denotes premium content | Jul 20 2008 Managing Partner archive
Volume 8 Issue 9
Editor’s foreword
This packed issue of Managing Partner is a truly global edition of the magazine. Not only does this month’s cover story explore the career opportunities for lawyers and managers working in the offshore market, but we are pleased to publish our second country report, which focuses on South Africa. Following on from the Canada report of last year, this supplement assesses the latest investment and development issues in both the country and region.
All of the South African ‘magic circle’ firms have contributed articles to the report, in which they review the current legal issues in a rapidly changing market. With a forecast GDP growth of nine per cent, South Africa is increasingly viewed as the gateway to the African continent.
Such a view is reinforced by South Africa’s position as host of the World Cup in 2010, which demonstrates growing confidence from both inside the country and from abroad. Managing Partner’s international view also reflects a business trend to look externally, breaking down traditional business-operation boundaries and concepts of client service.
As part of this, outsourcing has become a subject of some debate. Companies choosing to outsource functions to other, more cost-effective countries, is a well-known strategy that has brought many benefits to business productivity and profitability. But it is a development that has also drawn some criticism. With law firms, in particular, outsourcing transcription work to, say, India, may cut the bills, but reduced accuracy brought about by language difficulties in such a technical space is an obvious downside.
Sensible advice for law firms would be to only outsource to countries that share a common language, but some firms are going further, to reassess domestic outsourcing opportunities.
Smaller firms, in particular, could reap the rewards of outsourcing certain functions, such as IT or human resources. Not only would this free up internal resources but could prove more cost-effective than trying to recruit full-time IT or HR functions in-house.
But there are challenges to making the decision to outsource, even in a domestic rather than international scenario. At a time when many firms are centralising management activities, the thought of outsourcing a function could smack of losing rather than gaining business control.
And where a firm is considering outsourcing for the first time, there are many careful considerations to be made regarding quality and reliability – a watertight service-level agreement will be the first requirement, followed by ongoing monitoring and service-level reviews.
Maintaining an in-house resource, however, is not necessarily the more effective solution, demanding similar levels of management time, as the firm expands and demands on that function change. Outsourcing also has some key advantages: if the service levels are good, management need not get overly involved in who is doing what in the outsourced function; there will be no worries about career development or staff satisfaction in the support department; and cost, of course, should be more manageable. And, in a market where business differentiation is the watchword of the day, those firms that can focus their resources on core client service may have a distinct head start over those that are still caught up in reorganising or building their internal support divisions.
Features
Foreword - South Africa Country Report
South Africa is on the move. As the largest economy in Africa and with forecast GDP growth of nine per cent, it is the gateway to the continent. Its unique and strategic position has, of course, been boosted by winning the bid to host the World Cup in 2010. The end result is that confidence is growing both inside the country and among foreign investors.
South Africa country report: The Sandton Sun & Towers (hotel review)
The Sandton Sun & Towers hotel is located in two separate buildings linked by a skywalk. Both are part of the Intercontinental group of hotels and are excellent value for money. The Sandton Sun is a good business hotel that offers everything you would expect from a five-star property.
South Africa country report: Licensing and regulation in the communications sector
South Africa currently has two key statutes governing broadcasting, and a separate statute for telecommunications. There is, however, a single regulator, the Independent Communications Authority of South Africa (ICASA), which governs both sectors.
In the first quarter of 2006 almost all of this legislation will be repealed by a convergence statute, the Electronic Communications Act (EC Act).
South Africa country report: Oil and gas exploration
In November 2005, BHP Billiton (and its US partner Occidental Petroleum) postponed drilling a deep water well in Block 3B and 4B off South Africa’s west coast, despite having secured a drill rig. Media comment at the time suggested that it would take at least two years to secure a new rig, owing to an international shortage. This is a major setback for the industry, as the BHP Billiton/Occidental drilling programme represents the first deepwater play off South Africa’s extensive coastline. The 130,000m² Orange Basin off the west coast is largely unexplored. Only 44 wells have been drilled, with six wells producing gas and condensate and four with positive gas results. In addition, a geological survey by Norwegian group PGS Geophysical noted that basin modelling indicated a high potential for oil. (Financial Mail, ‘South Coast tapped out: Hope turns to West Coast’, 9 September 2005).
South Africa country report: South Africa attracts foreign direct investment
Following South Africa’s peaceful transformation into a democratic society, the South African government put in place sound macro-economic policies. These policies are now starting to pay dividends, as evidenced by a lowered rate of inflation and a sustained and accelerated economic growth rate. The days when South Africa had to rely on its natural resources to fuel economic growth are long gone. Today, the South African economy is largely driven by manufacturing, buoyant consumer spending and tourism.
South Africa country report: South Africa’s tonnage tax gains momentum
In February 2005 the South African Minister of Finance announced in his annual budget speech that South Africa would be introducing a new tonnage tax in the 2006 tax year.
The reason for the introduction of a tonnage tax is that more than 90 per cent of South Africa’s exports and imports are conducted via international shipping routes. As there is currently only one vessel registered on the South African Ships Register, foreign registered vessels render these services almost exclusively. One of the reasons for this phenomenon is that ship owners are likely to register vessels in the most favourable tax jurisdiction. The South African tax regime as it pertains to ship owners is regarded as unfavourable compared to that in force in other countries.
South Africa country report: Harmonisation of company law
While the common perception is that Africa can greatly benefit from outside knowledge, expertise and technical assistance, the knowledge flow should not be one-way. In the context of moves towards deeper harmonisation of company law within the European Union and the associated challenges of amalgamating civil law and common law national systems, it is worth analysing the company law harmonisation efforts and experience of sixteen West and Central African countries.
