The resurgence of commercial activity in the Middle East is prompting international law firms to strengthen their presence in the region, with Cleary Gottlieb Steen & Hamilton and CMS announcing their first regional offices within a week of each other.
Cleary announced at the beginning of September that it would be opening its first Middle East office after obtaining a licence from the Abu Dhabi Executive Council in the summer. CMS group opened its office in Dubai on 23 September, adding to its offerings in Iraq and Lebanon.
Cleary does not open foreign offices lightly. The Abu Dhabi launch becomes only the thirteenth foreign office for the Global Elite firm in 63 years. Paris-based partner Gamal Abouali has relocated to Abu Dhabi to head the office of five associates and will integrate the firm’s existing Middle East practice that covers project finance, M&A, litigation and arbitration. Abouali said the move had been on the table for three to four years, with the decision taken to launch in late 2010. Creating a local presence was critical, as Cleary’s Middle East practice comprises 20 lawyers scattered across London, New York, Paris and Milan.
‘Our decision [to open here] is really out of loyalty to our clients, and our desire to use it as a base for expanding our penetration in the region,’ he said.
He admitted there were jitters about not having a core office and the move is to be closer to clients. ‘We were quite nervous a few years ago that we would lose business, but that has generally not been the case,’ he said. ‘Some of our clients have expressed a strong preference that we be based here.’
‘A new hub of energy companies is emerging in Dubai to service major investment into Iraq.’
Penelope Warne, CMS
Abouali said that the firm may beef up its offering by the end of 2013 with further hires but Shane Morton, who has run the Dubai office of legal recruitment specialist Taylor Root since 2007, said: ‘We know Cleary well and it is very selective, so it is probably not looking to massively expand.’
Cleary has a well-established track record of advising on major Middle East mandates, particularly in Iraq. The firm is representing the Ministry of Oil of the Republic of Iraq on the $17bn Basra Gas Company project, a 25-year joint venture between South Gas Company and affiliates of Royal Dutch Shell and Mitsubishi Corporation, which was signed at the end of last year.
Oil and gas projects are a key driver behind CMS’ decision to open in Dubai. The new practice comprises five oil and gas lawyers led by energy partners Stephen Millar and Matthew Culver.
‘A new hub of energy companies is emerging in Dubai to service major investment into Iraq, and this is stimulating demand for specialist lawyers in the region,’ said CMS’ head of energy, Penelope Warne.
Morton believes that there are great opportunities for energy firms in Dubai but also in related areas such as projects and construction. ‘I believe that CMS is also looking at the construction side. There’s a lot of potential for firms that have expertise to come in and soak it up.’
According to Millar, the new office will meet the various needs of energy clients initially. ‘Clients tell us that there are few lawyers based in Dubai who specialise in day-to-day oil and gas matters – the drafting of complex transportation arrangements, negotiating drilling contracts and the like,’ he said. ‘Clients’ experience is that there are many property, finance and real estate lawyers but few with a deep energy sector focus.’
CMS currently has a substantial amount of work in the Middle East but most of it is for European or US-headquartered companies. Millar said that many more companies are investing in the region from the Far East and other locations and to win work from such clients would make a presence in Dubai a prerequisite.
Sean Korney, who has been an energy projects partner in Baker Botts’ Dubai office for the past five years, said that recruiters have been looking for oil and gas partners for a number of firms in the region who want to build their practices. ‘But since there are relatively few genuine oil and gas lawyers in private practice, this has proven difficult,’ he added. ‘CMS might have more success than these firms by relocating an oil and gas specialist, but there will still be a period of reputation building.’
The recent flurry of activity among international law firms in the Middle East represents a positive development in a market where a number of international law firms were hit hard by the collapse of Dubai World and then the Arab Spring. Berwin Leighton Paisner opened its second Middle East office in Dubai in September, adding to its existing office in Abu Dhabi. It will be led by real estate partner, Mohammed Kamal.
Lateral hiring is clearly also in evidence, with Holland & Knight hiring construction partner Steven Hunt from Al Tamimi & Company in September – the fifth hire to its Abu Dhabi office in 2012. Also in September, K&L Gates announced the hire of Simmons & Simmons’ former joint head of financial markets in Dubai, Natalie Boyd.
According to Andrew Stephenson, executive partner of Holland & Knight’s Abu Dhabi office, it is ‘absolutely critical’ for any law firm that takes itself seriously with a Middle Eastern practice to have an office in the region. ‘The relationships with clients are based on face-to-face interaction and you’ve got to have boots on the ground,’ he said.
Taylor Root’s Morton added that emerging economies don’t just go in one direction, saying that there are inevitable setbacks that firms are prepared for with the understanding that the region is developing.
‘Firms are in the region for the long term,’ he said. ‘There’s a lot of potential for the firms that have the expertise – the reality is that if you are not in the region, the likelihood of getting the work is pretty low.’