Transformation and growth: The South African legal landscape

As South Africa enjoys unprecedented levels of economic growth, the road ahead for the country’s law firms looks promising. Christine Boggis reports.

Bowman Gilfillan Attorneys

Bowman Gilfillan is one of South Africa’s top law firms and has a string of awards to its name. In 2005/06 it was runner-up in the South African Corporate Law Firm of the Year category in the Chambers’ awards, an accolade it won in 2003/04. The firm was also named Top Company of the Year in the support-services category of the 2005 South African Business Awards, and last year a graduate survey said it was an “ideal company to work for”.

Ex-Allen & Overy lawyer Jonathan Lang heads up the firm’s Africa Group. Set up in late 2004 in a bid to provide African solutions to African problems, the group brings together lawyers across the firm to advise clients based in Africa.

Major recent work includes advising Salton Inc on its sale of its 53 per cent shareholding in the JSE-listed Amalgamated Appliances for R600m (£57m), acting for Murray & Roberts on a black-economic-empowerment (BEE) deal worth R494m, and advising Microsoft when it secured the conviction and maximum sentence of three years’ imprisonment in South Africa against Craig Marnoch, a counterfeit software reseller.

Brink Cohen le Roux Inc

Brink Cohen le Roux is a medium-sized firm seen as a good alternative to South Africa’s magic circle. It is South Africa’s member firm of Interlaw, an international association of over 60 independent firms in 120 business centres across the world.

This year, Brink Cohen was awarded the Professional Management Review Diamond Arrow Award. It achieved the highest overall rating for a medium-sized firm in PMR magazine’s annual survey of 306 respondents drawn from South Africa’s top 800 corporate clients.

Major recent deals include advising Rio Tinto, the controlling shareholder of JSE-listed Palabora Mining Company, on a R1.2-1.5bn restructuring of the mining business’s balance sheet. Brink Cohen also advised JSE-listed AFGRI on its disposal of 26.77 per cent undivided interests in its operations to the Agri Sizwe Empowerment Trust for approximately R501m – the first BEE transaction in the agri-business industry in South Africa, featuring a novel structure based on co-ownership.

Deneys Reitz

One of South Africa’s largest commercial law firms, Deneys Reitz recently set up Africa Legal, an Africa-specialised division that provides an international pan-African service.

The group’s English solicitors and other practitioners with African deal experience focus on economic development and legal needs north of the Limpopo.

Director Joe Whitfield explains: “Part of the rationale of Africa Legal is to develop the type of legal skills and international standards locally that we think Africa should be applying in its business dealings. Africa should be looking to develop and apply these skills for itself rather than relying on foreign service providers who perhaps have a vested interest in keeping the knowledge to themselves.”

In 2004, Deneys Reitz broke the mould by sponsoring a television series on South Africa’s ‘Summit TV’, in which legal experts advised on a broad range of issues, including insider trading, money laundering and internet law.

Major recent work includes advising Barclays on its offer to acquire up to 60 per cent of Absa for R33bn, and opposing the merger between oil companies Sasol and Engen – the most lengthy and high-profile case ever heard before the country’s competition tribunal. Deneys Reitz also advised Rand Merchant Bank, Investec Bank, The Standard Bank of SA, Old Mutual Specialised Finance, Old Mutual Life Assurance Company and Sanlam Capital Markets (as lenders) in the financing of the buy-out of Afrox Healthcare.

Edward Nathan

Edward Nathan celebrated its centenary last year, still ironing out the residue of its demerger from investment bank Nedcor. In 2000, Edward Nathan was the first South African law firm to be bought out by an investment bank, and in January 2005, exactly five years later, the firm’s 47 directors bought it back. Chairman Michael Katz, who maintained a close working relationship with the bank after the split, is still probably the best known big personality on the Johannesburg legal scene – but at 63 is likely to be nearing retirement, so all eyes are on the firm to see how changes at the top will affect it.

Edward Nathan advised the Elephant Consortium, a group of prominent black personalities, black-owned businesses and trusts benefiting black South Africans, when it teamed up with Public Investment Corporation, the managers of the South African Government Pension Fund, to buy a 15 per cent stake in Telkom from foreign investor Thintana, a consortium of SBC and Telekom Malaysia, for R6.6bn. It also advised Primedia when its subsidiary Comutanet acquired Altmedia for R746m.

