Central Asian-based Colibri Law has become the second international firm to enter the Iranian legal market after opening its doors in Tehran.

The Iran team will focus on corporate work including joint venture agreements, merger control issues, and trade and regulatory issues. The firm is also looking to specialise in advising foreign firms looking to investment in Iran.

It took three years for Colibri to develop its Iran entry strategy and an additional year of negotiations before choosing to partner with local firm Gheidi & Associates.

Colibri partner Otabek Suleimanov said: “Iran is the largest market to open in the post-Soviet era and we see endless opportunities, particularly in the areas of infrastructure, energy, industrials and consumer goods.”

The length of Colibri’s strategy meant that it was in the final stages of striking the deal before the Joint Comprehensive Plan of Action was signed in July 2015. The plan, also known as the Iran Deal, saw the country reduce its stock of uranium in return for relief in US, EU and UN sanctions.

Two weeks after the sanctions were lifted CMS became the first international firm to open an office in Iran. Jürgen Frodermann and Shaghayegh Smousavi, partners from CMS’ German arm CMS Hasche Sigle, head up the Tehran office.

CMS launched a task force to explore the possibilities of opening in the country following the announcement that Iranian president Hassan Rohani’s had begun negotiations to remove the sanctions.

It is understood that a number of UK firms have been discussing opening in Iran including Clyde & Co, Eversheds and Pinsent Masons. None of these firms have committed to opening an office in the country although French firm August & Debouzy launched an Iran desk to support its French corporates with their projects in the region.

Payne Hicks Beach construction and energy head Julian Critchlow will leave the firm on 1 June to set up his own practice focusing on Middle Eastern and East African legal work.

The new firm will be called Al Bawardi Critchlow and is established in association with UAE firm Al Bawardi Advocates. It will be based on Fleet Street.

The tie-up will allow Critchlow to practise across the Middle East and increase Al Bawardi’s international presence, with Critchlow’s firm becoming its first associated office in the UK.

Critchlow is taking five consultants from his team at Payne Hicks Beach and his personal assistant with him to the new firm.

He will also be taking a number of clients to his new firm, including ex-Gibson Dunn & Crutcher partner Peter Gray.

Critchlow is representing Gray on his high-profile claim against Gibson Dunn over negligence and breach of contract.

Gray, who is based in Dubai, is seeking approximately $500,000 ($350,000) in costs related to a previous legal battle in the UK that saw him lose his job at the firm.

Since his departure from Gibson Dunn, Gray has started working for Dubai-based law firm Kingsgrove Partners, which also has an association with Al Bawardi.

Critchlow said it was through Gray that he had “become more involved in Middle Eastern work”, leading him to launch the firm.

“After long and friendly discussions with Payne Hicks Beach we’ve agreed it’s not the right place to do this type of work from,” he said.

Critchlow joined Payne Hicks Beach in January 2013 to launch the construction team. He joined from Fenwick Elliott.

In a statement Payne Hicks Beach said: “We have enjoyed working with Julian and wish him well in his new endeavours. 

“Payne Hicks Beach will continue to advise on construction related matters, as we did before Julian joined us, however this will not be a key area of focus for the firm moving forward.”

In line with His Highness Sheikh Mohammed bin Rashid Al Maktoum’s vision encapsulated in the 2015 Dubai Strategic Plan to develop Dubai as an international investment hub between Tokyo, Hong Kong and Singapore in the Far East and Frankfurt, London and New York in the West, Borse Dubai Limited was established in August 2007 to consolidate the Government of Dubai’s two stock exchanges in the holding company for Dubai Financial Market (DFM) and Dubai International Financial Exchange (DIFX).

Borse Dubai is 60 per cent owned by the Investment Corporation of Dubai, 20 per cent by Dubai Group LLG (a member of Dubai Holding Group) and 20 per cent by DIFC Investments LLC.

International standards

The DIFX is located within the state-owned onshore financial free zone known as the Dubai International Financial Centre (DIFC). The Dubai Financial Services Authority (DFSA), regulates the conduct of financial services in the DIFC to ensure compliance with the legal and regulatory framework based on internationally acceptable standards familiar to the participants of the global financial markets.

The DIFX was launched in September 2005 as a dollar-denominated, regulated and transparent electronic trading platform to provide multinational companies, government-held corporates and family-owned conglomerates from the Middle East and North Africa, Turkey, Levant region and Egypt, Indian sub-continent, South Africa and further afield with an opportunity to tap into the international capital markets by means of an IPO, secondary listing, issue of bonds or other debt instruments to finance their expansion strategy overseas.

With the rise in competition and liberalisation of markets following the membership of the Gulf Cooperation Council (GCC) states to the World Trade Organisation, an IPO on the DIFX would allow the founders of these companies to retain majority ownership and diversify risk among investors, gain capital to expand beyond their saturated domestic markets and seek opportunities abroad.

Issuers seeking a listing on the DIFX must comply with the Listing Rules to have their securities admitted to trading. A company applying to list its securities must comply with the eligibility criteria relating to the issuer of securities and the eligibility criteria relating to the securities. These include:

– The DIFX must be of the view that both the issuer and its business are suitable for listing;

– The directors must have appropriate experience and expertise in the business of the applicant and exhibit high standards of integrity;

– The DIFX generally requires a minimum free float of 25 per cent of the securities to be listed;

– The applicant must have published audited accounts for the preceding three years, in accordance with the International Financial Reporting Standards;

– If there is a majority or controlling shareholder, the DIFX must be satisfied that the applicant will be able to operate its business independently of that shareholder; and

– The applicant must have an expected market capitalisation of at least $50m (£24.3m). The DIFX does not have any foreign ownership restrictions, lock-in restrictions on investors or any restriction on the percentage of a security that an investor may hold.

Listing on the DIFX will enable an issuer to broaden its shareholder base by attracting institutional and high net worth investors and to obtain a reference price or market value for the company based on investor demand. Following admission of their securities to trading, issuers are subject to continuous disclosure obligations.

The DIFX promotes transparency, disclosure, corporate governance and accountability using mechanisms familiar to international investors such as a comprehensive disclosure regime, class transaction tests and related party transactions, full reporting of accounts, avoidance of shareholders’ agreements and full disclosure of control mechanisms and corporate governance.

In the Gulf, the business model has generally been for state-owned companies and family-held conglomerates to have direct or indirect ownership over a variety of business sectors (eg infrastructure, ports, airlines, telecoms and real estate) and have the same representatives or nominees sitting on the board of directors of numerous companies within the group. These companies will need to implement corporate governance standards and produce financial statements to meet the transparency and governance standards set out in the listing rules.

In the context of the unprecedented public scrutiny of the aggressive cross-border acquisitions led by emerging market companies, a listing on the DIFX will place well-capitalised multinational firms in the GCC, adopting a corporate governance strategy commensurate with international best practices in Organisation for Economic Co-operation and Development (OECD) countries, in a strong bargaining position when embarking on cross-border acquisition sprees, particularly during the course of takeover or competitive bids.

