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Allen & Overy's Global Microfinance Working Group

A global microfinance working group

• Client: microfinance institutions, NGOs
• Country: All
• Area of law: Microfinance
• Date published: 1 Jun 2010

The client's needs

The UN has identified microfinance as "one of the key driving mechanisms towards meeting the Millennium Development Goals". Providing financial services such as credit, savings and insurance to the poor helps them develop their businesses and support their families, educate their children, access medical care and protect themselves from the unforeseen.

Microfinance institutions need to attract outside investment, using sophisticated products to secure long-term financing for their microfinance programmes. They also need to comply with ever more complex regulatory requirements.

Allen & Overy has been advising on microfinance-related issues for several years, including on two landmark securitisations for BlueOrchard Loans for Development, which were amongst the first to enable to microfinance sector to tap the international capital markets.

In August 2008, we established our global Microfinance Working Group to coordinate our work with microfinance institutions, banks, and other organisations, and to provide, often on a pro bono basis, the much-needed legal support to keep pace with the ever-growing demand for microfinance. The group now includes more than 200 lawyers from across a variety of practice areas and over 20 of our offices worldwide.

Although we are not the only law firm advising microfinance institutions and their investors, we believe we are the only firm taking this innovative and global approach to pull together our expertise, not just to provide advice, but through training and research, to support the development of the microfinance legal marketplace.

Challenges and lessons learned

Our microfinance group was established with the objectives of pooling our knowledge and coordinating our resources across the firm. Our lawyers use their expertise and skills to work on microfinance matters, but developing and sharing our expertise is vital:

• We host training events which microfinance institutions, existing clients and our own lawyers can attend to deepen their knowledge of the sector and develop specific expertise;
• We conduct research and publish articles on microfinance-related topics, building and sharing our knowledge with others.

Coordinating the involvement of over 250 lawyers in more than 20 locations requires strong communications:

• A monthly e-newsletter shares recent developments within the sector across this diverse group of lawyers, as well as highlighting recent successes and new mandates won.
• A dedicated intranet site accessible across all offices is used to share information and build a library of best practice and know-how.

For each individual microfinance matter we take on, we establish teams that bring together lawyers from across the areas of expertise and geographical locations required, and led by one or more partner. We have a vast experience of providing advice on complex, multijurisdictional cases, and have robust systems in place to help us provide a seamless service to our clients when working across multiple locations.

The impact of the case

The pro bono legal advice helps microfinance institutions access the long-term funding streams and develop the structures and policies they need to provide sustainable and meaningful solutions to poverty. Investors are attracted to microfinance because of the 'double bottom line' of the social as well as financial return.

The money released, individuals supported and long-term development of microfinance institutions and the broader microfinance knowledge base are the most tangible difference our Global Microfinance Working

Group is making to our clients' work.

• Our advice on two landmark securitisations secured funding worth US$209million, going to over 100,000 individuals and small businesses in 15 developing countries.
• Our research on innovative sharia compliant microfinance for the International Development Law Organisation opens the debate on investment in microfinance initiatives in the Middle East.
• An associate was given time out from the firm to conduct a legal risk audit for Delhi-based Drishtee and help it to structure its microfinance and health operations across rural India.

Resources and work required

Since its establishment in August 2008, over 250 lawyers have joined the Global Microfinance Working Group from across a variety of practice areas and from more than 20 offices. The group is led by a partner and is coordinated on a global level by a senior associate, with support from a team of trainees, business development and administrative staff, who all fit this work around their day-to-day activities. As the group is diverse and work is taken on locally as well as through the coordinating team in London, it is important that information on all proposals requested, mandates won and the progress of matters are tracked and communicated across the group.

An intranet site was established to share information internally, as well as through the monthly e-newsletter distributed to all members of the working group. We also share information with clients and potential clients through our website, which has a dedicated section for the Microfinance Working Group. Marketing brochures were created setting out our credentials and expertise, just as they are for our fee-earning work, and we have also hosted conferences which bring together leading individuals and organisations within the microfinance sector.

The key resource contributed to the development of the working group and its support to our microfinance clients is the time of our lawyers. We have a policy that allows our lawyers to count up to 25 hours of pro bono work, including microfinance, towards their annual billable targets. A number of associates have been allowed to take extended breaks to spend time in the field with microfinance institutions in Africa and India.

Approximately 70% of our microfinance work is undertaken on a pro bono or part pro bono basis, depending on the nature of the client we are advising on a particular matter. Through pro bono and discounted work, we can build the firm's reputation in the microfinance sector, develop relationships with key stakeholders (including many of our core clients) and help our lawyers develop their experience, with the long-term view of wining an increasing number of fee-paying mandates to generate both the necessary profits for the firm and the incentive to continue to work on a pro bono basis as well.

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