Routledge Modise Moss Morris

Routledge Modise is going from strength to strength after taking over the bulk of disbanding firm Moss Morris and the Durban-based maritime division of Adams & Adams, which gave the firm considerable maritime capacity. Chairman Terry Mahon said the takeover would make the firm the dominant player in several industry sectors, and hoped it would create more opportunities for young lawyers, particularly those from previously disadvantaged communities.

Recent work includes advising on Netpartner Investments’ acquisition of the entire issued share capital of Medscheme, worth R250-400m; advising on Dimension Data South Africa’s R120m acquisition of 51 per cent of the issued share capital of Plessey; and advising on the introduction of BEE shareholders into Barplats Investments through a R173m shares issue to Gubevue Consertium Investment Holdings.

Sonnenberg Hoffman Galombik

Sonnenberg Hoffman Galombik (SHG) has made successful moves to transform itself since the end of apartheid, and has some leading black lawyers in its ranks. It is unusual among South African law firms because it started in Cape Town and then moved into Johannesburg, where its office, headed by Mzi Mgudlwa, now competes with the magic circle. Cape Town-based Taswell Papier was named Lawyer of the Year in the Legal Business Awards 2006 – the first time an international lawyer has won the accolade.

SHG recently set up a pro bono office in Mitchells Plain to provide free legal services to the poor who might not be able to travel to its Cape Town foreshore offices to get pro bono advice.

Major recent work includes advising Hosken Consolidated Investments on its acquisition of 51 per cent of Johnnic Holdings for R870m, one of very few successful hostile takeovers in South African M&A history, and advising Distell in an empowerment deal that saw it dispose of 15 per cent of the shares in its wholly-owned subsidiary South African Distilleries and Wines to a BEE consortium for R860m.

SHG also advised Lewis Group, GUS Holdings BV and GUS plc on the disposal of 54 per cent of GUS’s shareholding in Lewis Stores in a R1.7bn deal. Fifty per cent of the shares were sold to institutional and other investors in the South African market, while four per cent were transferred to employee share-incentive schemes for the senior management and staff of Lewis.

Webber Wentzel Bowens

Widely seen as South Africa’s leading law firm, Webber Wentzel Bowens (WWB) is set to see a change at the helm when David Lancaster becomes managing partner in March 2006. Said to have been “a popular choice”, Lancaster was last year named a South African leader in aviation law in an independent poll by Law Business Research.

WWB’s public-interest law department, set up in 2003 to co-ordinate its pro bono work, is staffed full-time by partner Moray Hathorn, associates and candidate attorneys.

It advises poor communities on issues such as their rights to housing education, healthcare and services, and children’s rights, and it has relationships with various non-governmental organisations and other organisations that help it decide where to offer pro bono assistance.

WWB still has a finger in the pie of most of the country’s top deals. Major recent work includes advising Rustenburg Platinum Trust when it successfully defended an application brought against the Lebowa Mineral Trust and the Minister of Minerals and Energy, which claimed that rights granted to businesses including Rustenburg breached administrative law principles; advising Standard Bank of South Africa on the biggest residential mortgage-backed securitisation transaction in the South African market to date, worth R4.5bn; and acting for Anglo in the Anglo/Kumba transaction, worth R9.2bn.

Werksmans

Werksmans is one of South Africa’s major full-service law firms, with 48 directors. The firm is in a particularly strong position for African work as it manages Lex Africa, a network of leading law firms from Africa’s major economies.

Werksmans is also boosting its media work, and department head Amanda Armstrong is widely regarded as the country’s top media lawyer. Since 2000, the firm has acted in over 60 BEE deals across a range of industries.

Major recent work includes advising Standard Bank as the senior lenders in a suite of financing agreements to International Ferro Metals for a mining project and a new Ferrochrome plant, worth R792m, and advising brewer SABMiller on its acquisition of a 50 per cent stake in Shaw Wallace Group’s Indian brewing operations, which gave the brewer 99 per cent of the brewing operations of India’s second-largest brewer.