With Africa's fast-growing economy attracting record investment, international law firms are at last taking the continent seriously. Richard Lloyd reports

Africa is hardly new territory for the international legal community. Many of the largest English and American firms have been active across the continent for decades, advising the likes of the oil majors and mining multinationals on myriad billion-dollar investments.

However, the last six months have marked a significant watershed in the development of Africa's legal markets. In September, Allen & Overy (A&O) became the first magic circle law firm to open an office in an African country when it launched its outpost in Casablanca, Morocco's commercial centre. Norton Rose and Clifford Chance (CC) quickly followed A&O into Morocco, attracted by the country's stable political system, economic growth and emerging position as a hub for work in North Africa.

Before this flurry of office launches in Morocco, international firms' African outposts were largely limited to South Africa. Last year Norton Rose's merger with South African practice Deneys Reitz went live, following similar tie-ups for Eversheds and DLA Piper. Of the major US firms, both Dewey & LeBoeuf and White & Case boast well-established Johannesburg offices.

In the grand scheme of international law firm strategy, the openings thus far in Morocco and South Africa still represent a trickle of interest. Many of the most active international firms in Africa, such as Linklaters and Herbert Smith, thus far have opted against an office on the ground and, in the short-term at least, a flood of new openings looks unlikely. However, some local lawyers insist this is due to change. "I would be surprised if any truly global firm believes they do not require a presence in Africa," asserts Rob Otty, managing director of Norton Rose South Africa.

Over the last decade, as the volume and value of instructions has increased and investment has poured in from China and other markets, so international firms have developed their African strategies. "What has changed is that there is now a strategic opportunity to develop our business in Africa, whereas 10 to 15 years ago we were ultimately responding to ad hoc client requests on Africa projects," says Edmund Boyo (pictured), a CC partner based in Frankfurt and co-head of the firm's Africa group.

The leading English and US practices are discovering a whole new appetite for the continent.

A decade of growth

The turnaround in the economic fortunes of many African economies has been remarkable. A decade ago, Africa's prospects looked so bleak that The Economist described it as the "hopeless continent", riven by famine, conflict and geo-political uncertainty. In the following 10 years, growth rates in many African countries leapt as they profited from their wealth of natural resources. Vast improvements in mobile telecoms and gradual investment in infrastructure also helped alter the continent's prospects.

By last December, Africa's fortunes had changed to such a degree that The Economist trumpeted "Africa rising" on its cover. And the growth looks set to continue. The International Monetary Fund forecasts that between 2011 and 2015, seven of the 10 fastest growing economies in the world will be in Africa.

Money has poured in not only from the West but also, perhaps most significantly, from China, which has seen the likes of Aluminum Corporation of China, China National Offshore Oil Corporation and CIBC invest in projects across Africa. Chinese money also built the newly-opened headquarters of the African Union (AU) in Addis Ababa, Ethiopia.

The AU is Africa's attempt at greater economic and political co-operation, but by far the closest ties are being forged at the regional level. Unions such as the Common Market for Eastern and Southern Africa and the Economic Community of West African States have brought disparate countries closer together.

However, Africa has not been immune to the effects of the economic downturn – African M&A was down markedly last year and South Africa's economy remains sluggish. But as more developed economies, particularly those in Europe, continue to suffer, investors have looked to geographically diversify into some of Africa's leading economies.

Perhaps not surprisingly, given this economic growth, most lawyers who regularly advise on African deals can't conceal their enthusiasm for all things African. "I have no doubt that Africa will be the continent of the 21st century," says Stephane Brabant (pictured), a partner in Herbert Smith's Paris office and head of the firm's Africa practice. As recent developments show, some firms have ditched any scepticism they may have had.

Our friends in the North

Although its economy is smaller than the likes of Nigeria and South Africa and it does not boast the same kind of wealth in natural resources, Morocco was seen by A&O and CC as a natural base for their first African office, and by Norton Rose for its first foray into the North.

"We've been doing a significant amount of work in Francophone North Africa for decades, so it was an easy decision in many ways," says CC's Boyo. "Morocco is thriving economically, is politically stable and there's a lot of long-term potential in sectors such as renewables, transport and telecoms."

It was A&O, however, that moved first, when it announced last July that it was hiring Hicham Naciri and Yassir Ghorbal from Gide Loyrette Nouel's local office. Since the office opened in September, investment has poured in from the A&O network, so that the office now houses 30 fee-earners including three partners.

"We had worked with Hicham and his team for a number of years," comments Francois Duquette, a banking and corporate partner who has relocated from A&O's Abu Dhabi office. "They're market leaders in Morocco, so marrying our international network with their local expertise was an easy decision to make."

In contrast to A&O's move, both CC and Norton Rose have transferred teams from their respective Paris offices to launch their Moroccan practices. CC's office, which opened in February, is led by finance partner Mustapha Mourahib and so far is home to five fee-earners, and Boyo says it will probably double in the next year.

