WOMEN LAWYERS’ FORUM –
TANGANYIKA LAW SOCIETY ANNUAL GENERAL MEETING
PRESENTATION BY AMNE SUEDI KAGASHEKI
FOUNDER OF SHIKANA LAW GROUP
4 APRIL 2019
Good morning! It is good to be here with you all and it is great to see so many courageous advocates here at 7 am in the morning. I hope my presentation will be worth it!
It is the first time in a long time that I am attending the TLS AGM. This has been because I have been busy growing my firm and we all know that at the tender age of a law firm, there is no break. Every day is a new day for hustling and dealing with challenges. Unfortunately, I did not have the time to really socialize or even attend important sessions like these.
Sustainability of laws firms managed by women is the topic today. I am not sure if this topic will really be catered towards salient features of women managing law firms because I do not believe that there is a difference between men and women managing law firm in private sector. Business is business for everyone, whether you are a woman or a man. Sustainability is a term that is multi- faceted and carries quite a few dimensions to it. I have been practicing for total of 14 years, 5 and half of those years have been spent in Tanzania. Today, I will share with you my point of view. In order to discuss sustainability, we need to talk about the challenges and risks first and then how to address these so as to create sustainability for our businesses.
I think this is a fantastic opportunity to be here together to discuss these issues. Speaking to practitioners in Tanzania, there are few occasions where practitioners get to acknowledge and share their experience with regards to the reality of many legal practitioners facing a constant struggle to survive economically in the practice.
There has been a steady and rapid growth in the profession particularly the last 5 years in Tanzania where there is approximately 1,000 new advocates sworn in, each year at least. The number goes up to 1,200 new advocates. This growth of the number of advocates needs to be considered within the context of the slow economic growth in Tanzania since 2015. One wonders what these new advocates will be doing after being sworn in, against the back drop of the number of viable law firms that exist in Tanzania and employment opportunities as well as training opportunities that may exist, which needs to be said are minimal compared to this exponential growth of advocates.
To date there are over 8000 practicing advocates in Tanzania against a population of 55 million Tanzanians. Can we say that the legal practice in Tanzania is saturated? It hardly seems that way when we look at these numbers and yet many lawyers are complaining about the lack of work and the struggle of getting a market share.
There is a huge number of firms in Tanzania that are small in terms of number of partners and of course those running as sole proprietors. While larger firms may have increased resources to share the risks, smaller firms face unique challenges in respect of viability and sustainability. However, it does not mean that the larger firms do not face the risks with regards to sustainability and viability. No business enterprise is immune from this risk.
The following questions needs to be asked:
- What are the measures that are implemented by firms to address the risks of viability and sustainability?
- Are you generating sufficient income to meet operational needs?
- A key aspect of sustainability is financial stability, ie. having enough cash flow to meet operational needs. If there is not enough cash flow, what measures exist for law firms to continue viability anyway?
- We all know accessing finance in Tanzania is a nightmare and does not make any business or economic sense in terms of the interest rates, collateral demands and payment terms. Conventional financing is out of the question for most. What about insurance coverage for these situations mentioned above? In Tanzania, this does not exist and yet there is a clear need for it.
In circumstances where the firm is not generating sufficient income to meet its operational expenses, serious consideration must be given as to whether or not it is prudent to continue with the practice in its current form. Law firms and managing partners needs to be able to react quickly to the financial realities and adapt their business model or strategy so as to survive. Some of these options are:
- Cutting the past losses and closing or selling the firm;
- Investigating whether or not a merger with another firm is viable;
- Downsizing ;
- Exploring new areas of practice;
You cannot afford to wait for miracles. Instead deal with the reality at hand, assess the risks and Adapt or Die.
The factors posing a risk to the law firms in Tanzania in general include:
- Studies have shown that the generally challenging economic environment across the globe and economic downturn is often followed closely by an increase in professional indemnity claims against legal practitioners. Most legal practitioners in Tanzania practice with no indemnity insurance coverage therefore imagine the risks since the authorized legal structures to operate as a law firm are sole proprietor or partnership. Our neighbors in Kenya offer a Limited Liability Partnerships that limit the liability to the partnership in the event of liability and indemnity.