The DIFX has attracted international and regional investment banks as ‘members’ to trade and/or provide securities clearing services on the exchange. They are: ABN AMRO, Arbuthnot Securities, Barclays Capital, Citigroup, Credit Suisse, Daman Securities International, Deutsche Bank, EFG-Hermes, Hichens Harrison, HSBC, ING Bank NV, Jefferies International, KAS Bank, Mashreq Capital DIFC Ltd, Merrill Lynch, Morgan Stanley, National Bank of Dubai Investment Bank, SHUAA Capital and UBS. The members will assist in pricing and underwriting IPOs. Deutsche Bank, Merrill Lynch and Morgan Stanley are providing liquidity on the exchange.

Nasdaq alliance

On 20 September 2007, Borse Dubai and Nasdaq announced a series of transactions as part of the planned takeover of the Nordic exchange operator OMX AB (publ) to create a global exchange platform across the US, Europe, Middle East and North Africa and Asia. The DIFX is set to be rebranded ‘Nasdaq DIFX’ and will benefit from Nasdaq’s technology and trading platforms, experience and geographic reach to accelerate its growth and compete on the global financial markets.

One of the main challenges of a new stock exchange is to attract sufficient issuers and instruments to ensure a meaningful liquidity pool attractive to international investors. Abraaj Capital, the Dubai-based private equity firm, which has $4.6bn (£2.23bn) of assets under management and company capital of $1bn (£480m), announced on 16 December 2007 that it was considering floating between 20 and 30 per cent of the company in an IPO of up to $1bn (£480m) on the DIFX.

DP World, the third largest global port owner and operator following its acquisition of the UK’s Peninsular & Oriental Steam Navigation Company (P&O) for $6.8bn (£3.30bn) in 2005, announced on 21 October 2007 that it would be selling 20 per cent of its shares worth at least $3.5bn (£1.70bn) on the DIFX in November 2007 as it seeks to double its capacity over the course of the 10 years in the Far East (for example, China, India, Vietnam and Pakistan).

The proposed IPOs by Abraaj Capital and DP World (a subsidiary of Dubai World, which is a holding company owned by the government of Dubai) are landmark listings for the DIFX as it seeks to attract regional heavyweight issuers, enhance liquidity and enlarge ownership of securities to institutional and high net worth investors. The proposed listings will invigorate the DIFX and underline the stature of the DIFC as a prominent international financial centre as Dubai seeks to gain a foothold on the global financial stage.

Pervez Akhtar is head of corporate in Dubai and Kamar Jaffer an associate at Allen & Overy

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HSF will partner with a local firm in the region in accordance with Saudi Arabian law, which prevents international firms opening without a local partner. The firm is hoping to gain local approval for the new association by March next year.

The news has emerged two years after HSF ended its six-year exclusive alliance with local firm Al-Ghazzawi Professional Association.

This year it also closed its Abu Dhabi office with its five lawyers relocated to Dubai.

The firm still has an office in the Qatari capital of Doha, which it opened in 2012 and is home to two partners.

The identity of its local partner firm has not yet surfaced, though just a small number of firms remain independent in Saudi Arabia.

A spokesperson for HSF said: “The Middle East is a key strategic market for our firm, and we are strongly committed to growing our leading practice there. We will continue to consider how best to develop our ability to support the needs of our clients in the region.”

HSF is the third firm this year to announce a Saudi launch.

Dechert tied up with Jeddah practice Hassan Mahassni in September. Earlier this year Shearman & Sterling partnered with Saudi Arabia’s Abdulaziz Alassaf & Partners, allowing the firm to do business in Riyadh, Jeddah and Al-Khobar.

DLA Piper also announced it is planning to open two additional offices in the country by the end of 2015. The first of these offices will be run by legal director Rakesh Bassi and be based in Jeddah. Middle East firm Al Tamimi & Company also said it was expanding its presence in the jurisdiction to Jeddah.

However this year has also seen a series of closures in the Middle East. Latham & Watkins closed in Doha and consolidated its Abu Dhabi and Dubai offices in March and Baker Botts closed its Abu Dhabi office, though it boosted its Dubai offering.

For more on the Saudi Arabian market and international relationships there, see last year’s analysis, Keys to the Kingdom.

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The three offices will be launched in Kuwait, Lebanon and Riyadh and are expected to open before the end of the year.

The firm confirmed its plans to open the three offices but declined to comment further as to how many partners would be based in the region.

Currently, the insurance firm’s only office in the Middle East is situated in Dubai. There are nine partners and 20 associates based within the office, which specialises in dispute resolution, transactions and regulation work across the aviation, infrastructure, insurance and shipping sectors.

Although HFW has no other offices in the region it also operates in Abu Dhabi through alliance firm Salem Al Maddfa Advocates and Legal Consultants.

The office openings will be the firm’s latest attempt to increase its international presence. In an effort to show the importance of the Asian market for the firm last year senior partner Richard Crump relocated permanently to Singapore. As region Asia represents a considerable investment for HFW with 20 per cent of the firm’s staff based on the continent.

Last year HFW saw its global revenue fall by 3 per cent, from £143.8m to £139m. On top of this average profit per equity partner dropped 9 per cent to £496,000.

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Corporate partners Charles Fuller and Andrew Tarbuck are both moving to Hogan Lovells’ seven-partner office, along with finance partner Anthony Pallett. 

Fuller joined Latham in 2002 from Simmons & Simmons and has since advised Dubai based Olive Group on its merger with Constellis Group, as well as Spectrum Equity on its investment in Trintech alongside Vista Equity Partners. 

Meanwhile, fellow corporate partner Tarbuck and finance partner Pallett joined Latham from Norton Rose Fulbright in 2010 and 2007 respectively. 

While at Latham, Tarbuck represented the National Commercial Bank of Saudi Arabia on its IPO, with Pallett working on financings for regional real estate developers such as Majid Al Futtaim Group. 

The departures from Latham come after the firm closed its Doha office last March and announced plans to merge its Abu Dhabi and Dubai offices.

Following the news, Latham also lost Abu Dhabi project finance Nick Collins to Jones Day’s London practice, with the number of partners now understood to be falling to six.

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Riyadh corporate partner Nasser Al-Hamdan, who will continue as managing partner of the local firm, will also join HSF as a partner.

Euan Pinkerton will join the office from White & Case in Riyadh, where he was a partner in the energy, infrastructure, project and asset finance group.

DLA infrastructure partner Anthony Ellis will join HSF’s Dubai office. Earlier this year HSF closed its Abu Dhabi office with the five-lawyer team relocating to Dubai. Ellis will be joined by a senior associate from HSF’s Australian offices, bringing the total Dubai practice to seven lawyers.

The appointments bring HSF’s Middle East operations up to eight partners and 31 lawyers across Riyadh, Dubai and Doha.

Joint chief executive Sonya Leydecker said: “Together with our recent launches in Johannesburg and Düsseldorf, this will be our third major investment in strengthening the firm’s presence across the EMEA region, a key focus for the firm to provide clients with a truly global offering.”

HSF Middle East head Zubai Mir added the association “brings a leading corporate capability into Saudi Arabia”.

The Riyadh launch comes two years after HSF ended its six-year exclusive alliance with local firm Al-Ghazzawi Professional Association.

HSF is the third firm this year to announce a Saudi launch.

