IFLR 1000
The Guide to the World's Leading Financial Law Firms

"It was a very busy but a strange year; it was a battle to get the deals into closure – deals that were started before the Lehman Brothers crash," says one partner. Another partner explains that "it has been a bit stop-and-start, but there is a lot in the pipeline; there is a lull at the moment as projects are in the initial stages"....

"It was a very busy but a strange year; it was a battle to get the deals into closure – deals that were started before the Lehman Brothers crash," says one partner. Another partner explains that "it has been a bit stop-and-start, but there is a lot in the pipeline; there is a lull at the moment as projects are in the initial stages".

As well as the firm mergers, an additional trend has been the increasing reach of firms into the rest of Africa, where they have acted on significant deals such as the Bujagali Dam in Uganda and the construction of a hospital in Lesotho, among other projects.

"We are going to see a lot more cross-border deals," says one peer. Another peer explains: "We have a cross-border deal with Mozambique for gas and coal; Botswana has coal and Namibia theoretically has natural gas, and a pipeline has been talked about for the last eight years ... so maybe."

Locally, "project finance is still steaming ahead," says one partner, while a peer adds: "The new government has to be seen to be spending money on roads, schools, healthcare, prisons." Five prisons are to be constructed, two or three new toll roads are to be announced soon, funding has been obtained for widening projects on ports, and there are construction projects in the pipeline.

One significant individual movement has been the departure of public-private partnership (PPP) expert Clare Cork to Australia at a time when the project finance and PPP sectors seem to be holding up well.

"Electricity is the flavour of the month at the moment ... and poor planning in the past now demands a lot of regulatory work in this area," says a peer. Eskom has provided the market with large mandates, while Transnet, has committed to spending R18 billion ($2.29 billion) in the next few years as well. The 2020 World Cup has also created work for firms.

In banking "there has been a slowdown in the small and mid-loan market as banks have tightened up because borrowing is getting more and more stretched" says one partner.

The South African legal market has seen a number of large mergers over the past year. Webber Wentzel merged with Cape Town firm Mallinicks, Cliffe Dekker with Herbstein & Gihwala Hofmeyr, and Werksmans with Jan S de Villiers....

The South African legal market has seen a number of large mergers over the past year. Webber Wentzel merged with Cape Town firm Mallinicks, Cliffe Dekker with Herbstein & Gihwala Hofmeyr, and Werksmans with Jan S de Villiers. Most recently, in March 2009, Glyn Marais announced a formal association with Denton Wilde Sapte.

Another development yet to have an impact in the rankings is Eversheds' partnership with small firm Routledge Modise. The trend of mergers, which began with Edward Nathan & Freidland and Sonnenberg Hoffman Galombik combining in 1999, has provided leading firms with critical mass and surer footings in commercial centres Johannesburg and Cape Town. Notably, White & Case leaves the rankings this year following retrenchments and a considerably lower profile in the market.

While big mergers and high-profile movements of top lawyers have changed the landscape of the market, the slowdown in capital markets activity is acknowledged by all firms to have limited the impact of the moves thus far.

One particularity of the South African market is that due to its size, clients tend to follow individuals. Significant individual movements include Clinton van Loggerenberg, one of the most reputed lawyers in the market, returning from Allan & Overy Tokyo to join Edward Nathan Sonnenbergs, and Jackie King joining Deneys Reitz.

"The last 12 months have been miserable for the debt capital markets," says one peer, while another adds: "Securitisation is dead ... there have been a few corporate programs, debt capital markets have been driven by infrastructural investments, and the big issue has been parastatals accessing local capital markets for big projects; but the corporate bonds side has been very slow."

"We haven't had rights issues in this country for a number of years but I have done four so far," says one peer, while another peer comments that bond issues seem to be holding up better than other debt market transactions. Banks have been very keen to push covered bonds but, says one partner, the capital markets regulator is "jittery and conservative" at this prospect.

Competition is a relatively young area of law in South Africa, which was only established in 1999 with the passing of the Competition Law. Since its inception, the market has developed quickly....

Competition is a relatively young area of law in South Africa, which was only established in 1999 with the passing of the Competition Law. Since its inception, the market has developed quickly.

"Part of it flows from the structure of South Africa's economy, which is a closed economy and has allowed the growth of a few very powerful organisations such as Sasol and Mittal, which are both ex-state entities turned private," says one peer. "Mittal has been hurtful in a policy perspective as it turned from a state-owned monopoly to a monopoly owned by Mr Mittal."

The government and the Competition Commission have made a huge effort to undo uncompetitive economic structures. While all notable mergers are referred to the Commission, providing much of the work for law firms, the recent drop in merger activity and a possible change in focus from the Commission has translated into a flurry of anti-cartel cases.

Top cartel deals over the past year have involved Mittal, British American Tobacco, Tiger Brands, Sasol, SAB Miller and Impala Platinum. Corporate leniency and whistleblower protection have started to take affect: "Leniency has absolutely taken off and has resulted in a lot of prosecutions here – there have been several cases and there is no doubt that it has had a huge role to play," says one peer.

Due to the nature of competition, all firms with strong corporate practices have competition capabilities. A recent exception has been the establishment of boutique competition practice Nortons Inc by former Webber Wenztel lawyers.

In this young area of law, there is only a small pool of competition lawyers. "Firms tend to have few very knowledgeable senior guys ... while a lot of the others who still have things to learn," says one client. "This is the case," says a client, "because it is a new and highly-complex field."

Nevertheless, as competition grows and the value of the deals goes up, so will the importance of this practice area. Some big corporate leniency successes and fines of up to $70 million mean "companies are trying to pre-empt fines and public opprobrium" according to one peer.

While there has been a proposal for the criminalisation of cartel activity as in other countries, peers seem unanimously to agree that this would undermine corporate leniency successes.

M&A has had a slower year than normal. The drop in activity has been "in the realm of 40%," says one peer, "although the press has quoted much higher figures....

M&A has had a slower year than normal. The drop in activity has been "in the realm of 40%," says one peer, "although the press has quoted much higher figures." Another peer says: "There is still some activity but we have definitely felt a drop and we are not out of the woods yet ... and the failure rate in deals in much higher."

"It was a strange year, like I suppose it was everywhere – though we are certainly busier than London, in the M&A perspective," says another peer. "The number of transactions that people work on that never happen ... I have never had so many deals pulled."

However, there were a number of landmark deals through the year. Most notably, Werksmans had an outstanding year, acting on a number of sought-after deals for Liberty Holdings, Telkom and M-Real Corporation. One of the roles of the year went to Cliffe Dekker, which advised Remgro on its high-profile restructuring – the highest valued transaction in the market.

Other highlight transaction included the restructuring of the BHP Billiton and Rio Tinto joint venture, a proposed acquisition by Tiger Brands, and the acquisition by Vodafone of a controlling stake in Vodacom. Black economic empowerment (BEE) corporate work provides complex and high-value work to firms, and notable deals in this area were closed for Vodacom, MTN and Remgro.

Another notable development is a new Companies Act, which is in the pipeline and aims to modernise business laws.