ECCH Ref. No.

806-077-1
Rev. 28
th
February 2008
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STRATHMORE UNIVERSITY
NAIROBI, KENYA

LawAfrica (A)

Author: Dr. Freddie Acosta


Every lawyer in Kenya, including my own father, would think we were mad if we let go of these
prestigious, reputable law firms and law practice opportunities, - Maina Waweru.



In October 2000, both Maina Waweru, the CEO of LawAfrica, in Nairobi, Kenya, and
Katarina Juma, the Chief of Operations, were faced with a dilemma. Their new online
business had not generated any revenue because the website developer contracted to do
the job had failed to develop the website on time. Moreover, the two budding entrepreneurs,
Maina and Katarina, were on the verge of resigning from their lucrative careers to embark
on running their own business.


Maina Wawerus Early Career

Maina was born in Kirinyaga, Kenya on 14
th
of April 1975. He completed his primary
education at Catholic Parochial Primary School and secondary education at Strathmore
School. He further pursued a two-year Information Technology course at Strathmore
College. Maina always had a desire to pursue law. He wanted to attend the University of
Nairobi, but during that time, the university was shrouded with student riots and
demonstrations. Therefore, in 1993, Maina decided to pursue a degree in Law at Lancaster
University in the United Kingdom. He graduated in 1997 and a year later, earned a Masters
in Law at Cambridge University.















This case was written by Dr. Freddie Acosta, Strathmore University, under the direction of Prof. Lluis Renart, IESE
Business School for the IFC MSME Project. It is intended to be used as basis for class discussion rather than to
illustrate either effective or ineffective handling of a management situation. The author has changed some names to
protect their interest.

Copyright 2006-2008 by Strathmore University. No part of this publication may be copied, stored,
transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the
copyright owner.

Website: www.strathmore.edu


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Maina came back to Kenya in August 1999 and enrolled at the Kenya School of Law to
obtain a professional qualification. Maina highlighted that:

Each candidate must undergo a Pupilage process for 8 months under an
experienced lawyer in order to become an advocate of the High Court. I was
accepted for Pupilage at Great Advocates,

Great Advocates was a leading Kenyan law firm providing a comprehensive range of legal
services and solutions for domestic and international clients. The firm had a reputation as
one of the leading law firms in the East African region.

In April 2000, Maina started working for Great Advocates as a Legal Assistant even before
he had been admitted into the bar which had been scheduled to happen in June that year.
He immediately received a 100% increment on his current monthly salary of KShs 30,000
(US$ 400) because his employers saw that he had great potential of growing in the firm.

Maina was stationed in the commercial department handling intellectual property right,
trademark and patent cases. Working with Great Advocates was every young lawyers
dream, Maina remarked.


Katarina Jumas Early Career

Katarina Juma was born in Nairobi, Kenya on 22
nd
of December 1975. She spent her
formative years in Mombasa, a large coastal city, 500kms South-East of Nairobi. She
attended primary education at Loreto Convent from 1980 1989, and proceeded to high
school at Loreto Limuru High School from 1990-1993. While in high school, she served as
the Library Captain for 4 years. I was in-charge of the library and I loved it, Katarina said
in an interview. After high school, Katarina wondered which degree to pursue.

Katarinas father was a lawyer and served as a High Court Judge for many years. Katarina
explained that:

I, however, didnt have any interest in law. So in 1994, I enrolled to study
Economics at Sussex University in the UK. Later, I found out Economics wasnt fun
at all. I didnt like it. During that time, I lived with five other foreign nationals in the
students hostel: a French-Psychology student, a Greek-Law student, two Arab
sisters and a Jew from Israel who were all taking law. Half of the time, we discussed
their subjects. I got enchanted listening to their cases and began to develop an
interest in law,

Without telling her parents, Katarina applied for a degree in law at the University of Wales,
now called Cardiff University. After being accepted, she transferred all her personal effects
to her new university and then went back home to Kenya to tell her parents about it.



