# **3.2 Legal Services**

Law graduates may appear at first sight to be less scarce than other professions – in fact some officials feel that there may be too many already in Mozambique. But the picture is somewhat different if we consider the horizontal distinction between lawyers with different specializations (e.g., tax, labor, commercial) and the vertical distinction between lawyers with different levels of experience and perceived ability. Our discussions with the main stakeholders in this sector suggest that the main shortages are felt in some horizontal dimensions - for example not enough tax laywers - and are especially acute in some vertical dimensions - for example the supply of experienced lawyers is limited.

The market for legal services in Mozambique is also vertically segmented but somewhat less dramatically so than the market for accounting and auditing services. The main providers of legal services are about 10 relatively large law offices and the legal departments of KPMG, PWC, and Deloitte. By relatively large law offices we mean law offices employing on average more than 15 lawyers each, as indicated by our survey in Maputo. These two types of services providers employ a total of about 157 Mozambican lawyers and 20 foreign lawyers. Based on the enterprise census data shown in Table 5, as of 2002 there were 42 firms providing legal services in Mozambique. Assuming that many of those firms continue to operate today, this implies that there are at least another 30 smaller law offices providing legal services in Mozambique (plus any new law offices that opened between 2002 and 2008). In addition to these law offices, individual lawyers also provide legal services. The Mozambican Guild of Lawyers as of March 2008 has a membership of 308 lawyers.<sup>11</sup> Many law offices are Mozambican-owned but we identified 5 law offices with some degree of foreign ownership.

The market structure in legal services is unknown. Based on our survey in Maputo, 4- 6 large law offices account for more than 80% of the market for legal services and the rest of the market is accounted for by smaller law offices. The average annual sales of law offices in the period 2005-2007 range from 50000 USD to 2 million USD.

The main clients for legal services provided by the 10 relatively large law offices are multinationals, domestic firms of all sizes, and some parastatals. Only multinationals are able to purchase the services from the legal departments of the big 4 given the high prices charged.<sup>12</sup> There is also segmentation in demand in that smaller law offices report more often to be serving small domestic firms than larger law offices. Also, it is interesting to note that not all multinationals in Mozambique use law offices for their legal services’ needs. For example, SASOL outsources legal services to a law office arguing that is the only efficient option given the complexity and time-consuming processes linked to the Mozambican legal system but MOZAL prefers to rely on the services of an internal legal advisor.

> 11 Of these 308 lawyers, some work exclusively for the public sector but we do not have the exact number. 12 In rare cases, ministries also use the services from the legal offices of the big 4 firms.

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