Dechert tied up with Jeddah practice Hassan Mahassni in September. Earlier this year Shearman & Sterling partnered with Saudi Arabia’s Abdulaziz Alassaf & Partners, allowing the firm to do business in Riyadh, Jeddah and Al-Khobar.

DLA Piper also announced it is planning to open two additional offices in the country by the end of 2015. The first of these offices will be run by legal director Rakesh Bassi and be based in Jeddah. Middle East firm Al Tamimi & Company also said it was expanding its presence in the jurisdiction to Jeddah.

However this year has also seen a series of closures in the Middle East. Latham & Watkins closed in Doha and consolidated its Abu Dhabi and Dubai offices in March and Baker Botts closed its Abu Dhabi office, though it boosted its Dubai offering.

For more on the Middle East, look out for Monday’s special report focusing on the region. For more on the Saudi Arabian market and international relationships there, see last year’s analysis, Keys to the Kingdom.

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Four bands battled it out in Dubai in front of 400 fans, the first time Law Rocks has been held in the Middle East.

DLA Piper’s Pipers At The Gates Of Dawn opened the evening, making Dubai partner Simon Palmer the only person to be able to say he has opened two inaugural Law Rocks, both Dubai and the first ever one in London.

The set included brilliantly executed songs from Blur, The Killers and, to boot, the first-ever song to be played at Law Rocks, The Undertones’ Teenage Kicks.

CMS Cameron McKenna were up second, having flown in the day before from the UK to play. The Stragglers, consisting on this occasion of partners Jonathan Dames and Paul Smith, and their colleague Menna Haf knocked out a semi-acoustic set, using Haf’s powerful and soulful voice to good effect.

In particular, Queen’s Somebody To Love had the whole place singing along. The Stragglers were winners of the first ever Law Rocks back in 2009.

Nabarro’s band, Latent Defects, were up next, with Dubai managing partner Terry Fleet, the driving force behind the band, playing bass in public for the first time in his life.

When asked how he found it, Fleet said: “I felt nervous. First time performing in public for me. But I am Alright Now and I Feel Good.”

Possibly not entirely coincidentally, these were two of the songs Latent Defects played with gusto. While musically the entire band was of a very high standard, singer Rebecca Day shone with a remarkable performance.  

Finally, Taylor Wessing’s Tomorrow’s World took the stage. Relying on the staple diet of a four-piece band, some good old fashioned rock including Born To Be Wild, I Fought The Law, and Twentieth Century Boy, Middle East managing partner Mark Fraser and his team emerged victorious.

The panel of judges consisting of Tim Taylor QC of King & Wood Mallesons, sponsors 4 New Square’s George Spalton and Navigant Dubai managing director David Dale, all described it as a very close call, but Taylor Wessing just pipped DLA Piper with a point or so in it.  

Regular compere Damian Hickman, CEO of the IDRC in London said: “To have finally made it to the Middle East was brilliant. The legal market there, like everywhere else it seems, has taken Law Rocks to its hearts, and we’re very grateful. Quite how the bands keep getting better year on year is beyond me.”

Navigant managing director and Law Rocks founder Nick Child added: “I thought I’d seen the most impressive inaugural event yet in Singapore earlier this year. But these guys, they just rocked it. The bands, the crowd, even the venue, it simply couldn’t have been better.”

The 2016 event will be on 30 November so any budding UAE bands better get practising.

Outside of the Middle East, there will be Law Rocks gigs in 2016 in London, Los Angeles, New York, Vienna, Washington DC, Istanbul, Limassol, Sydney, Melbourne, Auckland and Sao Paolo.

By the end of 2015, the Law Rocks team estimates the total funds raised since it launched six years ago will pass the $1.5m mark.

Earlier this month Howard Kennedy was victorious at the final UK Law Rocks of the year at London’s iconic 100 Club, while in October Addleshaw Goddard and Coffin Mew’s performance split the judges with a first-ever tied result.

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Vinson & Elkins has become the latest firm to close in Abu Dhabi, with all staff set to relocate to its Dubai office.

All staff in Abu Dhabi, including partner Rob Patterson, will move to Dubai from the end of March, with the firm continuing to have offices in both Dubai and Riyadh.

The decision was made by Vinson & Elkins’ management committee, with a number of other firms closing in Abu Dhabi last year.

Herbert Smith Freehills closed in Abu Dhabi in the summer, in a move that saw five other lawyers relocate to Dubai and resulted in the consolidation of its United Arab Emirates’ offices into one.

Meanwhile Latham & Watkins closed in Doha and merged its Abu Dhabi and Dubai offices, seven years after launching in the region.

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Clifford Chance’s establishment of a professional partnership with Saudi Arabian firm and long-standing association partner Al-Jadaan made headlines early last year.

The move allowed Clifford Chance to formally establish its presence in the kingdom through its own legal framework, and own 75 per cent of the business.

The stability this brings the firm should not be underestimated. It could set the standard for every future launch in Saudi Arabia.

Clifford Chance is now no longer reliant on a single Saudi lawyer to sponsor it and head up its office and bank accounts. If its relationship with one of the Saudi nationals comprising the 25 per cent Saudi stake of the business disintegrates, it is no longer without a vessel for its work in the country. Instead, it can locate another suitable Saudi candidate to take the lawyer’s place. All of a sudden, the volatility that has plagued Western firms trying to establish a bridgehead in the Kingdom of Saudi Arabia (KSA) can be managed.

The new team includes two Al-Jadaan partners, banking partner Abdulaziz Al-Abduljabbar and corporate and capital markets specialist Khalid Al-Abdulkareem. Mohammed Al-Jadaan remains managing partner of Al-Jadaan and, together with the rest of the Al-Jadaan team, will now focus on litigation, mediation, strategy and structuring-focused advice. He will continue to support Clifford Chance in an advisory capacity.

Clifford Chance Riyadh managing partner Tim Plews told The Lawyer last year that he believed the firm’s professional partnership with Al-Jadaan would set a trend.

“There’s a new generation of Saudi lawyers who will try to sell this as their model,” he commented.

The Saudi legal market can be volatile, but while Clifford Chance’s solution is clearly an evolutionary step in the legal market in the kingdom, is it a feasible model for every firm and how quickly might it take root?

Furthermore, what is the best approach to setting up in the kingdom, how are firms choosing to establish themselves now, and how might this change?

This report takes into account key trends in the Saudi market and outlines why the kingdom is such a difficult place for firms to conquer.

How to secure a licence

A Clifford Chance-like structure will not necessarily suit Saudi lawyers since they will have to sign an arrangement that allows them less freedom. Currently, firms that choose not to follow Clifford Chance’s lead (or who cannot find a local lawyer who is happy with such a structure) but still want to establish themselves in Saudi need to find an association partner.

This partner must be a Saudi national. Because the law in Saudi Arabia is such a fledgling profession, the number of Saudi-born lawyers is low. The number of Saudi-born lawyers who are also suitable candidates for international firms to partner with – in other words, who have relevant experience of cross-border work – is even lower.

Rules for setting up an association require firms to be in line with local regulations. International firms must apply to the KSA Ministry of Justice to validate their association and establish a vehicle to do business in Saudi. The process of setting up an association and securing a licence is lengthy, taking anywhere from six months to a year.

