation. Below is an edited transcript of an interview with Corbett.

Q. Was this all about mining?

Mining is a very important component but it is not just about mining. It is also about infrastructure, it is about banking and finance, it is about international arbitration. Some of those things relate to the mining sector, but not exclusively.

Q.What about Oil & Gas?

It certainly is oil & gas, but in addition it is large infrastructure projects, so it could be building a railroad, building a port, building a school, a hydro electric, a big dam. It is the whole infrastructure of Africa that this is about.

Q. What was your presence in Africa before this merger?

We had an office that we set up in 2003 in Johannesburg, it has always been an office that has consisted of only a few people. We went to Johannesburg to service our mining clients. It developed into more than that but what we found was, frankly, we didn’t have enough, clients use the expression “boots on the ground”, and so, left with the quandary of staying the same size, growing incrementally through a few laterals, or doing more dramatic. And we have chosen to merge with Bell Dewar.

Q. How will this help your presence not just in South Africa, but throughout the continent?

Faskens’ experience has been throughout Africa, not just in South Africa, so we have worked in almost every country in Africa on projects. It gives us a much broader base to service the entire continent and we service Africa, not just from Johannesburg. One of the reasons that we have an office in Paris is that it enables us to service Franco-Africa [in both] the French language capability and the civil law system and we have been servicing Africa essentially from London, Paris, Johannesburg and Canada. The bigger base in Johannesburg will allow us to expand out.

Q.What does Bell Dewar stand to gain?

From Bell Dewar’s perspective, they were looking for a more international platform, and one of the reasons for that is that many of the transactions in Africa, outside South Africa, most of the large transactions now are governed by British law. So you have to have a UK legal capacity and they didn’t have that. So, if they wanted to go into one of the other countries, and do a large infrastructure project, they would find that they would be regulated by the laws of English law, and the contracts ended up being done by UK firms largely. With our UK capacity [over 70 lawyers in the UK] in London, we are able now to do that work that Bell Dewar could not do.

Q. How is this driven by client demand?

[Bell Dewar] has an incredible reputation in the mining industry and infrastructure. They are just known by the banks, they are known by the large construction players, so it enhances our ability to do work both in South Africa and for those companies that are South African companies, then the rest of Africa. Where Bell Dewar was having some challenge was that if they would take their South African clients and want to do a transaction outside of South Africa and the law was governed by English law, they couldn’t do the transaction. So what Bell Dewar and we get is the ability now to take a client base that they have and service that throughout the continent of Africa much more effectively than they were able to do, and it enables our clients, who have projects in Africa, we now have a lot of people on the ground. This is partly for us to do with Asia and the Middle East, and I say that because there is a whole bunch of money flowing in from both Asia and the Middle East and we would have Asian clients who would say “we want you to do this project” and we would say that we have five lawyers, and well, that was then a tough discussion. To be able to say that we now have 80+ lawyers, and that in fact [we are now] one of the largest firms in Africa, I think that helps us, it makes us a better firm, helps us be with the client’s requirements.

Q.With recent unrest in South Africa and conflict in many other parts of the continent, Africa is seen by many as high risk – how do you deal with that?

What we are finding is that the natural resources in the African continent, whether it be gold or diamonds, copper, every mineral known to mankind, it is all in Africa, the clients want to be there, and sure there are risks, there have always been risks in the developing markets, whether it be Africa, Asia, South America, there is always risk. We have been there a long time, this isn’t something that has come to us overnight. We were there in fact, before we set up an office for many years our partners were doing work in Africa, so the experiences is 10+ years in Africa. We have great confidence in the government and the ability to get over these issues. It is obviously a challenging time as it is a challenging time in many places in the world, but they have great stability, they have a history of democracy.

Q. Is your firm considering a merger with a large global firm?

What we are focused on, and what we have been focused on over the last decade, is very much developing a platform that is client oriented, following our clients, following the industries we think have potential for growth, not just short term, but medium and long term, and we know that this makes us a better firm. When you are a better firm, it positions you well, no matter what direction the legal market takes so we are a better firm, we are positioned well and we don’t rule anything out, but my focus and the firm’s focus is on making the merger work, make it work for our clients and their partners in the best way possible. Don’t rule anything out, but our focus is clearly on the platform that we develop and continue to develop ourselves.

Q. Are you planning on expanding into other geographical areas, in Africa or other continents?

I think in terms of Africa this gives us the platform we want, frankly. I don’t see further expansion in Africa in the medium or the short term. We now have the coverage, Franco-Africa through Paris, which is where the best law firms service Franco-Africa out of and with the base in Johannesburg and our London base I think are really well positioned in Africa after this merger. Areas that we have always been interested in include South America. South America is a harder environment to break into because of the regulatory regime. If you want to open in Brazil for example it is very difficult to do so because of the law society requirements in Brazil. So South America is an interesting geography for us, we do a lot of work in South America, we have to see how we can best service that market. The Asian market we are looking at the money coming out of Asia, and it is coming in Canada and it is coming into Africa so we think we have actually done okay in covering that market. There are a number of firms that have opened offices in China and Hong Kong, but we have to find the right opportunity, it is not something we would do on a greenfield basis.

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