Herbert Smith Freehills (HSF) is to end its five-year exclusive tie-up with Saudi Arabia’s Al-Ghazzawi Professional Association (GPA), as international activity in the region shows no sign of slowing down.
The two firms’ association formally ends on 1 August, but HSF will continue to co-operate with GPA on a non-exclusive basis. Neither firm has plans to enter into another exclusive association at this time.
The split is said by both firms to be mutual but reflects a divergence of their respective strategies, indicating the exclusive nature of the alliance is now more limiting than helpful.
A spokesman for HSF said: ‘The strategies of both firms have developed in ways we could not have foreseen in 2008.
‘The way our business strategies have evolved over the last four years has given rise to a broader range of work opportunities for both firms, which we have been restricted from taking up because of the exclusive nature of the association.’
The move flies in the face of the current trend among international law firms to seek stronger ties in the region. In March, Clifford Chance (CC) secured approval to integrate with longstanding associate firm Al-Jadaan & Partners, becoming the first international law firm to set up a mixed local and foreign lawyer partnership in Saudi Arabia.
CC and Al-Jadaan have been allied since 1998 and as of 1 January 2014, will have integrated corporate, finance and capital markets practices in the region.
According to Tim Plews, head of CC’s Middle East financial services and markets practice, having strong local ties in the region is the only way to penetrate the highly lucrative but loyal domestic market. ‘If you’re not there through an association it’s difficult to do Saudi work. To be credible as a Saudi law firm, you need Saudi lawyers,’ he said.
‘Saudi is a difficult place for ex-pats, unlike Dubai. You have to institutionalise the relationship; we have done since 1998. Every firm wants to be embedded but that doesn’t always happen, it can be determined by personality, culture and values,’ said Plews.
Saudi has been the centre of much international law firm activity over the past few months. In December, Allen & Overy (A&O) re-established its presence in the region through an exclusive association with a new law firm launched by A&O Saudi-qualified lawyer, Zeyad Khoshaim. Linklaters, meanwhile, began a co-operation with A&O’s former associate firm, Abdulaziz AlGasim.
According to Al-Jadaan’s managing partner, Mohammed Al-Jadaan, many international firms get their approach to the region wrong. ‘Lots of international firms want to come and run the business: it doesn’t work. It depends how good your Saudi associates are,’ he said.
Although HSF may be left without an embedded relationship with a Saudi firm, the region remains a priority. ‘We have three offices in the UAE and an office in Qatar, and a team of over 50 lawyers, a number of whom are fluent in written and spoken Arabic, who are able to deliver a full service to our clients with interests in the region,’ said the spokesman.