International firms' interest has in part been fuelled by the Moroccan Government's efforts to promote the country as a regional hub for North and Francophone Africa. The plans are perhaps best illustrated by the development of the Casablanca Finance City, a low-tax financial hub similar to the Dubai International Financial Centre (DIFC). Plus, as Tunisia and Libya recover from the overthrow of their respective Governments, considerable foreign investment is expected to flood in and the new entrants into Morocco hope that their local offices will give them an edge in pitching for that work.

As much as A&O's and CC's first steps into Africa represent a significant development, they are predominantly a play for work in North and Francophone Africa, leaving out large swathes of sub-Saharan Africa. So will more African office launches follow Morocco? "We're definitely not excluding that," admits Duquette. "If we find the right teams of local lawyers, there's no reason we won't do the same as we've done in Morocco."

Boyo concedes: "We have no plans right now, but we are keeping this under review. We will, however, most certainly continue our investment across the continent, including deepening our relationships with major clients, working with the best local counsel in each market and investing in legal education, pro bono and community support across many African markets."

Africa's gateway

The next logical step for CC and A&O would appear to be South Africa. The continent's largest economy is home to by far its most sophisticated corporate finance community and a well-developed legal system with a strong group of domestic practices. Eversheds' merger with Routledge Modise, DLA Piper's alliance with Cliffe Dekker Hofmeyr and Norton Rose's 2011 tie-up with Deneys Reitz have heralded a notable step up in interest from the international legal community. Throw in Dewey & LeBoeuf's hire of an eight-partner team from local practice Werksmans at the start of this year, and it's clear that more firms are closely watching the market.

For Deneys Reitz, the merger with Norton Rose was the culmination of a decade-long strategy that had seen the firm expand its interest across the whole of Africa. That growth of a network of local firms, however, led the firm to a strategic crossroads. "We asked ourselves whether we wanted to be a regional boutique or part of a full-service global firm," reflects Otty. "And whether we wanted to follow our clients out of South Africa into Europe and around the world."

That questioning coincided with Norton Rose's interest in merging with a local presence – "We were both on the same page at the same time," says Otty – and a deal was announced in late 2010.

Like Deneys, most of the leading local South African practices have looked to expand their interests into the rest of Africa. Werksmans, for instance, has been the driving force behind Lex Africa, an alliance of local practices that covers much of the continent. Last year, Webber Wentzel joined the African Legal Network, a similar alliance that covers much of East and Southern Africa, while another South African giant, Edwards Nathan Sonnenberg, admits that it is looking to open its own offices in key African markets. Most of the largest firms have English and French law qualified lawyers, so that they can advise on cross-border deals.

Whether South Africa can maintain its position as a gateway to the rest of the continent is not clear. "It's partly down to the South African Government's approach to attracting investors," says Roddy McKean, head of Webber Wentzel's Africa group. "Fifteen years ago everyone viewed Hong Kong as a gateway to China; now most investors go straight into the mainland." The same, muses McKean, could happen with South Africa.

Where next?

For all the interest being shown in Africa's major markets, the fact remains that not having a local office has not been a brake on global firms' ability to pick up major instructions. Linklaters, for instance, regularly features near the top of the African M&A league tables and last year took a role on Africa's largest deal, advising mining group Anglo American on the increase of its stake in De Beers. In 2010 it also featured on the largest deal of the year, when India's Bharti Airtel acquired Linklaters' client Zain Africa in a $10.7bn (£6.8bn) deal.

"Opening our own offices in Africa is constantly under review," comments Linklaters projects partner Andrew Jones, who advises regularly on African deals. "But our approach of having strong working relationships with the best local firms has worked well." He also points out that to effectively advise clients in a market like South Africa requires a large, broad-based practice. Quite a commitment for a firm that at the moment is more interested in trimming its partnership.

In contrast, Herbert Smith, which advised Bharti on the Zain takeover and has advised on deals across Africa, does look set to open on the continent as it overhauls its international strategy. "We continue to carefully study where we want to be and we'll reach a decision in the not too distant future," Brabant admits.

Despite the obvious optimism around Africa's economic growth, the recent unrest across North Africa has shown just how fragile the political environment is in many countries. Nigeria, Africa's most populous country and home to the continent's largest oil reserves, would appear to be one possible location for international firms, but the country remains gripped by ethnic and religious unrest, making the investment environment much more uncertain. For the time being, at least, international firms look set to limit their new offices to countries like Morocco and South Africa – ones where stability looks assured.

"The question is always, will there be political developments that will undermine the stability of these countries?" says Rui Amendoeira, managing partner at Portuguese firm Miranda Correia Amendoeira & Associados, which has an extensive network of alliance firms in Africa. "Will the existing stability in a country like Mozambique, which is looking fantastic right now, hold for the next 10 to 20 years? I hope so, I think so," he adds. Much of the international legal community is holding out similar hope.

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