Kenya’s elite law firms have stepped up global partnerships as they seek to leverage on international experience in the race for lucrative corporate advisory deals in multi-billion-shilling infrastructure development projects.
Coulson Harney, Hamilton Harrison & Mathews (HH&M), Anjarwalla & Khanna, Kaplan and Stratton, Iseme, Kamau & Maema (IKM) Advocates and Walker Kontos rule the corporate legal advisory deals.
Kenya has, over the last decade, been a lucrative market on the continent for corporate deal-making, prompting the law firms to forge links with international firms to take advantage of economies of scales.
Coulson Harney has enjoyed close links with Bowman Gilfillan, which traces its roots in Johannesburg since August 2008, while IKM Advocates has had ties with DLA Piper – a top law firm by revenue in the USA – since January 2010.
Walker Kontos in October 2016 inked a partnership deal with Norton Rose Fullbright which has roots in the USA and the UK, with a presence in 33 countries across the world.
Oldest law firm
HH&M, Kenya’s oldest law firm founded in 1902, last month joined the fray after it signed a deal to formalise its 10-year “loose” relationship with world’s leading law firm Dentons, subject to regulatory approval.
Insiders in the lucrative legal corporate advisory industry say many players are cranking up global collaborations with sights on mega pipeline infrastructure projects, largely in roads and electricity generation.
Kenya enacted the Public-Private Partnerships Act in 2013, bringing in private sector in the development of infrastructure.
The PPP contracts in the road sector – which account for single largest share of government’s development spend – are set to combine design, build, finance, operate and maintain framework.
The risk under PPP projects is also transferred to the private investor who sources for own cash and recoups the same over the long-term through user fees such as tolls before handing the road project back to the State after agreed time.
The PPP concept, unlike the previous design-and-build models under Public Procurement and Asset Disposal Act 2015, makes their formulation more complex, building the case for indigenous law firms to tap global experience, head of Infrastructure Hub for Africa at KPMG James Woodward said.
“While there is no lack of capability in the Kenyan market for local law firms to draft large complex contracts, long-term roads PPP contracts are nuanced and have never before been completed in Kenya,” Mr Woodward said.
“One of the perceived shortfalls of the PPP approach is the potential for up-front time delays that can stem from local capacity constraints to deal with such complex procurement processes.
“To manage this from the perspective of the legal profession, it is both prudent and practical for local law firms to partner with international firms. International firms bring decades of PPP legal corporate advisory expertise to these projects that can be leveraged by local firms when working in close partnership.”
Partnership with global law firms, HH&M senior partner Richard Omwela said, will help bring down costs of the projects because all a law firm requires is localise a previous contract for a similar project done elsewhere.
The Kenyan procurement law under Section 157(9) further requires that international contractors, including law firms, should reserve at least 40 per cent share for local content, a boost to the elite indigenous firms with a track record.
Sharing of IT systems, staff and insurance indemnity – which provide cover for legal costs when defending a claim and compensation for clients – are the main areas of focus in collaborations between indigenous and global law firms.
“We have the sea and airports coming up, we have the railways continuing to expand, but the bigger one that’s happening now is the highways. We have a huge potential in management of highways,” Mr Omwela said.
“The ability to deliver on assignments depend on expertise you have in-house and what numbers can you put on project to deliver.”
The Kenya National Highways Authority (KeNHA) has settled on Nairobi’s Southern Bypass, Nairobi-Nakuru Highway, Nairobi-Mombasa Highway and Thika Superhighway for implementation of the proposed road tolling programme where road users will pay fees for maintenance.
“To ensure value for money from PPP projects, the procurement process is usually competitive. Working with financial and technical advisors, law firms will coordinate the development of the procurement documentation on behalf of government and participate in the evaluation process,” Mr Woodward said.
HH&M’s choice of Dentons was strategic, Mr Omwela said, citing the global firms strong roots in China – Kenya’s largest lender with a portfolio of $5.2 billion (Sh520 billion) last December, largely in infrastructure financing.
Chinese firms also control the lion’s share of infrastructure deals in other East African countries as well as Central and Southern Africa.
“Having that Chinese connection gives us leverage above the other law firms in Kenya because if a Chinese firm is doing a project in East Africa and they are clients of Dentons, we will automatically be involved in that project unless we are conflicted,” the HH&M senior consultant told Smart Company.
“We believe we will be able to bring that cost down because there is a very fierce competition among law firms in Kenya. So we will have a head start against everybody else.
"When we join Dentons, you find that whatever you want to do has been done elsewhere because we are not the first ones to do the road concessioning under the PPPs.”