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I knew they wouldnt be pleased with my decision because I had wasted time and
money in Sussex. As expected, they were shocked about my sudden change of
degree, but they couldnt do anything about it, Katarina narrated.

She further explained that:

During the 1997 break at Cardiff, I went home to Kenya to do my internship. It was
then that I met Maina at Great Advocates. Although it was such a short meeting,
four weeks was enough to know a person. After I finished my Law degree at Cardiff
in mid-1998, I went to New York in the United States for my Masters in Law at
Cornell University,

In the mid-1999, Katarina went to England. She was employed at Unilever as a
Management Trainee was not involved in any legal matters at all.

I was interviewed and hired from England and was sent to Kenya. When I arrived in
the country, all the other Management Trainees had already been recruited. So I
was given the task of recruiting and short listing Europeans and did all the paper
work, Katarina added.

During that period, Katarina felt that she needed to go to a Law School in order to become
a court advocate. After weighing her options, she opted to quit her job as a Management
Trainee at Unilever, which she described as one of the best job opportunities in Africa. She
then went to the Kenya School of Law for eight months and was accepted for pupilage at
Prime Advocates an equally reputable law firm like Great Advocates.


Katarinas Story

When she came back to Kenya in 1997, Katarina realised that it was difficult to get
materials of court rulings. While still at Cornell in early 1999, Katarina was assigned a
project which she was to do with another Kenyan student who had also experienced the
same difficulty. Katarina highlighted the unavailability of materials on court rulings in Kenya
to their adviser and inquired on what could be done. Katarina had observed that it was so
easy to get electronic rulings for American courts and she thought of creating a business
modeled along a similar concept.

Katarina exchanged ideas with her partner, whom she described as a woman who was
my total opposite. Her partner wanted to implement the idea through a Non-Governmental
Organization (NGO) model whereas Katarina wanted to establish a private company. Due
to these disagreements, they parted ways and she embarked on a preliminary study of her
idea. Commenting on why she did not want the NGO model, Katarina pointed out that,
half of the time I spent in Johnson Business School of Management. I took courses in
Entrepreneurship and Project Management. Towards the middle of 1999, Katarina


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returned back to Kenya. At that time, she said, my family had relocated to Nairobi. I
didnt know anybody in Nairobi except Maina, she added.

During that period, Maina was at the Kenya School of Law.

I didnt have his address, but I clearly remembered his phone number. Therefore, I
called him and we met at a popular restaurant in Nairobi. This was in late August
1999. I told Maina about my business idea and he gladly welcomed it. He promised
to contact me after finishing his bar examinations.

In September 1999, while already working at Great Advocates, Maina contacted Katarina,
who was now doing her pupilage at Prime Advocates.


Mainas Story

Maina recounted that:

Legal research was painstakingly difficult for practitioners in Kenya. There was a
pressing need for past judgments of any court since the system of law in Kenya was
based on precedents. Lawyers needed to access previous court rulings in order to
compare current cases and get a better understanding of their possible outcome.
During that time, lawyers did not have documented information on past rulings.
Therefore, they relied on their own memory and personal collection of cases, or got
information through informal networks with other lawyers. In the university too,
students were taught not only the principles of the law, but also how to do research
and find these materials. Thus, we realised there was an opportunity.

Let us do it! Maina told Katarina. We will collect all the data and sell them to
lawyers by asking for a subscription fee, he added. Consequently, Maina and
Katarina conceptualised their business with a 50/50 share ownership without
resigning from their jobs. They worked full time at their respective law firms during
the day and dedicated extra hours for their business idea at night.


The Early Days of LawAfrica

In late September, 1999, Maina and Katarina started collecting court rulings. They wanted
to secretly collect as many cases as possible within a short period of time.

We have to do this secretly because we wanted to keep the business secret until
the day we launch, Maina remarked. Besides, the only barrier to entry to this kind
of venture was information, he added. So we started with the Court of Appeal.
There was only one Court of Appeal in Kenya (Exhibit 1) and it had relatively few


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cases each year. We used our own salary and allowances to photocopy all the
materials.

