Fortune News | Apr 02,2022
The Ministry of Justice (MoJ) registered Ethiopia's first-ever law firm a year after Parliament legislated a proclamation governing the commercialisation of advocacy services.
Lawyers and attorneys were not allowed to form law firms until last year. A new law paved the way for two or more lawyers with advocacy service permits to establish entities considered businesses. Three lawyers established Habesha Legal Advocates L.P. as the first legal firm to receive a registration certificate last week. Its founders have been practising law for over a decade.
One of the three founding members of Habesha, Wubshet Demissie also serves as a general manager of the firm. He studied law at the Ethiopian Civil Service College, graduating in 2008. Practising since 2012, he represented the state-owned Commercial Bank of Ethiopia (CBE) and its labour union.
He teamed up with two of his partners and applied for a license three months ago. But preparations to transition into a full-fledged law firm began a year ago while the proclamation was in the draft stage.
“We decided to form a law firm instead of practising independently,” said Wubshet. “This will allow us to provide services to clients with the help of lawyers specialised in different areas.”
Bayou Mekonnen graduated from Haromaya University in 2006, and Gebeyhu Zikaregachew studied law at Hawassa University, graduating in 2009. Gebeyehu served as a public prosecutor for six years beginning in 2009 and specialised in tax and construction-related laws.
Habesha founders foresee lawyers joining them as partners.
They are the first among half a dozen groups applying to establish law firms, disclosed Awol Sultan, director of communications at the Ministry of Justice.
“Applications were returned for failing to fulfil the requirements,” he told Fortune.
For Yehualashet Tamiru, a legal consultant and researcher, Habesha's registration as a law firm is a long time coming.
“The proclamation introduced many changes, but the recognition of law firms is arguably the most significant,” he said.
Law firms can be organised under a limited liability partnership (LLP) arrangement. Unlike unlimited liability legal structure, LLP limits the liability of the partners to their financial interest in the partnership. For more than six decades, lawyers and legal practitioners have been lobbying for the amendment of the commercial code, which had restricted the establishment of law firms as business entities. However, lawyers have been practising law since 1952 after receiving permits from the authorities.
In the 1960s, a few practitioners started to provide legal services by establishing de-facto law firms. Scot & Scot Law Office, Assefa Dula, Vosikis Law Office and Hamawi Law Office were among the few known groupings. Such attempts, however, came to an end when the country adopted a socialist ideology during the Dergue regime, which nationalised private properties and companies.
After the partial liberalisation of the economy in the early 1990s, practitioners' demands were ignored. The commercial code enacted in 1963 designated the legal profession as a non-commercial enterprise. The amendment of the commercial code led to the passage of a proclamation governing the licensing of advocates. There are around 530 lawyers under the Ethiopian Lawyers' Association.
“Law firms can give efficient and effective representation, especially to their institutional clients, who require specialised service,” said Yehualashet.
This includes the state itself.
In the past, the federal government appeared before the Permanent Court of Arbitration, a non-UN intergovernmental organisation headquartered in the Hague, Netherlands, over disputes with investors. Allana Potash took the Ethiopian government to court claiming damages from the government's failure to provide infrastructure support for a large-scale potash mining project the company had plans to invest in the Afar Regional State.
Foreign law firms represented the federal government.
“The government can benefit by hiring local law firms that better understand the country's investment regime,” said Yehualashet.
Foreign investors prefer hiring law firms to individual lawyers. Although the proclamation has laid the legal foundation for issuing licenses, directives that govern the lawyer-client relationships are yet to be issued.
The proclamation allows firms to take part in advocacy services. These include providing consultation on legal matters, conducting negotiations except in criminal cases; drafting legal documents or submitting documents on behalf of a client; and representing a client before law courts. However, the particulars of the services are to be defined in a directive to be issued by the Ministry of Justice.
“The directive is under preparation,” Awol disclosed.
The capital threshold for incorporation is not stated in the law, but firms are expected to raise enough to cover operational costs. Habesha has registered 1.5 million Br in initial capital. It has previously been operating through offices in Addis Abeba (near Mexico Square) and Bahir Dar, the seat of the Amhara regional administration. The firm plans to open branches in other regional capitals, according to Wubshet.
He disclosed they also expect two additional lawyers to join their ranks once the cases they are currently handling have been closed.
One of them, Addisu Mengistu, has already signed up to join the partnership. He has served as a Supreme Court Justice of the Amhara Regional State for five years.
The partners of Mehrteab Leul & Associates Law Office are a few of the companies preparing to transition into a law firm.
"The market itself demands the creation of fully-fledged law firms,” said Mehrteab Leul, the founder.
His office was established in 1997, and it has been preparing to transform into a law firm since 2012.
“We're at the final stages,” Mehrteab told Fortune.
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