Relationships between African and global law firms can be fraught with difficulties – African firms should concentrate on developing close relationships with a few global players
Many African law firms have a strong desire to remain independent, but building relationships with international firms is extremely important given that a large proportion of African firms’ revenue is generated via referrals from global players. Redstone Consultants research has shown referrals from international law firms account for between 25 per cent and 75 per cent of African firms’ billing.
With global firms’ interest in Africa reaching new heights, African firms now accept – albeit in some cases reluctantly – that building a long-term relationship with an international firm could be potentially lucrative. However, building such relationships is fraught with difficulties, says Steve Blundell, managing partner at Redstone Consultants. “Some global firms adhere to the notion that international clients only want to instruct global firms,” he explains. “They doubt that African firms will have much success in attracting work directly from such clients.” Blundell adds that such global firms see the client relationship as ‘theirs’ and are averse to exposing the client directly to African lawyers. He continues: “These global firms see it as their role to select the African firm as a subcontractor only. Unsurprisingly, the African counterparts suspect these firms of hogging not just the relationship, but the fees as well. We refer to these firms as the ‘hoggers’.”
However, there is another breed of law firm – which Blundell dubs “huggers” – who believe building relationships with African firms is a long-term game. “They know growing numbers of international clients are instructing African firms direct,” Blundell says. “At the moment, the proportion of work this accounts for is small – but it seems certain to grow – huggers nevertheless know there will remain distinct roles for global firms and African ones, where each adds value to the international client.” Blundell argues that, rather than waiting until clients figure this out, huggers are taking the initiative, bringing African firms into the client relationship and, in some cases, sitting down with the client to negotiate who does what and for what fee.
The evidence suggests African law firms prefer “huggers” to “hoggers”. Blundell says African firms describe the hoggers as “poor and/or slow communicators” who are reluctant to share information and lack transparency. They are also criticised for being unfair with regard to fees and poor at sharing profits.
Huggers have a much better reputation among African firms, who see them as good at distributing work, fair with fees, good at giving instructions, and as having a “partnering attitude”. Consequently, it might be concluded that African firms have become highly selective regarding the global firms with whom they build a long-term relationship, Blundell says. However, he adds that research suggests the opposite. “With the aim of remaining ‘independent’, most African firms mistakenly believe they need to treat all global firms equally,” Blundell says. “This has two downsides – first, it spreads the African firm too thinly when it comes to relationship management and means the relationships are too shallow and not sufficiently well co-ordinated. Secondly, it suggests disloyalty to global firms. Some global firms are dismayed that they have, in their view, invested in a relationship that they expected to be a ‘best friend’, only to discover the African firm is happy to be ‘best friends’ with every other firm.”
Blundell says African firms should think hard about which global firms they want to have a close relationship with and focus on a small number of these. “There is a fear this will somehow turn off the tap of referrals from the others, but lessons from other markets suggest this is unfounded,” he adds. “The hoggers won’t be inclined to send more work to firms just because those firms pay them regular visits or see them at conferences – huggers on the other hand are looking for more co-operative working arrangements and ways of deepening trust and understanding.”
Blundell continues: “African firms should start to do likewise – that means selecting a small number of global firms to be the focus of management attention and getting to understand those firms’ strategic aims – for example, what are their goals for markets and key clients?”