Saudi Arabia Lures Big Law Firms to Lucrative New Legal Market

At least 30 multinational law firms have opened branches in Saudi Arabia in the past nine months or have applied for the right to do so, racing to establish a foothold in the oil-rich kingdom now allowing outside legal work.

Several had affiliations with Saudi-based firms since the early 2000s, but for the first time were allowed to create their own practices in the country without the constraints of a local partner. Others are entering the marketplace for the first time.

“What’s happening now dwarfs anything we’ve seen here in 25 years,” said Nabil Issa, managing partner of King & Spalding’s Middle East offices, whose firm has established a team of nine lawyers in Riyadh since announcing its license in September, and said it hopes to expand two to three times that number in the next nine months.

For global firms it’s a rare opportunity to enter a new and potentially lucrative legal market, albeit with considerable conditions set by the kingdom, several law firms already in the region or entering the space told Bloomberg Law.

“If it’s infrastructure, you’re building towns and cities that are hundreds of thousands of people and you will never get to work on that again,” Nick Aiyegbusi, a manager at search firm Robert Walters, said of the opportunity. “That can take you anywhere in your career in five to 10 years.”

But convincing lawyers from the US or other countries to move to Saudi Arabia—where women weren’t able to practice law until about a decade ago—can be complicated by the country’s human rights record.

Simmons & Simmons, a British law firm, faced backlash from staff over its announcement last month that it would open a Saudi office, The Telegraph first reported.

“As with all international businesses, we operate in a number of diverse regions, some with different local customs and laws,” a spokesperson for Simmons & Simmons told Bloomberg Law. “We have strict processes in place to ensure that all mandates we take on align with our values and those same processes will be applied here.”

The evolving legal market coincides with Crown Prince Mohammed bin Salman’s relaxing of other aspects of Saudi culture and moving to diversify its economy. His Vision 2030 modernization plan is backed by a $700 billion sovereign wealth fund, the Public Investment Fund.

The PIF disrupted the professional golf world in 2022 when upstart LIV Golf dropped hundreds of millions of dollars to lure star players away from the PGA Tour. While critics and some pro golfers criticized LIV Golf as an effort to “sportwash,” or use Saudi wealth to deflect from its human rights record, LIV Golf is now in talks to merge with the PGA.

Beyond sports, PIF has backed ambitious infrastructure projects in the kingdom that bring business and legal work, including the development of Neom—a sprawling set of futuristic luxury developments to be constructed across the desert, with both snowy mountains and sunny beaches.

“You’re building a ski resort in the middle of the desert,” said Aiyegbusi.

Saudi Rules

Among the law firms operating Saudi Arabia independently since last March are US giants Kirkland & Ellis, and Latham & Watkins, and UK “Magic Circle” firms Clifford Chance and Linklaters.

Made with Flourish

All the newly opening firms must adhere to a requirement that their staff be comprised of at least 70% Saudi national lawyers, which can be challenging because of a dearth of local talent.

Saudi lawyers are now in high demand, with firms bidding against each other to secure homegrown talent. The average tenure of a local associate is only about one year in a new firm before they typically switch to another, said Aiyegbusi of search firm Robert Walters.

Law firms are competing with each other for that talent, as well as employers like oil behemoth Aramco, the PIF, and government entities like the Ministry of Finance.

The residency rule prevents the market from being “taken over by UK or US law firms,” said Catherine Workman, head of Middle East region for international law firm Pinsent Masons.

“There is a future for bright, young, and ambitious Saudis who want to become lawyers,” said Workman. “There should be a market for them.”

Practicing Sharia

Firms operating in Saudi Arabia must have at least two partners living in the country. And many find it important to be able to navigate Islamic Law, commonly known as Sharia, and the local legal landscape, especially as the region elevates its local procedures to better match international standards.

Not all lawyers need to be trained in Islamic Law, and some have evaded Sharia and local practices by drafting documents for large transactions in English law or US law. But this can sometimes lead to errors, especially when international documents or precedents do not match the laws and practices of the Saudi kingdom, according to several lawyers.