South Africa country report: The changing face of dispute resolution
Arbitration has been used for many years in South Africa as a means of dispute resolution and has been the principal form of dispute resolution in the construction and engineering industries. More recently, it has become popular as a procedure for resolving a wide range of insurance and other commercial disputes.
South Africa country report: Alternative energy sources
Higher prices and possible supply shortages are critical issues driving the need for South Africa to investigate alternative energy sources and is leading South Africa into different areas of energy exploration.
South Africa country report: Beware – Your restraint of trade clause may be anti-competitive
Businesses are bought and sold every day in South Africa, as elsewhere in the world. A common clause included in sale of business agreements is an undertaking by the seller of the business that it will not, for a specified period of time, compete with the purchaser in the production, marketing and sale of particular products, either in a specified area or at all.
South Africa country report: Taming thin capitalisation
South Africa’s economy expanded by approximately five per cent in the 2005/6 budget year and is expected to grow even further in the period ahead. Revenue collection for the past budget year was an unprecedented R41bn more than expected, resulting in a budget deficit of only 0.5 per cent of gross domestic product. A commonly held opinion is that the South African economy and business confidence, through prudent fiscal and monetary policy, has never been stronger.
South Africa country report: Corporate law reform - A delicate balance
In May 2004, the South African Department of Trade and Industry released a policy paper entitled ‘South African Company Law for the 21st Century – Guidelines for Corporate Law Reform’.
The policy paper sets out the basis for a redraft of the South African Companies Act 1973. The overall aim is to streamline the Companies Act, to bring it into line with 21st century legal thinking and practice, thereby ensuring a regulatory framework that will promote growth, innovation, stability, good governance, confidence and international competitiveness.
South Africa country report: Foreign-owned companies and BEE
There is no legal requirement that multinationals or foreign-owned companies doing business in South Africa must transfer ownership of equity or assets to Black Economic Empowerment (BEE) groups. That said, our BEE legislation and regulations have a cascading effect that makes it a commercial imperative for most companies to transfer equity and/or assets to BEE groups. In other words, because state-owned entities and government departments are legally obliged to apply BEE legislation in evaluating tenders or in granting licences, permits or concessions, those firms that rely on government business become obliged to comply with BEE requirements. These same firms then demand that their suppliers become BEE compliant so that they can meet their own BEE targets, and so on.
South Africa country report: An economic powerhouse
South Africa has undergone extraordinarily dramatic changes following its transition to democracy. Despite some of the inevitable growing pains this entails, the country has significantly exceeded the expectations of most observers. Economic growth has been, and continues to be, strong. It is, more than ever, the economic powerhouse of Africa and opportunities abound in every sphere of economic activity. By Giles White, partner, and Robert Cleaver, managing associate, Linklaters.
South Africa country report: Africa’s platform for growth
A glance at the South African economic landscape in 2006 will leave even the harshest of commentators struggling not to recognise the scale of opportunity that currently exists here. By Martin Kingston, chairman, Deutsche Bank South Africa.
South Africa country report: Gateway to Africa
These words by Yvonne Johnston, delivered in a speech during the International Marketing Council of South Africa’s mission to Germany and the UK in June 2005, may be argued by the more cynical investor to be little more than marketing hyperbole. The recent investment by Barclays of $5.5bn of its shareholders’ money into a majority stake in South African bank Absa, however, displays a contradictory opinion and represents a strong vote of confidence in the African country. By Gary McLean, partner, Allen & Overy.
DLA Piper Group signs third African ally
DLA PIPER Rudnick Gray Cary (DLA Piper) has signed an agreement with Zambian firm Chibesakunda & Co, making it a member of DLA Piper Group. This is DLA Piper’s third alliance agreement with an African-based law firm following its tie up with DLA Matouk Bassiouny in Egypt and South African law firm, Cliffe Dekker.
South Africa country report: The road ahead
On 1 March I travel to South Africa for the first time since I was appointed Minister for Africa in May 2005. Like many of my ministerial colleagues, my relationship with South Africa dates back to those difficult days during the struggle. The new South Africa in many ways demonstrates the very best of Africa: a democratically elected government that works for the good of its people; an important player on the international stage; a major destination for international investment that offers the best prospect for reducing the gap between rich and poor. By Lord David Triesman of Tottenham, UK Minister for Africa
Case study: What’s the matter?
How a matter-centric approach to DMS implementation has improved business processes and client service at Brodies LLP. By Andrew Powell, IT director, Brodies LLP
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.
Going offshore
As the offshore sector continues to grow, more British lawyers head off abroad to live the dream. But what do they find when they get there – a bed of roses or stagnant backwater? Kieran Flatt reports.
Outsourcing the solution
While firms have seriously invested in expanding their support departments in recent years, there is growing debate as to the value of outsourcing areas such as human resources.
Case study: Time to outsource?
Deciding to outsource a function as essential as HR could be risky, but a phased approach could be the key to reaping the benefits. By Kehrela Hodkinson, principle of Hodkinson Law Group.
Facing the threat: IT security in a volatile landscape
In a business world that is increasingly reliant on the resilience of its IT infrastructure, firms need to identify, evaluate and respond to a variety of threats that could not only bring down the IT system, but damage productivity, profitability, client service and reputation. By Greg Taylor, Ward Hadaway.
Operational practicalities of LLP conversion
Deciding to convert to a limited-liability partnership makes a lot of sense for firms that wish to limit the personal liability of existing partners, and can also help in attracting top recruits to the firm. It can be easy, however, to underestimate the work and partner involvement required to get it right. By Derek Godfrey
Regulars
Thought leader
It is not a good idea to announce a major change programme to a partnership with no warning, background or context. Most managers of law firms say that they would never do such a thing and yet, in various ways, it happens time and again. By Alan Hodgart.
Opinion: Chief running firm
By Colin White, managing director, Ortus Professional Search
