As one of the world’s richest nations in terms of natural resources, how has the huge upswing in infrastructure investment and natural resources transactions emerging from China impacted the legal market? Is this producing work for a large number of firms, or just internationals?
Over the years, Chinese investments in Nigeria have become a trending topic as Nigeria is currently the largest recipient of Chinese Foreign Direct Investment (FDI).
In 2016, China’s FDIs in Nigeria stood at $15 Billion out of the total $26.5 Billion investments in Africa. This has produced substantial work for several local and multinational law firms, particularly law firms involved in corporate and commercial law practice. Local lawyers are at the forefront of advising Chinese businesses on issues ranging from setting up legal entities, immigration formalities and advising on different transactions in infrastructure, transportation and other projects. Although international lawyers are involved in some of the transactions, local lawyers are in high demand as they are familiar with the terrain and business environment.
Nigeria has seen internal problems, with sections of the country’s northeast occupied by Boko Haram. How has this impacted on firms operating in those regions, and the broader regional economy?
Generally, business hardly thrives in politically charged environments. Attacks and the fear of inherent attacks by these terrorists and bandits operating in the northern region of Nigeria has affected both local and foreign businesses operating there. In fact, in a 2011 World Investment Report of the United Nations Conference on Trade and Development, the activities of the Boko Haram group, cost the Nigerian economy the sum of $6 billion because of the lull in business activities in Kano State alone. Several businesses have folded up, investors no longer consider Nigeria as a good and viable investment hub. This has affected the client base of most law firms because law firms thrive in an environment where business booms. Also, several law firms have relocated from the northeast region, to other parts of Nigeria. This has affected the administration of justice in the northeast region.
The broader regional economy has also being affected as insecurity continues to spread to other parts of the north and its environs.
Nigeria’s economy was affected by the COVID-19 pandemic, but maintained 1.87% growth in the first quarter of 2020. Does this speak well for the prospects of recovery and continued growth?
It does speak well for the prospects of recovery and continued growth in the Nigerian economy. This is particularly because an examination of the report released by the National Bureau of Statistics shows that the performance recorded in the first quarter of 2020 represents a drop of 0.23% points compared to the first quarter of 2019 and a 0.68% points decline compared to the fourth quarter of 2019. This was despite the outbreak of COVID19 and the drastic reduction in the global price of crude oil which forms a major part of Nigeria’s export.
This implies that there are prospects of recovery and growth in the Nigerian economy. However, the government must take necessary steps to ensure that it heeds to the call for a diversified economy. The focus should not be limited to crude oil as the government should also focus on non-oil sectors. Furthermore, the security situation must be made a priority. This is because businesses will only grow in a tranquil environment and investors will only invest in a country that is safe. As it stands, foreign investments still has a huge role to play in Nigeria’s economic progress and we must do all we can as a nation to attract same.
President Buhari has stated key aims for the economy include agricultural and food security, boosting the nation’s manufacturing sector, and ensuring energy sufficiency. Are these areas where the demand for legal services has increased, and are the pledges realistic ones?
Law firms in recent times have experienced an increase in patronage from these listed sectors. However, the major sector that law firms have received a major increase in the demand for legal services is arguably the financial technology (fintech) and e-Commerce space. As a result, several fintech and e-commerce companies have sprung up. A typical example is Paystack, a Lagos based fintech which was recently sold to Stripes for the sum of $200Million. Many law firms are beginning to have/develop their fintech practice groups.
On the other hand, the pledges are also realistic. Given Nigeria’s rich natural resources and the persistent call for diversification of the economy, it would appear that the interest and focus of the government in these areas may make the pledges a reality.
Sukuk-funded road and infrastructure projects have been a growing factor in the sector. Will this continue, and have banking and finance teams had to adapt to the increased demand? Similarly, are projects-focused practices or financing teams doing better out of this development?
It does appear that these sectors will continue to experience growth. For instance, in July 2020, Nigeria’s Minister of Power, while receiving a sovereign Sukuk symbolic cheque of N165.55Billion from the Minister of Finance, announced that the Federal Government of Nigeria is set to fix 44 federal roads all over the country. This signifies that the growth in Sukuk-funded road and infrastructure projects will continue.
Furthermore, the Debt Management Office (DMO) recently announced an oversubscription of the third sovereign Sukuk, having offered N150 Billion to investors. The said offer attracted a very high subscription rate from investors, with a total of N669.124 Billion subscriptions. This suggests that there will continue to be available resources through Sukuk bonds, with which the government can take up projects.