“I continue to pick up documents, as of this morning, from other law firms that I’m reading and saying, ‘I know this actually doesn’t work in Saudi Arabia, but I appreciate that it’s what makes sense for that law firm, based on the lawyers they have, their training and so forth’,” said King & Spalding’s Issa last month.

Being well versed in Sharia has been a competitive advantage for the firm, Issa said.

‘Evolving Really Quickly’

The Saudi Center for Commercial Arbitration released rules in 2023 that align with international arbitration best practices, providing a dispute resolution procedure that foreign lawyers are familiar with.

“The regulatory landscape is evolving really quickly in Saudi Arabia,” said David Charlier, Middle East managing partner at London-based Ashurst. “It is becoming increasingly sophisticated. They recognize that they need to make improvements and have been working hard to do that.”

The amended rules also mean there will be fewer instances of lawyers drafting documents in foreign law and trying to apply them to fit Saudi law.

“The view that Saudi law isn’t clear, or that you would just take a contract and draft it based on one legal system and then change the governing law provision, is changing,” said Waleed Rasromani, national managing partner for Saudi Arabia at Linklaters.

Human Rights

Critics point to Saudi’s human rights record, including the murder of Washington Post columnist Jamal Khashoggi, and the imprisonment of women’s rights activists and political dissidents, in questioning the morality of doing business in the country.

Simmons & Simmons staffers are protesting the London-based firm’s announcement last month of its expansion into Saudi Arabia, calling it hypocritical while the firm lauds its commitment to LGBTQ+ rights in the UK. Saudi Arabia considers homosexuality an offense and trans people can face prosecution in the kingdom.

Kevin Gold, executive chairperson at Mishcon de Reya, another international firm based in London that has applied for a license to operate in Saudi Arabia, said: “We’ve built up an element of trust, where people will believe that we will do our utmost to run our own office in a way that is consistent with our values.”

Saudi leaders say the Vision 2030 plans emphasize the importance of women for Saudi’s economy, promoting job opportunities, and allowing women to drive cars, in keeping with Sharia.

“When I go to Saudi, I run meetings and I am heard and respected,” said Workman. “It is changing, but it only comes if people tell people it’s changing, because they won’t be able to see it for themselves sitting hundreds of miles away.”

‘Slightly Different Strategies’

Latham & Watkins, Baker Botts, and White & Case were among the big firms that previously operated in the country through affiliations with Saudi-based firms.

While those arrangements gave global firms an avenue into doing business in Saudi, differences in goals, work styles, and expectations could be challenging for some firms, said Charlier of Ashurst, which launched its presence in Riyadh in 2018.

Allen & Overy ended its association with Khoshaim & Associates in 2020 and has not announced a Saudi license or new local affiliate since.

Clifford Chance, one of the earliest to enter the kingdom, had first developed Al-Jadaan, a joint Saudi and foreign-owned law firm that was licensed by the Saudi Ministry of Commerce and Investment in 2013, the first of its kind. But local courts questioned whether the license was obtained lawfully, and in 2016 it scrapped its model and entered an association with Abuhimed Alsheikh Alhagbani (AS&H).

“What we’ve seen over time is lots of divorce, marriage, divorce, marriage for many firms,” said Charlier.

Allowing law firms to open their own businesses should change some of that.

Clifford Chance last year dissolved its earlier association and formed a true joint venture with AS&H to form AS&H Clifford Chance.

King & Spalding ended its more than 16-year-long affiliation with Mohammed AlAmmar’s firm. Others absorbed affiliated partners into the larger global firms.

“Each firm may adopt slightly different strategies and target different clients and sectors in seeking to build their practices, and some will be seeking to enhance pre-existing operations under different structures whilst others are entirely new to the market,” said Guy Norman, Senior Clifford Chance Partner at AS&H Clifford Chance, in a note.

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