Firms must also apply to the Saudi Arabia General Investment Authority (SAGIA), as does any foreign company wishing to set up in Saudi, for a foreign investment licence. The steps are numerous and involve compliance with many government departments.

Once established, the distinction between Saudi and foreign lawyers must be explicit. Firms need to be able to show what work Saudis perform and what work international lawyers do. What’s more, all front-facing work must be supervised by the Saudi associated partner, even if an international lawyer has done the bulk of it.

When setting up an association, firms have historically scouted the Saudi market for likely candidates and established relationships in a relatively straightforward way: network, relationship-build, pair off.

However, in an effort to minimise the volatility the classic association model can throw up (more of which later), firms have begun to hire Saudis as partners and then use them to establish a base. The partnership is still an association, as regulation requires, but by hiring the lawyer as a partner, firms engineer a cultural and relational shift.

One example of a firm that has taken this leap is Ashurst, which hired Faisal Adnan Baassiri in 2012 to establish its Jeddah office. Baassiri was head of legal at a private wealth management company in Jeddah before being poached by Ashurst and had done business with the firm in the region for years.

King & Wood Mallesons SJ Berwin’s (KWMSJB) recent launch was engineered by two office co-heads, one of whom, the Saudi-qualified Majed Almarshad, was hired by the Dubai office of legacy SJ Berwin in 2011. According to Almarshad, SJ Berwin had been eyeing Riyadh for years and it was the first international office the newly merged firm chose to establish.

In 2012 Allen & Overy (A&O) launched an association with Zeyad Khoshaim, made a partner in 2010, after Linklaters effectively poached A&O’s association with Abdulaziz AlGasim Law Firm, which was up for renewal after a five-year tenure. Khoshaim was formerly employed by Abdulaziz AlGasim.

These tie-ups represent a middle ground between a Clifford Chance-style professional partnership and a classic association, and the firms to establish them are among the most recent to launch a presence in Saudi Arabia. However, the practice of setting up a classic association has not disappeared, as is evident from McGuire Woods’ launch in May 2013, signing a co-operation agreement with local outfit the Law Firm of Badr Alarishi.

It is evident from the table above that, beyond the old-timers of the 1980s and 1990s there was a significant uptick in interest in Saudi from 2006 onwards, continuing until now. This can be at least partially explained by the reign of King Abdullah, seen as a reformer, who has implemented numerous changes in policy since 2005 and has focused on foreign investment.

There is no obvious pattern that can be seen in terms of headcount or partner hires and length of time firms have been established, indicating just how unpredictable the market can be.

White & Case, Baker & McKenzie and Clifford Chance were the first firms to make a foray into the Saudi market and they remain the largest, but aside from these three, size and year of establishment do not correlate. Norton Rose Fulbright’s office has existed since 2005 but currently contains five lawyers, while Clyde & Co’s headcount is twice that number, although it was established four years later.

It is not a case of the biggest or most elite leading the crowd to Saudi. While the first Western firms to establish a presence in the region were American, from that point on, Brits took the lead until around 2010, when Latham & Watkins decided to launch in the kingdom, poaching White & Case’s sponsor Mohammed Al-Sheikh, partner Christopher Langdon and the maj-ority of the associates from White & Case’s Riyadh office.

While Latham’s wholesale poaching is among the standout relationship breakdowns in the kingdom, volatility is a huge concern more generally.

Troubled history of associations

As with any pairing, differing expectations and perspectives result in problems. An association is a naturally volatile model as the agreement relies on individuals and one common stumbling block thrown up by the pairing of a local firm with an international one is the difference in client strategy.

International firms usually come to the kingdom with a major client relationship already established. As such, they will do everything in their power to keep that client happy, and quality control and availability are paramount. For the firm’s local partner that client may be no more important than others on its roster – and may not naturally fit within its client base at all.

Corpses of former associations litter the Saudi market, with many international powerhouses running into trouble.

These disputes have come to the fore since 2012, with bickering and infighting among firms reaching a new level. Before then there were occasional instances of this, such as Latham’s takeover of White & Case’s team and DLA Piper’s rocky relationship with its partners. But as the market has become increasingly populated by Western firms, the exits and arguments have piled up.

A&O and Linklaters ran into difficulties in December 2012 when Linklaters effectively poached A&O’s association with Abdulaziz AlGasim Law Firm, which was up for renewal after a five-year tenure.

A&O responded the same month by launching a tie-up with Zeyad S Khoshaim Law Firm. Interestingly, the lead partner of its new sponsor, Khoshaim himself, joined A&O as a partner in 2010 from its ex-sponsor Abdulaziz AlGasim.

DLA Piper, although only launching a base in the kingdom in 2009, has been through the wars, chalking up three associations already. In 2006 it announced it was launching with Abdulaziz Al-Fahad, but by 2008 the relationship had broken down.

In response, DLA Piper sent in Saudi lawyer Abdulaziz Al-Bosaily, who had been a DLA partner for a year since joining from Clifford Chance, to save its practice. However, in 2009 he switched to Clyde & Co to launch its Saudi practice, where he remains, and was replaced by Eyad Reda, DLA’s current Saudi sponsor.

Other break-ups include that of Canadian firm Fasken Martineau and Herbert Smith Freehills (HSF), both of which cut their losses in KSA last year. Herbies’ split with partner firm Al-Ghazzawi Professional Association (AGP) was said to be amicable, with the firms saying their strategies had developed in different ways. HSF continues to keep “friendly ties” with AGP and is looking for other ways to maintain a presence in the market.

Fasken Martineau, however, came to blows with Osool Law, with the Canadian firm saying its clients had driven the change and the erstwhile Saudi firm saying Fasken had marketed itself outside of the arrangement.

Trowers & Hamlins, with its Middle Eastern presence still strong in Abu Dhabi, Bahrain, Dubai and Oman, closed its Jeddah office in 2011, less than a year after opening, citing low work levels. At the time it sent office head Julian Sweeting back to London, saying it would service its clients from Riyadh via its association with Feras Alshawaf Law Firm.

One year later, the firm closed that office too. UAE head Abdullah Mutawi told The Lawyer at the time that its one remaining Saudi associate had become frustrated at the firm’s failure to deploy a partner to the office and had deserted it in favour of local ally Feras Alshawaf. Trowers’ tie-up with Feras Alshawaf was dependent on it having at least one employee in the country so the alliance came to an end.

Entering a professional partnership or hiring an association lawyer as a partner are both solutions that firms have engineered in response to the volatility question. The key benefit of switching to a professional partnership system is that it gives the assurance that there is a system in place that does not rely on a particular individual.

How to work the association model

For firms that are in association models with non-partner lawyers, how to best treat the alliance so it remains fruitful is the million-riyal question. Firms need to recognise that just by signing an alliance agreement with a Saudi firm the local firm is not subsumed into its network. It is not a merger or takeover in which the bigger firm’s aims and wishes take priority. Instead, treating an association partner more like a client may be key to conquering the Saudi scene.

Firms that have succeeded in conquering the Saudi market are those that have had a lengthy presence in the kingdom and have engineered key relationships with government departments or government-owned entities such as Saudi Aramco or the Ministry of Industry.

The firms best known as possessing such relationships are the usual suspects: Saudi nationals within the legal industry commonly list A&O, Bakers, Clifford Chance and White & Case as the key Western players.

