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Hogan Lovells losing bulk of South African practice as merger partner breaks away

Hogan Lovells’ South African headcount is being slashed as its merger partner splits from the firm following a troubled six-year tie-up.

The firm confirmed today (1 August) that it is undergoing a ‘restructuring’ of its South African practice that will see 71 of its lawyers set up an independent law firm, while Hogan Lovells will re-launch a 20-lawyer office in the country under its UK LLP.

The move, approved by the partnership last night, brings to an end the troubled tie-up with South African firm Routledge Modise, launched in December 2013, which saw its local branch operate as a financially and operationally separate entity under the Hogan Lovells logo.

The office met several hurdles along its way, seeing its headcount shrink from 120 to 91 and recently attracting criticism for its work for the South African Revenue Service (SARS). At the beginning of last year, Labour peer and former cabinet minister Peter Hain accused the firm of being complicit with corruption and money laundering in the country and called on the Solicitors Regulation Authority (SRA) to withdraw its authorisation as a recognised body.

In summer 2018 the SRA confirmed it would not take any action against the firm, and the South African Law Society found no evidence of misconduct by the firm.

The office also saw the departure of one of its partners amid allegations of sexual misconduct between the end of 2017 and the beginning of 2018. Hogan Lovells declined to provide details of the episode, nor specify whether it had been reported to local authorities at the time.

As a result of last night’s decision, five of Hogan Lovells’ South Africa partners and 15 other lawyers will form a fully-integrated office focused on corporate, finance and natural resources work.

Meanwhile, 21 other partners – including South African chairman Nkonzo Hlatshwayo – will launch an independent firm under a different name alongside 50 other lawyers following a two-month transition period.

A spokesperson for Hogan Lovells told Legal Business that while the sexual misconduct episode was unrelated to yesterday’s decision, the issues involving the work for the SARS had been a factor, as they arose from work that the firm did not necessarily wish to continue carrying out in the country.

‘One year ago we were looking at a position where the office was coming under severe criticism,’ the spokesperson said. ‘We made sure we went through the appropriate process in terms of giving evidence to Parliament and supporting the independent investigation by the Law Society.’

They added that once all claims against the firm had been dismissed, ‘we looked at the relationship we had with Hogan Lovells South Africa: this is the only office that is not fully integrated’. After a conversation with the South African partnership the firm concluded that ‘the best way forward was to have a smaller, focused office’ while Hogan Lovells South Africa pursued its own strategy with a wider range of clients in the South African market, ‘for example the government sector which is not necessarily a sector we want to pursue in South Africa.’

Hogan Lovells’ Johannesburg-based services center, which hosts around 200 employees, is unaffected by this decision.