Summer2012


City of London Solicitors’ Company Prize 2012


Angus Mercer Trainee Solicitor, Herbert Smith LLP


Each year the City of London Solicitors’ Company awards a Prize of £600 to a trainee who has completed one year’s training with a City firm and who shows the most promise as being a future City Solicitor. All applicants must have achieved a Distinction on the LPC and the winner is chosen on the basis of an essay on the “single key issue or challenge facing City firms in the next five years and the best solution to it” and a short interview with the Master of the Company and the Chairman of the CLLS Training Committee. We are delighted that Angus Mercer of Herbert Smith LLP was awarded this year’s Prize and his essay is reprinted below.


The single key issue or challenge facing City firms in the next five years and the best solution to it.


The profitability challenge, the Africa solution


The sluggish UK economy and uncertainty in the Eurozone present a serious threat to city firms. Traditionally, firms have achieved profitability by distinguishing themselves from their competitors, either through expansion (growing into global businesses) or specialisation into niche markets. The current climate may well require a fusion of these two strategies: targeted


expansion in unsaturated


growth markets. With emerging BRIC economies now fiercely competitive, the obvious new horizon for ambitious city firms is undoubtedly Africa.


Africa’s energy and infrastructure opportunity


Kenya struck oil for the first time last month. On the very same day, Ophir Energy and BG made their biggest ever gas find off the coast of Tanzania. East Africa is fast becoming a key gas hub, with new discoveries attracting drillers such as Shell, Statoil and Exxon Mobil. Eni’s “supergiant” natural gas find in Mozambique last month is reportedly big enough to justify an LNG plant to export fuel by tanker to Asia. The proximity of India, with its rapidly growing energy demand, is another reason why East Africa is poised to


emerge as a dominant power provider. Elsewhere,


developments in shale


gas exploitation have been described as a “game-changing” opportunity to diversify energy streams in South Africa.


Similarly, African infrastructure projects present enormous opportunities for city firms. Last August, DLA Piper’s head of mining and energy estimated that Africa needed around $93 billion of infrastructure investment each year. By way of illustration, he noted that there are currently only 10,000km of roads connecting African countries; between 60,000 and 100,000km are required to adequately integrate the continent. Someone needs to build these roads, and smart


city law


firms will make it their business to advise them.


The myriad spin-off opportunities for city firms


Importantly, City firms can tap into lucrative


African markets without


establishing a core Africa energy or infrastructure offering. Targeted expansion means playing to a firm’s existing


strengths. For smaller City


firms, this might mean offering expertise in one of a variety of related niche areas:


• Employment: Local laws in Africa increasingly oblige international companies to employ a specified proportion of local workers.


• Corruption: The new UK Bribery Act criminalises the corrupt activity of overseas companies carrying on part of their business in the UK, even if such activity occurs outside the UK.


Caption to come


• Tax: The limited number of double tax treaties in Africa allows many states to impose unusually high withholding taxes on foreign companies.


• Environment: Many African governments


have incorporated


international environmental laws (such as those relating to liability for decommissioning and air/water pollution) into their domestic legal systems.


City firms can advise on such issues either through strategic alliances with top local firms, or through establishing their own presence in Africa. The use of English common law as the framework for many African legal systems, coupled with the desire of many clients to have their agreements governed by English law, represents a huge opportunity for City firms to make a bold, targeted and strategic expansion into Africa.


City Solicitor • Issue 78 • 9


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