Loyalty counts for a lot in the kingdom and if a firm enters the market hoping to win big clients through networking it may be disappointed. With speculation that visa requirements will be streamlined, Western law firms’ interest in setting up in Saudi will only heighten. Newcomers will have to study others’ experiences very closely.

Changing investment priorities

 The reason for the shift in priority from energy and petrochems to infrastructure and education is an increasing population, half of whom are under 25. This sector along with education and infrastructure will grow rapidly, as will healthcare as the country looks to take advantage of its oil-generated wealth, given the finite nature of the resources and the political uprisings of its neighbours.

The boom in the education sector, which has seen international clients looking to set up programmes with local Saudi education establishments, ties in with the kingdom’s historic employment – read unemployment – problem.

Of the 2 million jobs created in the country in the four years from July 2009, 1.5 million went to non-Saudis. Creating economic opportunities for Saudi nationals is of paramount importance.

The Saudi government knows it needs to build its knowledge economy. Its nitaqat policy, which expels foreign workers and fines companies that do not hire enough Saudi workers, was established in the hope of encouraging the private sector to hire Saudi nationals and not import foreign expertise.

The image promoted by the expulsion of foreign workers, which make up about a third of the country’s 30 million population, conflicts with the government’s stance on investment. Although Saudi Arabia could not be said to be an easy place to do business, foreign investment is welcome.

Indeed, since 2005 the government has reformed regulation hugely to allow for more foreign direct investment. It maintains a ‘negative’ list, prohibiting foreign companies from entering certain industries, but is hardly unique in this. Restricted industries include media, tourism and the military, but the list is vastly reduced from its previous version. There are now about nine industries closed to foreign investment, with many caveats to the bans, compared with about 30 before 2005.

Also, compared with the stance on investment taken by some members of the Gulf Cooperation Council (GCC) states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE), the Saudi perspective on foreign investment is lenient. Some GCC nations require 51 per cent local ownership for certain investments, while in the kingdom it is possible for a company to establish 100 per cent ownership.

Outbound investment is in flux as many Saudi clients look outside the kingdom and the GCC. The country is at a stage in the economic cycle whereby its investments beyond the region is coming to the fore, whether that is in Africa, Asia, Europe or the US.

Its three biggest trading partners are China, Korea and the US, while markets that offer particularly attractive returns include western African nations, which are attracting a number of Saudi investors, particularly on sovereign-related deals, in the infrastructure and mining sectors.

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Norton Rose Fulbright TMT partner Dino Wilkinson has joined Clyde & Co to boost firm’s Abu Dhabi office.

Wilkinson, who has been based in the UAE since 2010, is departing days after the confirmation of Norton Rose Fulbright and Chadbourne & Parke’s long-awaited merger.

Wilkinson’s departure from Norton Rose Fulbright comes after sources claimed that a lack of clarity in client conflicts caused Norton Rose’s merger with Chadbourne & Parke to be delayed.

Clyde & Co has moved to strengthen its presence in the Middle East in 2017, bringing in shipping partner Ian Chung in February and corporate partner Glenn Lovell from King Wood Mallesons (KWM) last month. The firm has also announced a new IP-focused office opening in Kuwait as a part of the Clyde IP Services brand.

The Lawyer reported that as part of its merger with Chadbourne, Norton Rose head of litigation Deirdre Walker would be leaving London as Middle East chief Patrick Bourke headed in the other direction. Head of dispute resolution for Europe, Middle East and Asia (EMEA) Peter Scott was understood to be replacing Walker.

Ahead of the announcement, Wilkinson said: “I am looking forward to matching my Iocal experience, ambition and enthusiasm with a firm that recognises the opportunity for technology in the UAE and the wider Middle East.”

“The strength of Clyde & Co’s offering in the region provides the perfect platform to complement and develop my practice.”

Wilkinson had been a partner with Norton Rose since being made up in 2011 and ,according to The Lawyer Market Intelligence (LMI), Clyde & Co has four TMT clients who he can expect to be working with.

Clyde & Co has over 45 partners in four offices across the UAE, Qatar and Saudi Arabia. The Abu Dhabi office alone has 18 fee-earners with focuses in insurance, infrastructure and natural resources.

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A merger might have been seen as the right solution for the newly minted Appleby Hunter Bailhache, but there are plenty of others who have opened their own new offices.

Conyers Dill & Pearman has moved into Dubai – by far the hottest offshore jurisdiction for law firms at the moment – as the firm attempts to tap into all the wealth in the region.

As first reported by The Lawyer (24 April), Conyers will officially open in Dubai in July following its successful application for a licence from the Dubai Financial Services Authority.

The firm’s Middle East operation will be established by consultant Rosemarie Chen, while London-based associate Roger Burgess has been promoted to partner and will move to Dubai to run the new office. Burgess will be joined by Bermuda-based corporate lawyer Guy Cooper.

Conyers head of corporate in Bermuda John Collis says: “Dubai is a very exciting place. It has promoted itself as the place where finance people get together and it’s the ideal place for us to go.”

Collis claims that while the office is yet to officially open, lawyers there are already keeping busy. “We’re beginning to see clients come to us and not just in the area of funds and securitisation, but also for more substantial corporate work,” he says.

The firm will be practising Bermudan, Cayman and British Virgin Islands’ law in Dubai. Like all the big firms, Conyers cannot afford to be complacent and Collis admits that the firm has further expansion plans. “We want to get Dubai up and running, but we’ll keep our eyes open. I expect we will launch more offices in the next few years,” he explains.

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The Dubai International Finance Centre (DIFC) was set up in 2004 with the aim of harnessing the enormous regional capital and investment potential in the Gulf. However, the rules for the new regime in Dubai with respect to collective investment funds and financial services present issues for promoters and distributors of funds and for offshore jurisdictions generally.

Licensing funds
The Dubai Financial Services Authority (DFSA) is responsible for developing the financial services regulatory framework in Dubai. It is also responsible for authorising and licensing collective investment funds – whether these are set up in Dubai or they are foreign funds already set up in other offshore jurisdictions and seeking a market in Dubai.

The DFSA also has a role in investigation and enforcement within the DIFC. It has, for instance, already imposed the first ‘enforceable undertaking’ in relation to an investment adviser who was providing financial services without a DIFC licence. This amounts to the first punishment given by the regulator in the DIFC in relation to non-licensed financial services activity.

Clearly the new regulatory regime will present new trusts, funds and financial services issues to all offshore institutions marketing and working in the Gulf region – and it intends to make its mark.

An offshore fund can only be marketed in the DIFC by an ‘authorised firm’. An authorised firm must be specifically authorised to carry on financial services activities pursuant to the DIFC’s Regulatory Law 2004. An authorised firm can market two categories of offshore funds in the DIFC: a ‘designated fund’ and a fund that has sufficient functionaries authorised in a ‘recognised territory’.

The main relevant legislation in the DIFC are the Collective Investment Law 2006, the associated Dubai Collective Investment Rules, the Conduct of Business Rules and the Recognised Jurisdiction Notice.

