Summary
- Kenya has for decades been a lucrative market on the continent for corporate deal-making
- Many players are cranking up global collaborations with sights on mega pipeline infrastructure projects
- Kenya enacted the Public-Private Partnerships Act in 2013, bringing in private sector in the development of infrastructure.
- 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
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.
More complex
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.
Local content
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
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.”
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