Law firms interviewed: Al Tamimi & Company, Amereller
Law firms mentioned: King & Wood Mallesons, Eversheds Sutherland, Bae, Kim & Lee, Nishimura & Asahi, Afridi & Angell
The Middle East’s economic ties with emerging Asian economies is on the rise as M&A and sovereign investments between the regions drive growth. However, Asian law firms and lawyers are struggling to compete in an overcrowded legal market.
Last year, a highly improbable restitution of diplomacy was achieved between Shia Iran and Sunni Saudi Arabia that promised to bring stability to a battle-weary (or so it seemed) Middle East. For the first time in a long time, there was no American president hovering among the dignitaries shaking hands. The deal was drawn out in Beijing, and brokered by the Middle East’s largest trading partner, China.
The world saw the fruit of deep Chinese financial and political penetration into the Middle East and North Africa, where 19 countries are partners in President Xi’s Belt and Road Initiative. But China’s not the only Asian country seeking to cement trade and investment ties.
India, which has historic ties with the region, has become the fastest-rising Middle East trade partner in the last few years. Japan has traditionally been the region’s largest oil importer. And Southeast Asian nations have also witnessed desert funds coming their way, as the Middle East looks to diversify beyond oil, into technology, green energy, and pharmaceuticals.
And no sign points towards this more than the ramping up of Asian investments by the Middle East’s sovereign wealth funds (SWF), which represent 86 percent deal value in the Gulf Cooperation Council (GCC). The value of deals by SWFs with Asia rose nearly 60 percent in the first three quarters of 2023, a Bain & Company report found in January. The activity was spread across Asia, including China, India, South Korea, Japan, and Singapore.
The primary driver for this Middle Eastern pivot to Asia is diversification, says Thomas Calvert, head of Middle Eastern legal giant Al Tamimi & Company’s China group.
“The primary motivator behind this strategic reorientation is economic diver-sification. Countries in the Middle East are seeking to reduce their reliance on oil revenues and explore new economic frontiers. This need for diversification has coincided with Asia’s rise as a global economic powerhouse, making it an attractive partner for trade and investment,” he notes.
Law firm Amereller’s partners Christopher Gunson and Jonathan Noble say this growing relationship is fundamentally driven by economic interdependence. “The relationship also benefits from not having the historical baggage that exists between the Middle East and the West,” they add.
CULTURE IS KEY
For law firms in the Middle East, this means specialised and culturally adept hires to attract Asian businesses.
“At our firm we have recognised the growing importance of Asia in the global legal landscape. We have Japanese-speaking lawyers and also a leading and unique Korean Group, the largest group in the region with dedicated Korean law-yers,” Calvert explains.
Cultural familiarity is crucial part of client development for Chinese, Korean and Japanese clients. “Our Korean clients choose us because our Korea Group offers the legal expertise they need, along with language capabilities and an understanding of the Korean culture and way of doing business.”
Similarly, for China, Al Tamimi says it has the only China desk with lawyers who speak Chinese. “This commitment goes beyond mere representation; it involves a deep understanding of the Chinese community and its legal requirements.”
Despite the high demand for cultural context in client development, the region has not seen Asian law firms getting out their sun lotion and setting up shop in the Middle East. And those that have tried, have been burnt.
Over the past decade, a few Asian firms have set up in Dubai, but none have lasted. Chinese-Australian law firm King & Wood Mallesons maintained an office for some years in the UAE’s commercial hub, after its 2013 merger with troubled law firm SJ Berwin. That combination closed last year after KWM’s exclusive alliance with Eversheds Sutherland.
Korea’s Bae, Kim & Lee became the first firm from that country to establish a Dubai office in 2015, but that closed in 2019.
Leading Japanese firm Nishimura & Asahi opened a representative office in Dubai in 2016, which sources tell us was ordered to be shut down as international law firms were not allowed to open representative offices. Now, Japan’s largest firm by headcount has an alliance with local firm Afridi & Angell, where they second Japanese attorneys to assist clients in the region.
“A few East Asian law firms have set up in the region, but none of these have lasted significantly. Some law firms are seconding lawyers for fixed periods of time to get some first-hand experience. This is likely the successful long-term solution to growing a practice.,” say Gunson and Noble.
This difficulty in setting up a practice stems from an overcrowded international legal market in Dubai, the failure of law firms to look beyond Dubai, and a lack of local market knowledge which is integral to doing legal business in the Middle East.
“The presence of Asian law firms in the MENA region is relatively limited, this is due to various challenges and restrictions. One significant factor is that local legal markets tend to already be developed, and there are certain restrictions on practicing and advising effectively local laws in these regions, which necessitates deep, specialised local legal knowledge and expertise. The MENA region’s diversity and vastness add to the complexity, requiring a nuanced understanding of different legal and business environments,” explains Calvert.
“The Middle East is more than just Dubai. Opening an office in the UAE, which is a market that already has many lawyers and is arguably overlawyered, does not automatically lead to more capabilities across the region,” Gunson and Noble add.
Some lawyers in the Middle East, on the condition of anonymity, explain that while East Asian law firms have client relationships, none have shown the ability to be effective locally. And an office in the Dubai International Financial Centre, which is “an isolated bubble” in the region that is already “overlawyered” gives you no capabilities in the rest of the Gulf – Saudi Arabia, Iraq, Qatar, Egypt and others.
THE ALLIANCE OPTION
The better solution, experts say, is to set up alliances with local firms and use secondments to build local knowledge of the market and laws. As trade with Asia continues to grow, more Indian and Chinese lawyers are expected to shore up in the Gulf, Gunson and Noble say.
“Law firm alliances are rare, but more and more work between MENA and Asian law firms as respective local counsel is increasing. We can expect that more law firms, particularly Chinese law firms and lawyers, will cast more attention to the Middle East, particularly the Gulf, in the coming years. Indian law firms and lawyers have long been active in the Gulf, and this will continue,” they add.
Indeed, five Indian law firms set up shop in the UAE in 2023. But these were small commitments, with firms looking to dip their toes in international waters, assist specific clients in dispute resolution, and also brand themselves as a cross-border law firm. The level of investment – in the form of one or two practitioners - does not reflect a serious effort yet to expand into the Middle Eastern markets.
“Law firm alliances are rare, but more and more work between MENA and Asian law firms as respective local counsel is increasing. We can expect that more law firms, particularly Chinese law firms and lawyers, will cast more attention to the Middle East, particularly the Gulf, in the coming years. Indian law firms and lawyers have long been active in the Gulf, and this will continue.”
— Christopher Gunson and Jonathan Noble, Amereller
This market for international lawyers is significantly growing in cross-border dispute resolution which is a practice area of “increasing importance” in the region, say Gunson and Noble.
“In the past years, our firm has represented Asian clients in litigation involving the UAE, Egypt, Iraq, England, India, Pakistan, and beyond. As the Gulf continues to act as a link between economic centres, the need for sophisticated dispute resolution providers able to tackle these kinds of issues will increase.”
Calvert believes that legal integration is also possible in the future, with more strategic collaborations between Asian and Middle Eastern law firms.
“Building strong client relationships requires a strong online and offline presence and fostering collaboration and teamwork among our lawyers with firms across Asia is vital,” says Calvert. “Looking forward, we anticipate the legal landscape between the Middle East and key Asian economies to become more integrated. This could involve more strategic collaborations between law firms, allowing for a more seamless legal service offering across these regions.”