Jersey, Guernsey and the Isle of Man
In Jersey, Guernsey and the Isle of Man, the most closely regulated of fund vehicles will tend to qualify as foreign designated funds for distribution by an authorised firm. For instance, both Guernsey class A funds and Jersey recognised funds will automatically qualify as designated funds, as will an Isle of Man Financial Supervision Act 1988 fund. These most closely regulated offshore fund vehicles, however, tend to be aimed at retail investors and typically will have a lower minimum subscription than is intended for a fund marketing to the Gulf region.

The mainstay of the offshore fund industries has, of course, increasingly moved towards the sophisticated investor, private equity, hedge fund and fund of funds products. Jurisdictions such as Jersey, Guernsey and the Isle of Man will have to look at which of their sophisticated investor funds will qualify automatically to be distributed as before in the DIFC.

Dubai is a very lucrative market for targeting sophisticated and institutional investors as well as high-net-worth individuals. This includes the distribution of all types of fund products, but particularly sharia-related collective investment funds. Jersey has seen a great number of these over the last 10 years. However, Dubai may in future be in an enviable position in relation to sharia funds because of its position as a developing Middle East finance centre and may begin to compete on sophisticated investor funds.

Whether or not a jurisdiction’s funds can be distributed automatically in Dubai as designated funds, there are secondary rules that allow funds set up or run in ‘recognised jurisdictions’ to be marketed and distributed provided that the individual funds have a ‘regulated’ and ‘authorised’ investment manager and/or custodian.

Jersey is a recognised jurisdiction for the purposes of being able to provide an investment manager and/or custodian. Guernsey, the Isle of Man and Switzerland are also recognised jurisdictions for the purposes of providing an investment manager and/or custodian for such funds. Wherever a fund is domiciled, a new promoter may look at these jurisdictions when considering custody and investment management.

Cayman, Bermuda and Gibraltar funds
All funds set up in the Cayman Islands, Bermuda or Gibraltar will have to look at the most efficient means of complying with the requirements of the legislation concerning custodial functions and investment managers. These jurisdictions do not qualify automatically as recognised jurisdictions. Hence, such jurisdictions cannot take advantage of the permissive rules allowing for the market and selling of existing funds into Dubai.

This may have an impact on the choice of domicile/jurisdiction for the promoters of all types of hedge funds, fund of hedge funds and alternative strategy-type private equity funds. These products are, in fact, proving increasingly popular in the Gulf region. For reasons of simplicity, it is traditional for such funds to be set up in offshore jurisdictions and to retain custodial, investment management and fund administration functions in those offshore jurisdictions. This is the case even where the hedge fund is established by a firm well known worldwide and with offices and branches in recognised jurisdictions.

Equally, it is regular within the alternative strategies fund industry to see all brokerage, custody and administration functions performed by the same institution. This may cause issues where DIFC rules are applied and lawyers will need to look at these issues.

There are provisions in the DIFC’s Conduct of Business Rules that will allow promoters to take a view on the appropriateness of the existing custodians and brokers on funds. However, the issue is likely to have cost implications for traditional hedge funds and closed-ended funds selling into Dubai and is something that lawyers in all of these offshore jurisdictions will have to take into account. Under Clause 6.9.5.(4)(d) of the Conduct of Business Rules, the distributing authorised firm will be required to take responsibility for satisfying itself of the adequacy of custody and asset security arrangements for a fund.

Alternatively, Cayman, Bermuda and Gibraltar could use the secondary rules that allow, for example, a Cayman fund to be distributed and marketed into Dubai provided that it has a ‘regulated’ and ‘authorised’ investment manager and/or custodian in a recognised jurisdiction. This may mean that Cayman funds will look particularly towards sighting investment managers and custodians in Ireland or Jersey, which are both recognised jurisdictions that also convey confidence and familiarity to Gulf investors.
–Bill Gibbon is a group partner at Voisin

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To put the task facing Saudi Arabia as it updates its transport, telecoms and utilities infrastructure into perspective, you just have to take a look at the demographic challenge the kingdom has on its hands. The population of Saudi Arabia was estimated at a little more than 27 million in 2006, but by 2025 it is predicted that the figure will have increased to 40 million and by 2050 will be just shy of 50 million.

Add to that the desire to provide not just the same level of services to the growing population, but a higher standard of living, and you can see why infrastructure development in Saudi Arabia is on such a huge scale. Although the economy is strong, the risks of rising inflation and a need to control public spending mean the Saudi government is taking two new approaches to infrastructure and utilities. It is introducing new competitors to take on monopoly providers and asking the private sector to provide innovative and cost-effective solutions to meet its massive infrastructure needs.

Power and water
During the next 18 years Saudi Arabia will require an additional 50,000MW of electricity per year and an additional 170 billion cubic metres of water per day will be required by 2020. To meet this incredible demand the Saudi government has implemented a number of schemes to increase private sector investment in the power and water sectors.

In 2002 the Supreme Economic Council issued Resolution 5/23, setting out a process and structure for private sector independent water and power production projects (IWPPs). The first such project in a series of IWPPs tendered by Water and Electricity Company LLC (WEC), the $2bn (£1.02bn)-plus Shuaibah IWPP, achieved financial close in January 2006 and construction of the plant is well underway, with commercial production of power and water expected to commence in mid-2009.

Project and finance documents for the $1.9bn (£964.65m) Shuqaiq IWPP, the second WEC-tendered IWPP, were signed in late February. Shortly afterwards the Electricity and Co-generation Regulatory Authority (ECRA) issued the first permanent co-generation (power production and water desalination) licence to the project company for the Shuqaiq IWPP, signifying the growing maturity of the sector and the regulatory regime that will no doubt boost confidence and increase the already strong appetite for international lenders on future IWPPs.

Tender documentation for the third in the WEC series of IWPPs, the massive 3,000MW of electricity and one million cubic metres of water per day Ras Al Zour project, is expected to be issued shortly, and if this project follows a similar timeline to its predecessors it is likely to reach financial close in the second half of 2008.

In addition to the WEC-tendered projects, project agreements for the 2,750MW of electricity and 800,000 cubic metres of water per day Jubail IWPP, tendered by power company Marafiq, were signed in January this year. These aggressive timelines, and particularly the momentum of the WEC-tendered IWPPs, shows the Saudi government’s dedication to development of its power and water industry. For a bid to win the ability to meet these new challenging timelines is a must.

In addition to the IWPP scheme, privatisation of the Saline Water Conversion Corporation (SWCC), the kingdom’s desalination utility, is currently before the Supreme Economic Council for approval. The privatisation option would involve the unbundling and selling off to private operators of the desalination business currently operated by SWCC, which comprises 26 desalination plants in the kingdom, representing 20 per cent of the worldwide desalination capacity. The privatisation of SWCC’s assets is likely to generate just as much interest as the new IWPPs already outlined.

Telecommunications
In 2004 the liberalisation of Saudi Arabia’s telecommunications industry got underway, bringing an end to the monopoly the Saudi Telecommunications Company (STC) enjoyed in the mobile service sector.

A consortium headed by Etisalat, the national telecoms operator of the United Arab Emirates, secured the first 3G licence granted in Saudi Arabia. STC and Mobily, the licence-holding company established by the Etisalat-led consortium, together share around 15 million subscribers in Saudi Arabia.

