The Middle Eastern legal market has struggled to recover from the twin blows of Arab Spring uprisings and the global financial crisis. But could a pick up in business activity be the prelude to a period of stability? Leanne Mezrani reports.

For Mohamed Bouazizi, the 17 December 2010 started like any other day. The 26-year-old Tunisian street vendor was on his way to buy his daily stock of fruit and vegetables from the local food market, which he would later sell on the streets of Sidi Bouzid. 

On his usual route he was confronted by a police officer who demanded that he hand over his scales. When Bouazizi refused, the pair allegedly swore at each other until the police officer slapped him and, with the help of her aides, forced him to the ground.

To protest against what he believed to be relentless bullying by authorities, Bouazizi poured inflammable liquid over his body and set himself alight – an act of self-immolation that would trigger a series of pro-democracy rebellions across the Middle East, dubbed the Arab Spring.

To date, rulers have been forced from power in Tunisia, Egypt, Libya and Yemen; civil uprisings have erupted in Bahrain and Syria, and major protests have broken out in Algeria, Iraq, Jordan, Kuwait, Morocco and Sudan.

These uprisings have been blamed for the significant decline in M&A activity in the Middle East last year. Inbound M&A into the region fell to a six-year low in 2011, according to Dealogic figures, and firms felt the pinch as deal flow dried up.

But recent figures from Thomson Reuters bring hope to frustrated firms. The report found that Middle Eastern M&A activity was around $16 billion during the first nine months of 2012 – more than double the activity seen during the same period in 2011 and the strongest first nine months since the global financial crisis.

The United Arab Emirates (UAE) was the most active Middle Eastern country, with $4 billion of the total M&A activity in 2012.

Based in Dubai, Husam Hourani, managing partner of UAE firm Al Tamimi & Company, believes the upward trend in M&A signals the recovery of the Middle East’s legal market.

He also points out that, while the Arab Spring may have had brutal consequences for a number of Middle Eastern firms, others are actually benefitting.

Hope springs

Al Tamimi & Company, the largest law firm in the Middle East, has enjoyed an increase in corporate restructuring and employment work as clients flee the UAE’s politically unstable neighbours, he explains. 

 “The Arab Spring has been an unfortunate series of events, however ... the view that the UAE is a ‘safe haven’ [has] seen many companies shift their Middle Eastern operations to the UAE.” 

There is also growing optimism in the UAE, which has escaped a major uprising, that Dubai’s dormant property market is on the verge of a revival.

In 2008, the GFC brought Dubai’s real estate boom, the magnitude of which is reflected in the city’s grandiose buildings, to a screeching halt. Many major projects were either put on hold or dumped altogether.

But it seems the property market has turned a corner. In October, Cityscape Global, Dubai’s biggest annual property conference, unveiled a number of new developments. These include a replica of the Taj Mahal about four times bigger than the original and a skyscraper with nine swimming pools.

These and other developments are translating into more work for firms, including Al Tamimi & Company, with its construction & infrastructure and property practices the busiest they have been since the downturn, reveals Hourani. 

This injection of investment is not confined to property, or Dubai for that matter, he continues. Al Tamimi & Company has also grown its banking & finance and restructuring portfolios across the Middle East thanks to improved business confidence in the UAE and other oil-rich nations, such as Saudi Arabia and Qatar, which have managed to keep their ruling families in power. 

“The Middle East is definitely in a phase of growth and we have seen this in those countries where we have a presence,” says Hourani.

The extra work has also seen the firm increase its lawyer headcount by 11 per cent in 2012. Other firms in the Middle East are also bulking up staff numbers, claims Daniel Stirling, general manager of international recruiter Dolman.

Changing fortunes

When the GFC hit, a number of global firms reacted with a wave of redundancies, he explains. Others postponed graduate employment start dates and reduced hiring in an attempt to reduce both fee-earner and support staff.

But recent economic growth has meant the same firms that launched redundancy rounds last year are now looking to hire. Stirling says he is “cautiously optimistic” that the legal recruitment market in the Middle East is on the cusp of a long-term period of growth. 

“The Middle East will continue to gradually build upon its recent momentum and maintain a slow, steady growth,” he predicts.

Stirling’s outlook may seem like wishful thinking to lawyers in international firms where redundancies are still fresh in their minds. Herbert Smith Freehills conducted a 51-strong redundancy round at the firm’s Dubai office in April and US firm Hogan Lovells is planning to ditch its office in Abu Dhabi.

Other firms have tried to avoid redundancies by diversifying their practices. Stirling explains that many have added or promoted new practices, such as insolvency and restructuring, to leverage finance and debt capital markets.

The result, he says, is “greater practice diversification, improved financial efficiencies and profitability post GFC”.

Practices may be diversifying, but Stirling says firms are still hiring cautiously. Many are willing to engage foreign lawyers only when the workflow requires a specific experience, he adds. 

“Preference is given to lawyers who have prior experience within the Middle East but opportunities still exist for foreign lawyers who are new to the region,” he says, adding that lawyers with financial services, project finance and oil & gas experience are the most sought after.

Equal opportunities

In Saudi Arabia, new local or foreign hires may soon include female lawyers, with the country planning to introduce new laws this month that will allow women to secure licences to practise law from the Ministry of Justice. This will allow them to enter the courtroom, have their own offices and, for the first time, represent male clients.

Currently, Saudi women are forbidden from driving, excluded from holding prominent political positions and will get the vote for the first time in 2015.

But these types of restrictions on women are unique to Saudi Arabia. Other Middle Eastern countries boast a long history of women working in the legal profession on an equal footing to their male peers. Dubai firms, for example, have long attracted female lawyers from around the world, including Australian-born Sarah Standish. Recently returning to Australia after a four-and-a-half-year stint in Dubai, Standish says the Middle East offered the unique overseas experience she craved. 

Standish completed her law degree at Monash University in 2004 and joined Middletons’ Melbourne office the following year. She knew she wanted to travel, but the well-trodden legal path to a London firm was not appealing because “London is too similar to Melbourne”. 

In 2008 she joined Taylor Wessing’s corporate and commercial practice in Dubai and was quickly promoted to senior associate. She eventually moved on to a Dubai-based global oilfield products company, where she worked as general counsel for 16 months.

“Dubai is a great place for young lawyers with a few years of experience under their belt,” she says. 

Standish admits that it is challenging for a foreign lawyer to navigate the cultural nuances of Middle Eastern countries. But, she adds, these skills are coming in handy as Australia’s legal market becomes increasingly globalised.

“It is a steep learning curve, but a great way to develop your skills in a different way to how they might be developed in Australia.”

Currently working as general counsel for Imdex, an industrial company based in Perth, Standish credits her experience in the Middle East with fast-tracking her career.

Despite Standish’s enriching experience, an ambitious young lawyer confronted with the region’s political and economic volatility may think twice before considering a job in a Middle Eastern firm. International firms are also erring on the side of caution, whether they are considering expanding in the region or, for those already there, making decisions affecting their Middle Eastern offices.

But signs of returning stability are spreading quiet optimism throughout the legal market. Time will tell if the Middle East can ever rise above its reputation for being a battleground and be seen as a hub of business activity that attracts the world’s leading law firms and sought-after legal professionals.