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How should my company consume legal services in Africa?

“People often ask me whether companies operating in Africa should have a local in-house legal department and my answer is always unquestionably – yes!”

In the African market, whether or not a company has a local in-house legal department can be a catalyst for revenue growth or for failure. This is why virtually all the world’s largest companies operating in Africa have an in-house legal department. They recognise the legal department’s role as trusted advisors when making business decisions and how their work can impact the bottom line. Businesses that can afford a local in-house legal department, should have one.

In Africa, the companies that have understood the added value of having a local in-house legal department that understands their business have undoubtedly been the most successful at cementing a sustainable and long-term presence. There are many companies, particularly in the petroleum sector that are clear examples that it is an advisable cost to budget for. The companies reluctant to adopt this structure, relying solely on a combined strategy of working with legal teams in Houston, Dubai or Paris and having a “good working relationship with government officials” are today spending most of their days in court. And those who did not see working closely with local lawyers as central to successfully operating in Africa, are confronted with irreversible consequences and foreseeing no short or long-term solution. They are sometimes left with no option but to seek a way out, often regretting their approach and searching for creative ways to re-enter or reinvent themselves in the market.

Outsourcing legal departments, in whole or in part, is another alternative that can help save millions of dollars.

Failure to comply with customs and tax regulations, making improper payments, having non-compliant employment and immigration processes and failure to apply for – or renew – business licenses are but a fragment of the huge list of examples of avoidable situations that have resulted in millions of dollars in revenue leakage for businesses in Africa. It is evident, therefore, that the fines and penalties businesses can be subjected to and the dent this can have on their reputation and ability to operate in some markets dwarfs the cost of a local in-house counsel department.

Now, not all companies can afford the additional headcount; this is particularly so with start-ups and small to medium size companies. But that does not mean that they cannot benefit from other alternatives provided by some law firms: attorneys on-demand or outsourcing. Attorneys on-demand offers a dedicated on-demand general counsel or seasoned attorney for a fixed monthly fee, allowing businesses to enjoy the benefits of an in-house legal department without additional headcount.

Outsourcing legal departments, in whole or in part, is another alternative that can help save millions of dollars. Some companies are often sceptical of outsourcing due to concerns surrounding confidentiality, efficiency and responsiveness. Nonetheless, if a competent and professional law firm is hired those challenges should disappear.

To sum up

To sum up, there are unquestionably palpable financial, reputational and operational benefits to running your business with a local in-house legal department, using the skills and market insight of local attorneys or outsourcing your local legal department. But as we see it, seeking local counsel when running a business in Africa has immeasurable benefits; will your business consume legal services correctly in 2018?

ABOUT CLARENCE
Clarence offers its clients the freedom to operate in Africa. Thanks to our diverse resources, we understand Africa better than most firms. We assist clients to identify, assess and effectively minimise operational legal and regulatory risks. We develop creative and efficient solutions to operational challenges, so our clients can focus on growth and revenue. Our approach is to bridge the gap between external and in-house counsels. Our areas of practice include Energy and Natural Resources, Real Estate, Construction, Joint Ventures, Corporate and Commercial, Risk Management & Compliance, Litigation and Dispute Resolution, Government Relations, Customs and Taxation, Employment and Immigration, Aviation and Telecommunications. For enquiries, please contact us at info@clarenceabogados.com

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