The ongoing liberalisation of this sector does not stop there. In April a consortium led by Kuwait’s MTC was named as the highest bidder for the third mobile services licence with a bid of $6.1bn (£3.1bn) – an enormous increase on Etisalat’s $3.45bn (£1.75bn) winning bid three years ago. April also saw the end of STC’s monopoly over fixed-line services in the kingdom, with the approval by Saudi Arabia’s Communications and Information Commission of bids submitted by three consortia, headed by operators based in Bahrain (Batelco), Hong Kong (PCCW) and the US (Verizon).

Transport
In addition to the development of its utility industries, the Saudi government is also focusing on the development of more tangible infrastructure, particularly in the transport sector. For example, the Saudi Binladen Group was successful in its bid to secure the contract for the $300m (£152.31m) overhaul of the King Abdulaziz International Airport in Jeddah – the first PPP in Saudi Arabia’s civil aviation history.

The project involves the rebuilding of the airport’s Hajj Terminal Complex, Saudi Arabia’s air passenger terminal, which has been custom built exclusively for religious pilgrims travelling to Mecca. The number of Hajj and Umrah pilgrims is estimated to double by 2025, and the new terminal will have the capacity to handle around nine million passengers per day.

The privatisation of Saudi Arabian Airlines has been an ongoing project for some years and will involve the airline becoming a holding company, with its different functions such as catering, ground services and its training academy divided between subsidiaries. A percentage of the shareholding of these subsidiaries will then be sold to private companies.

This process moved up a gear last August when bids were invited for the purchase of between 30 and 49 per cent of the airline’s catering business. Also in 2006, Saudi Arabian Airlines’ monopoly on domestic flights came to an end with the award of licences to operate domestic flights to two new carriers – SAMA and National Air Services.

Notwithstanding the aviation projects outlined above, the Saudi government is taking steps to lessen the kingdom’s reliance on domestic air travel. Saudi Arabia, in common with other Gulf states, relies almost exclusively on a fairly limited and increasingly overloaded road network for overland passenger transport and goods freight. However, Saudi Arabia’s rail system in particular is gearing up for a massive expansion.

For a kingdom of its size, Saudi Arabia’s existing railway system is limited, consisting primarily of 450km of track between Riyadh and Dammam operating four passenger trains per day in each direction.

Three ambitious rail projects currently underway in the kingdom are set to change this – the Saudi Landbridge Project, the Mecca-Medina Highspeed rail link and the 2,400km North-South Railway. The Saudi Landbridge project will connect Jeddah on the Red Sea coast and Dammam on the Arabian Gulf coast, extending to link Jubail, Saudi Arabia’s largest industrial area, with Dammam. The $5bn (£2.54bn) project will involve the construction or upgrade, and the subsequent operation of the rail network, of around 1,500km of track.

The eagerly awaited Request for Proposals (RfP) for the Landbridge project received approval from the Supreme Economic Council’s privatisation committee in late April, and the RfP was due to be issued to pre-qualified bidders, including consortia led by the Saudi Binladin Group and by the MADA Group.

Competition among private sector participants for involvement in these mega-projects is fierce. This appetite for involvement in Saudi Arabia’s development, combined with the increasing willingness of international lenders to lend big sums, means that Saudi Arabia’s infrastructure boom will not be slowing down any time soon. Professional advisers to these projects must put in place the frameworks and contracts needed to bring the international lenders on board, keep the interests of the contractors secured, and all at a pace that matches the Saudi government’s impatience to improve its infrastructure.
•Leroy Levy is a partner and Rachel Rayfield an associate at Trowers & Hamlins

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THE GULF region is increasingly hailed by international law firms as a ­crucial part of their respective global growth strategies. Rich and growing markets boosted by ­massive hydrocarbon wealth at a time of near-record oil and gas prices; high birth rates; a rocketing standard of living creating demand for improved infrastructure married to a relatively small legal market all serve to highlight the region’s attractions.

The Saudi market is at the extreme end of this. While it pumps out a fifth of the world’s oil, cultural differences and the requirement that foreign lawyers have local sponsors means there is just a handful of global law firms operating in the kingdom. At the same time, Saudi clients are increasing the demands they make of their foreign-qualified advisers.

Mark Walters, Middle East recruiter at First Counsel in Dubai, which has placed lawyers both in-house and in private practice in Saudi, says: “The type of lawyer we’re having to source is ­becoming more sophisticated. Clients are making sure people are close to them.”

One Saudi lawyer puts it more succinctly: “If you don’t have a ­presence, [clients] won’t look at you.”

Odd one out

That must ring in the ears of Linklaters, the only magic circle firm not to have opened in Riyadh.

Nick Eastwell, London-based regional managing partner of the emerging Europe, Middle East and North Africa (EEMENA) group at Linklaters, does not believe that not having a Saudi office is a major disadvantage for the firm, adding that it won a major Saudi ­mandate recently.

But Eastwell admits this may not always be the case, adding that, sooner or later the firm may have to change tack. “I won’t be surprised if not having a presence becomes an issue eventually,” he says.

Panels

Another change to the Saudi legal sector is that clients are beginning to launch formal panels of the type used by entities in the UK and US.

Fares Al Hejailan, Freshfields Bruckhaus ;Deringer ;Saudi ­sponsor and co-head of its Riyadh office, says: “With the volume of deals you’re going to see the Saudi market change – [client] ­management will develop this ­concept.”

He points to client Al Rahji Bank, recently ranked in the Financial Times’ Global 500 list of the largest companies by market capitalisation, as one that is ­considering launching a panel. “They’ve been talking to us about that,” says Al Hejailan.

Aggressive firms

Firms are becoming increasingly aggressive as they seek to become top dog. The $15bn (£8.5bn) King Abdullah Economic City – a new city of two-million people on the western coast of Saudi Arabia – is being developed by Freshfields’ longstanding client, Dubai ­developer Emaar.

Allen & Overy (A&O) Riyadh partner Julian Johansen has also recently got in on the game through his advice to HSBC, Emaar’s ­financial adviser on the project.

One source told The Lawyer: “That’s a big coup for A&O because it’s a huge project. A&O, to all intents and ­purposes, is calling the shots.”

However Bob Charlton, Freshfields Riyadh co-managing partner, laughs off the suggestion that A&O is dominating the project. “I wouldn’t expect Emaar to take a backseat role,” he says.

Freshfields ;has ;grown ­significantly since relaunching in ­association with Fares, the son of the firm’s former trusted adviser Salah Al Hejailan, earlier this year. It has six lawyers on the ground, including US-trained Islamic finance specialist Dr Walid Hegazy. Senior associate Hegazy has recently advised Samba ­Financial Group on a number of general finance transactions, although the consensus is that Samba is still close to Clifford Chance and its local firm Al Jadaan.

The Clifford Chance tie-up is still one of the most successful in terms of deal volume, rivalled only by Baker & McKenzie (B&M), which has also been operating in the ­kingdom for quite some time.

Khalid Al Abdulkareem is one of the key rainmakers in the Clifford Chance relationship. This Saudi-qualified partner at Clifford Chance’s associate firm, The Law Office of Yousef & Mohammed Al Jadaan, has expertise across the corporate capital markets, ­litigation and projects sectors.