Banking and finance teams of law firms are becoming used to this increased demand and are quickly adapting to the developments. There has also been increased revenues from firms with strong banking and finance and capital market teams as they continue to play the role of advisers to the banks and the government.
How have firms utilised innovation and technology in recent years? Are firms working differently to how they did a decade ago?
As you are aware, technology is a game changer, and the world is adapting to the recent technological trends and growth. Law firms are not exempted, as they have had to adapt to this trend and as a result, adopt new policies that are in tandem with this technological growth and advancement.
For example, most law firms now communicate with their clients through electronic mails, and meetings and client interviews are now held through various electronic/virtual platforms. Laws are being amended to reflect the current position of things and documents which are signed electronically are now more readily accepted. Furthermore, the recent outbreak of COVID19 has changed the way in which most law firms operate. Law firms have been forced to operate remotely, thereby adopting certain digital methods. For example, some law firms have transited from analogue storage of files to cloud storage. Through these means, court processes, agreements and other documents can now be accessed remotely.
What are the international trends you expect to impact the Nigerian legal market the most?
Some of the international trends that we expect to impact the Nigerian legal market include the current technological advancement in the world, globalisation and economic diversification. With the current increase in the use of digital and technological tools such as the internet, it is expected that digital revolution through the internet will impact on legal practice. Most lawyers will begin to utilise technological tools to carryout practice of law.
As a matter of fact, in a recent study by Deloitte UK, it was predicted that about 114,000 legal jobs are likely to be automated in the next 20 years. Lawyers are also beginning to make use of artificial intelligence in the practice of law. On the other hand, the recent increase and growth in foreign investments around the world has necessitated the need for “transactional lawyers or law firms” that will be able to take on certain tedious and difficult corporate tasks. Countries are also diversifying their economy. New areas are emerging that may likely create certain opportunities for law firms. Hence, law firms must be prepared for these trends to benefit from them.
How has the COVID-19 pandemic affected the type of work firms are seeing, and how are firms adapting?
The outbreak of COVID19 negatively affected the legal practice globally. In Nigeria particularly, the legal profession was affected because the government issued various regulations and orders which required certain measures to curb the pandemic. One of such measures was an initial lockdown of Nigeria’s commercial hub (Lagos), Ogun State and the Federal Capital Territory for an initial period of two weeks; then for subsequent periods. As a result of this, some law firms were closed, others began to work remotely.
Most of the instructions we started receiving during those periods revolved around force majeure and breach of contract, staff layoffs and restructuring and breach of privacy issues.
However, law firms also adapted to the situation with virtual hearings taking place in court and arbitration proceedings, virtual meetings with clients and an upsurge in digital marketing. There were several virtual conferences that were held and attended to by lawyers. Technology was the saviour as firms were still able to maintain a level of visibility and assist their clients in need.
Following the lifting of the lockdown towards the last quarter of the year, lawyers now appear in court to represent their clients (while obeying the regulatory standards set in place, such as the use of face masks, the use of hand sanitizers and obeying regulations on social distancing) and hold meetings and interview sessions with clients. With life slowly returning to normal, it is hoped that there will be a rise in other legal activities.
Has the creation of a Ministry of Digital Economy and the accompanying push to increase 4G coverage created new demand for tech-focused legal services? Are firms creating and expanding tech practices, or are existing market leaders simply busier?
The creation of a Ministry of Digital Economy, though a recent phenomenon has paved way for a new demand for tech-focused legal services. This is particularly because certain policies and regulations are being put in place, to regulate the technological sector, particularly the fintech sector. Furthermore, the recent increase in fintechs and other tech Cos, has also created a new demand for tech-focused legal services. These companies are keen on ensuring that they comply with existing policies and regulations and as a result, they seek legal advice, they enter into agreements with government agencies, foreign and local entities. This in turn, creates opportunities for the legal profession.
Lawyers can advice these companies, prepare various technological agreement for them and even conduct due diligence where necessary, on their behalf. Also, the current push to increase 4G coverage is creating certain opportunities, this is particularly based on Nigeria’s desire to achieve 90% 4G/5G network coverage by 2025. As a result of this, most network providers have introduced the 4G network, in their own capacity. Lawyers will always have a role to play in this realm as they can offer legal advice pertaining to regulatory compliance.
On the other hand, most law firms are beginning to introduce tech-based legal services into their practice areas. This is to ensure that they are in line with the current trends. However, law firms that are already existing leaders in this realm are also doing their best to ensure that they continue in this regard.