Friends, acquaintances, judges, lawyers, NGOs, libraries and newspapers contributed
thousands of cases and stacks of information. At this point, the two partners stopped and
asked themselves, What do we do next? Maina stated their plight as follows:

We were short of funds and had already spent Kshs 200,000 (US$ 2,666) on
photocopying court cases. We wanted to publish these documents but lack of
adequate capital was a big problem. The alternative was to digitise all the
documents. But where would we get the money from? I wonder how many start-up
businesses were able to borrow money from financial institutions based on ideas
alone. At that time, in fact, we didnt even have an office. One could see all the
documents at the boot of my car. That is our office. Sometimes we worked at
Katarinas house.

In November 1999, the two entrepreneurs registered their domain name LawAfrica.
Hence, http://www.lawafrica.com became an official website for their venture.

The cheapest option of launching the business was on-line. It would cost a lot of
money to print the cases, whereas on-line, we could hide the fact that we were a
small company by developing a good website and creating the image that we were
a big company, Maina explained.

By December 1999, Maina and Katarina befriended the Director of Bit-Stop Ltd. and
contracted his company to develop an interactive website for their venture. The project
development was to commence in January 2000. We would talk for many hours about the
Internet and the online businesses in Kenya. We wanted LawAfrica to be like the famous
AfricaOnline
1
which was based in Nairobi, while at the same time, emulating Ayisi
Makatiyani
2
as our role model, Maina added.


Sources of Capital

In January 2000, Maina spoke to an investor who was also his relative. He told him of not
only their business venture, but also their need of funds to grow the business. The investor
asked them to prepare a business plan of no more than 10 pages, and maybe he would
consider pumping in some money.

We knew exactly what we wanted for our business. Writing a business plan was not
really a problem. We were able to come up with a 7-page document (Exhibit 3)
overnight that outlined our product, target market, marketing strategies, competitors

1
Africa's first and full Internet Service Provider.
2
A famous successful African Businessman and Industrialist.


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and revenue streams. The following day, we submitted the document requesting for
Kshs 1.5M (US$20,000), Maina narrated.

The investor agreed to lend them Kshs 1,500,000 (US$20,000) on condition that if the
money was not repaid in two years, he would convert the loan to a twenty per cent (20%)
equity in LawAfrica. In addition, a former Canadian schoolmate of Maina, who was based
in Japan, had also heard of their business venture. He donated US$ 1,000 to relieve them
of their financial burden. Katarinas parents also added a further KShs 400,000 (US$
5,333). A portion of their accumulated money was used to pay the forty per cent (40%)
down payment of the Ksh1M website-development contract with Bit-Stop.


New Offices

Since Maina and Katarina did not have an office, the first thing they did was to look for
premises. They found two rent-a-desk tables at the Industrial Area. They then hired two
people to start encoding the court cases because scanning would not give them the
desired product. Besides, lawyers required entire texts of rulings with the option of search
capability, whereby they could type some key words of a case and obtain a listing of all
cases matching the search criteria.

Within no time, the two desks increased to 10, with 20 employees working in two shifts.
However, they found the progress of work still very slow. Therefore, the two entrepreneurs
contracted a Virtual University whereby they rented and utilised the universitys 40
computers during the weekends. In addition to the 20 encoders working at Industrial Area,
they hired an additional 40 people who were to be working in shifts. These people were
working on contract, as self- employed casuals paid on the number of pages typed.

During this time, we tried to get the company registered as LawAfrica Limited but
the Registrar of Companies refused citing that the name was too generic. So we
registered Lawtel Africa Limited on the 11
th
of March 2000, Maina said.

In March 2000, Maina and Katarina rented a 3-bedroom apartment at Upper Hill for Kshs
27,500 (US$ 366) a month. They bought some furniture and second hand computers so
that work could be continuous throughout the week. Some of the initial setbacks were
typing errors and misspelled words. This delayed and slowed down the progress of the
project.



Employment at Great Advocates

In April 2000, Maina was formally employed at Great Advocates as a Legal Assistant prior
to his acceptance to the bar in June 2000. His salary was increased by 100 per cent which
he contributed towards payment of rent for the new office.