“He’s very connected with royals and the Saudi government. [He’s the] guy I’d suspect any foreign firm to snatch up,” says one recruiter to the Saudi market.

One of the major sources of work for the firm is chemicals and fertiliser manufacturer Saudi Basic Industries Corporation. The firm recently assisted it on a $10bn (£5.6bn) vertically integrated greenfield downstream petrochemicals complex.

The ;firm’s ;strength ;also ­stretches across the banking ­sector, with clients such as Arab National Bank, HSBC Saudi ­Arabia and Saudi Hollandi Bank under its belt.

Connections

However, according to one Saudi source, firms will be ­shooting themselves in the foot if they do not consider developing closer relationships with the Saudi political-economic elite. “Take a company such as Saudi bin Ladin. It has personal wealth ­intertwining with transport and other ­interests. It’s more than someone just sitting there with a pot of gold and a spreadsheet thinking, ‘Shall I put the money into a hedge fund?’”

B&M has something of a head start in this sector, although its reputation is also built on its strength in M&A work.

Head of the Riyadh office John Xefos is married to Lubna Olayan – heiress of an estimated $25bn (£14bn) ­fortune and CEO of the Olayan Financing Company.

“Having that as a base is the equivalent to having ranking members of the royal family close to them,” says the source.

Charlton at Freshfields says: “We take the view that we need to target the right type of business and the right type of client. And if there happens to be a connection, all the better.”

Opportunities may abound in Saudi, but it is not inconceiveable that this scenario could change, putting even more pressure on firms. It is not impossible – the eruption of political turmoil of the kind that saw law firms and ­foreign businesses exit Kuwait during the Gulf War, or Riyadh post-9/11, could be repeated. A massive fall in oil prices would also have a negative effect.

Such semi-apocalyptic events are already being discussed by partners with an interest in the region.

“The whole thing will come to a grinding halt for a reason no one knows,” says Jeffery Barratt, head of global projects at Norton Rose, which has offices in Bahrain, Dubai and Riyadh. The result, he says, will be a “flight to quality”.

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The event has been running since 1911 to press for women’s social and political rights. Back then there was no female suffrage in the UK and women couldn’t sit Law Society exams because they weren’t deemed to be “persons” under the 1843 Solicitors Act.

The presence of women in law firm senior management and the growth of female-friendly policies such as flexible working shows that change is happening, albeit at a slow pace (see story).

But if the pace of change is slow over here, spare a thought for sisters in Saudi Arabia.

There, women only began being awarded law degrees three years ago and still can’t officially practice as lawyers.

That could all change though with a new law in the pipeline that would allow Saudi women to act in family cases.

But one Saudi lawyer argues that there are fundamental changes that need to be ironed out first to the “bureaucratic, arbitrary and inconsistent” Saudi legal system (see opinion).

And given that Saudi women cannot vote, drive or travel abroad without the permission of a male guardian, becoming a lawyer is probably pretty low down on the list of priorities.

Also Freshfields has swapped its Saudi sponsor for his father. Find out why here.

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Skyscrapers and associate salaries competed to reach dizzy heights and the law firms kept flooding in.

DLA Piper was a relative latecomer to the market, launching in Dubai in 2006. It wanted to be the biggest firm in the region and recruited massively on the back of work with property company Nakheel.

In November 2008 it had its best month of billings ever and that year Middle East turnover reached £21m.

But the bubble soon burst and 2009 was a very different story. Nakheel was shelving projects, fee income for the region fell by 40 per cent and DLA Piper halved its total staff in the region.

The impact of this is felt in DLA Piper’s EMEA results, which were announced today (see story).  Despite income rises in Asia and Europe global turnover was down one per cent and PEP down 18 per cent.

In fact the restructuring costs in the Middle East were so huge that they alone depressed the global PEP by £100,000. And the human cost in terms of redundancies was arguably just as large.

Some streets are not paved with gold.dail

———-

Still, Dubai is still important enough for Clifford Chance, seeing as it’s about to send its Kraft star Guy Norman out there (see story).

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As revealed by The Lawyer in 2009 (5 January 2009), the firm had put together a Middle East team that was focused on launching an office in the region by the end of that year.

The office is Wragges’ first base in the Middle East and comes off the back of relationships struck up by corporate partner Bijan Sedghi, who joined in 2009 after having established a Dubai office at his previous firm HBJ Gateley Wareing, as well as work for clients such as Amec.

Wragges has tied up with local lawyer Mohamed Al Mehairi, who will become the firm’s local sponsor, chairman and senior partner. Wragges projects partner Jane Pittaway will relocate there as managing partner. The firm will be known as Wragge & Co Legal Consultants.

Wragges currently has international offices in Brussels, Guangzhou, Munich and Paris.

Abu Dhabi has tightened up its licensing process of late, in an effort to avoid going the same way as Dubai, where an influx of lawyers between 2006 and 2008 was followed by widespread job cuts after the local market slumped (2 November 2009).

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Freshfields Bruckhaus Deringer has scooped corporate rainmaker Pervez Akhtar from magic circle rival Allen & Overy, making him its new Middle East corporate head .

Akhtar rejoined A&O last year (20 March 2009) following a brief spell as an executive director with Middle East private equity house Abraaj Capital. He had previously been head of Middle East corporate at the firm.

Freshfields global corporate head Edward Braham said of Akhtar: “He is one of a select group of senior international lawyers who have spent considerable time in the United Arab Emirates working on complex deals. His appointment demonstrates our long term commitment to the MENA region.”

Following the hire, Freshfields will have a five-partner strong presence in Dubai, with Akhtar leading a corporate practice that currently features Bertrand Pellet and Patrick Ko.

Pellett is one of two corporate partners, along with Tobias Müller-Deku in Riyadh, to have relocated to the Middle East in the past 12 months as Freshfields continues to bulk up in the region.

Managing partner Ted Burke added: “Our Middle East practice is very important to us and Pervez is a great fit. We’re very happy that he’s joining us.”

A spokesperson for A&O said: “Pervez Akhtar has decided to leave Allen & Overy. We would like to thank him for the contribution he has made during his time at Allen & Overy and wish him all the best for the future.”

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The US firm opened a Riyadh office on 1 January, and said it would open offices in Jeddah and Alkhobar later this year.

The Saudi operation will be headed by partner Yusuf Giansiracusa, who rejoins Jones Day from Al Sulaim. Giansiracusa previously worked at Jones Day in the 1980s and 1990s and headed up Winston & Strawn’s Riyadh office between 1993 and 1996.

Fahad Habib will relocate from Washington later this year to head the Jeddah office, while Oliver Passavant is moving from Frankfurt to be the partner in charge of Alkhobar. The two offices will focus on project finance, M&A and dispute resolution.

The move into Saudi Arabia follows the 2009 opening of Jones Day’s Dubai office. Managing partner Stephen Brogan said setting up in Saudi Arabia was a “natural next step”.

Jones Day joins a number of competitors in the kingdom, including White & Case and Latham & Watkins as well as UK magic circle firms Allen & Overy, Clifford Chance and Freshfields Bruckhaus Deringer.

The kingdom is seen as a profitable place for Western firms to do business as project finance and infrastructure work in particular is booming at present.

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