- The rules in Tanzania around advertisement of law firms are outdated and archaic. Law firms are like any other business and therefore need a solid marketing strategy and other measures of securing new clients need to be considered constantly.
- You may be a gifted and talented lawyer, however this does not imply you have the necessary business acumen or the required work ethic to be a successful business person running a successful firm. It is important to be able to do an honest self-assessment and to identify your strengths and weakness.
- Another challenge is organisations outside of law firms offering services traditionally carried out by law firms (these include banks, audit and advisory firms, estate agents and legal consultancy organisations). How do you deal with this as a legal practitioner? What is the strategy in place to address this competition that is regulated differently and have more room for advertisement for example, where law firms are restricted?
- The slowdown in some areas of practice. For example, conveyancing as the property market stalls in Tanzania.
- The loss of key clients whether it is due to clients finding new legal service providers or winding up the company and leaving the country as we have seen increasingly since 2015. The reliance on a key client is also a significant risk in that the firm will be affected where, for instance, the key client may elect to engage the serv ices of another law firm, go out of business or is the subject of corporate activity or where the business relationship deteriorates.
- The loss of key staff and how to replace them. The market for legal practitioners in Tanzania is challenging. It is challenging to find lawyers that have requisite skills to deliver on jobs. Sometimes, we do not have the luxury of training lawyers to get the job done because the need could be immediate. Another issue in the Tanzania job market is where you may find the skills, the reliability is missing.
- Certain areas of practice may have become saturated.
- The negative reputation of our profession in some circles. In Tanzania, unfortunately the Tanganyika Law Society has not managed to address the rampant corruption that exists in the legal profession and perpetuated by unscrupulous lawyers. On a broader scale, this affects ALL of us legal practitioners.
- An inability or refusal by some practitioners to adapt to the changing legal, economic and technological environment.
What is needed is effective risk management plan that is put in place! You need to have a plan to deal with all these risks otherwise you may find yourself in a critical and dire situation affecting the structure, size, location, services of the firm.
Appropriate resourcing must also be taken into account in order to address the risks. This includes the human resources, as well as the infrastructure and other resources necessary to enable the firm to meet its business and operational needs and its servicing obligations to clients and other stakeholders. However, this in many ways, can lead to a so-called ‘catch 22” situation for emerging firms in that in order to operate successfully, these resources are required. However, the acquisition of these resources requires a significant initial capital outlay before the financial benefits can be reaped. The firm may not have the financial resources to procure such resources upfront.
A risk we have been seeing in Tanzania since 2015 is that many institutions, both private and public, seek to reduce their expenditure. One of the areas where they seek to reduce are costs associated with legal expenses. Such institutions may, for example, choose to build up their internal legal department and make appointments of legal advisers and corporate counsel, resulting in a reduction in the amount of work sent to law firms.
While a significant amount of expertise can be built up over many years in practice, no one individual is equipped with the specialist skills required for each and every risk faced by a business enterprise. The fact that there may be one (or few) key individuals in a practice who are able to deal with a variety of areas and functions in the firm is, itself, a risk of over reliance on a key person.
Where a firm’s institutional knowledge is centralized with one key person, this is also a risk. In the event of the unavailability of that key person, the continued existence of the firm is then placed at risk. As women running legal practice, we need to include in our plan the eventuality of a family and how that can affect the practice particularly if you are the key person? What happens if you have to be absent for maternity reasons or illness associated to maternity and child birth? What happens to the firm?
So, what needs to be done in a Nutshell?
- Firms needs to Develop business plans that address issues of the sustainability and viability of the practice in the medium to long-term. The business plan must address the unique circumstances of the firm. Simply following a precedent or downloading a generic business plan off the Internet will not be sufficient to properly deal with the risks in the practice.
- Including these risks in the risk assessment and identifying appropriate risk mitigation measures.
- Identifying appropriate risk treatment options. The purchase of appropriate insurance cover is one example of a risk transfer option.
- Consideration of whether or not the practice should continue (in its existing form or at all). There is no shame in changing. We often want to appear that we are winning from day 1 while the reality is that your business needs to be worked on constantly before finding the right model and finding stability.
- The use of IT as a business enabler and as a means of facilitating and enhancing the efficient management and
- Obtaining appropriate training and/or mentor-ship.
These areas discussed are of course applicable to both men and women managing a law firm.