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While at Great Advocates, two partners of the law firm had talked to him about the
opportunity of growing in the firm. However, when he told them about his business venture,
they did not take him seriously but rather advised him to continue working with them while
at the same time devoting extra hours at night for his little project.

In July 2000, I felt very exhausted. I knew that Katarina was equally exhausted.
Working day and night seemed to make no sense at all. So I met with the partners
at Great Advocates and told them that I have been working hard day and night for
both the law firm and LawAfrica, and that I felt guilty because I was not working
100% for Great Advocates. Before that, I used to work until late in the evening. My
boss Thomas Cook, a brilliant lawyer, advised me to go on leave with pay for three
months. He told me to continue building LawAfrica and eventually sell it, then come
back and work in the firm. I opted to take unpaid leave until the end of October,
2000. Maina explained.

Maina was fully aware that Thomas Cook was taking a risk in his favour because some
other partners of the firm would not have been generous enough to allow him to take the
leave without any advance notice.


Dilemma

By 31
st
October 2000, all their money was depleted yet Maina and Katarinas business was
not generating any revenue. After almost one year of constant delay, they realised that
they did not have an on-line product. Their website developer had kept asking for
extension in the delivery of a functional website.

Maina had to give a definite answer to Thomas Cook the next day.

Deep inside, I felt bad for my boss who was grooming me. He was a good, quiet
man. He rarely found someone with whom he could interact with, and I knew that I
had wasted his time grooming me. It was such an honour and great privilege to be
working under the supervision of a very reputable lawyer. On the other hand, at the
bottom of my heart, I knew that I wanted to work for LawAfrica but was afraid that
this idea might not work, Maina lamented.


Katarinas situation wasnt rosy either.

My Mum kept asking me how would I repay her if LawAfrica didnt work-out as
planned. I was contemplating my other options, Katarina wailed.

The two partners Maina Waweru, 25 years old, single and Katarina Juma, 24, also single,
knew that they had to make a wise decision immediately.


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Exhibit 1


The Republic of Kenya Judiciary

THE COURT STRUCTURE






Source: http://www.judiciary.go.ke/c-structure.html (accessed 10 June 2005).














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Exhibit 2

The Kenyan Judiciary Background

The Kenyan legal system is primarily based upon the English Common Law, with Tribal
Law, Hindu and Sharia Law being applied in certain disputes. The Constitution is the
supreme law of the land and can only be modified by a vote of sixty five percent of all the
members of the National Assembly.

The legal system suffers greatly from inefficiency, corruption and a lack of adequate
funding. The Court of Appeal and the High Court are superior courts of record and are
established by Chapter VI, Part 1 of the Constitution of Kenya. The Court of Appeal sits at
the head of the court system and has jurisdiction to hear appeals from the High Court as
may be conferred upon it by law. The High Court has unlimited original jurisdiction in civil
and criminal matters and such other jurisdiction as may be conferred on it by law.

Lawyers in Kenya are represented by the Law Society of Kenya. The Law Society was
established by an act of parliament and governed by a ruling council elected annually by
the members of the Law Society. All practicing lawyers within Kenya are required to
become members of the society.

The Law Society of Kenya is mandated to maintain and improve the standards of
conduct of the legal profession, to conduct continuing legal education of its
members, and to assist the government and the judicial system in all matters
regarding legislation and the administration of law in Kenya. In the latter role the
Law Society has been active in the promotion of human rights and in participating in
the constitutional reform process.



Source: http://www.icj.org/news.php3?id_article=2578&lang=en&print=true,
(accessed 10
th
June 2005)


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Exhibit 3

Excerpts from LawAfricas Business Plan


A. Name of the Business
The business will be officially called LawAfrica Publishing Ltd. It is a start-up venture with
the following characteristics:

LawAfrica will be a company of two directors with a 50/50 share.
The goal will be to start the venture as inexpensive as possible, with no debt
financing from banks and other institutions.
LawAfrica will be an office start-up, utilising one apartment in Upper Hill, Nairobi,
Kenya.


