The reconstruction boom never happened, so why are law firms still interested in Iraq?

When coalition forces toppled Saddam in 2003, the world’s second largest oil producer was seen as a land of fantastic opportunity. Construction and energy companies were primed to invest, as were the lawyers riding on their coat-tails. When the coalition produced new investment laws allowing 100% foreign-owned businesses, those heady first impressions were confirmed. $22bn was ringfenced for immediate reconstruction, with projections for future infrastructure development hitting $180bn.

A steady influx of Western lawyers swung through the doors of Baghdad’s Palestine Hotel, swotting up on Iraqi law and sounding out potential referral partners. Vinson & Elkins; Pillsbury Winthrop Shaw Pittman; Akin Gump Strauss Hauer & Feld; and Dorsey & Whitney all set up dedicated Iraq groups, assembled from a mixture of energy partners, government contracts lawyers, Middle East specialists, and litigators.

But four years down the line, Iraq has been a wash-out for most firms. ‘It was hard to do anything until it was established who was in control – the transitional administrative law made it deliberately vague and difficult,’ says one partner at a US firm, who preferred to remain anonymous. There was also the fear that a future Iraqi government could renege on contracts agreed under US influence. But the most serious issue has been security. ‘I have visited Iraq on business,’ he continues, ‘but my wife would kill me if she found out I’d actually been there.’

Firms whose earlier press releases trumpeted forays into Iraq now underplay their involvement. Pillsbury Winthrop’s head of Iraq reconstruction, Ayaz Shaikh, has never visited Iraq on business, and is reticent about the firm’s recent involvement. ‘Assignments have been somewhat limited and discrete, given the environment,’ he says.

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