B. Premises
This venture will be initially located in a 3-bedroom apartment in Upper Hill, Nairobi, Kenya.


C. Descriptive Definition of the Business
LawAfrica Publishing Ltd. is a partnership by and operated by Maina Waweru and Katarina
Juma. Following is a summary of the main points of this plan:

The objectives of LawAfrica are to generate a profit, grow at a challenging and
manageable rate, and to be a good citizen.
The mission of LawAfrica is to provide fast and reliable information to individual
lawyers, law firms and law students.
The keys to success for LawAfrica are marketing and networking, responsiveness
and quality, and locking-in clients.
The initial primary service offered will be Internet-based case materials, although
publication will be considered in the future.
The local market for this business is very huge and expansion to other East African
countries is very promising.
An initial financial analysis of the viability of this venture shows outstanding promise
and results. Several sources note that legal publishing in the Internet business is
very easy to start, and the only barrier to entry is information itself.


D. Project Long Range Objectives
Over the long term, LawAfrica plans to explore other services like publication of other court
and law materials like Jurys Prudence and Court of Appeal Annotations among others.
Expand to other East African Countries.




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E. Feasibility Criteria
There is a pressing need for court rulings as there is no available product or service that
would cater to this problem. Because of this reason, the business venture would help
provide fast, reliable information to local lawyers, law firms, and law students.


F. Highlights of the Project
Since there is the fast rise in the use of the Internet Technology and the pressing demand
for court materials, the directors training in Law practice and interest in the field of IT gave
them the idea of putting a business that would render fast and reliable source of information
to those in the Law Practice.

G. Marketing Aspect
A. Product Description
The Company provides a complete list of court rulings stored in a database,
accessible in the Internet through subscription.

B. Demand and Supply
A logical segmentation breaks the market down into the following:
Individual Lawyers, Law Firms, Universities and Students, Law Society of
Kenya, Private Companies, NGOs and Government Parastatals.
The largest and most logical markets for LawAfrica are the law firms.
These firms most have a need for up-to-date court rulings to maintain
competitiveness in the industry.
While there are no competitors as of the moment, LawAfrica will be the
first law publishing company in East Africa.
Finally worth noting is the growth trend for this market, estimate at
around 5 to 6 percent annually.


C. Promotional Strategy
The directors would conduct product presentation to different law firms and
universities about their on-line products.


D. Pricing Strategy
Kshs 25,000 (US$ 333) monthly subscription fee

E. Sales Strategy
Sales strategy for LawAfrica is simple and straightforward: client satisfaction and
client lock-in and/or loyalty!

F. Strategic Alliances
The directors would approach the Law Society of Kenya to build networks and start
the marketing and promotion of LawAfrica products.


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H. Sales Forecast Through Subscription
2000 2001 2002 2003 2004
Sales (Kshs) 3,000,000 4,500,000 9,000,000 12,000,000 16,000,000
Sales (US$) 40,000 60,000 120,000 160,000 213,333




I. Project Timetable
Step Task Name Start Expected Date
to Finish
Duration
1 Gathering of Materials
(Photocopying)
September 1999 December 1999 4 months
2 Digitising the Data January 2000 August 2000 8 months
3 Internet Website
Development
January 2000 May 2000 5 months
4 Test Run (Uploading of
the Database)
1 June 2000 30 June 2000 1 month
5 Promotion/Marketing July 2000 October 2000 4 months







Exhibit 4
Expenses as of October 2000

Description Amount (Kshs) Amount (US$)
Domain Name Registration 25,000 333
Photocopying of Court Cases 300,000 4,000
Encoding of Court Cases (Encoders) 700,000 9,333
Rent (Apartment) 220,000 2,933
Rent-A-Desk 80,000 1,067
Rent of the Virtual University 80,000 1,067
Website Development 400,000 5,333
Miscellaneous expenses 200,000 2,667
Computers 200,000 2,667
Total 2,205,000 29,400