With the Covid pandemic now firmly in the past, the Middle East has been enjoying a return to form, with activity levels up across the region and many law firms – both local and international – in expansion mode.
On top of all of the investment driven by last year’s World Cup in Qatar, the wider Middle East region has benefited in the wake of Russia’s invasion of Ukraine, with global oil prices soaring, boosting revenues in oil-rich nations such as the UAE, where oil exports account for around 30% of GDP.
The ongoing war has also had an additional knock-on impact on the UAE, with its position of neutrality generating an influx of Russian money, alongside increased migration from Russia and Ukraine. This investment, combined with a general increase in foreign direct investment across the Middle East, has resulted in an increase in corporate structuring and set-up work.
Following the meteoric rise of the neighbouring Kingdom of Saudi Arabia, which overtook India as the world’s fastest growing major economy with a growth rate of 8.7% in 2022, the UAE is aiming to encourage further overseas investment and non-oil expansion of its own.
Meanwhile, improved relations with Qatar and Iran and the opening of economic opportunities with Israel are expected to result in an increased flow of work into the UAE.
UAE market reform
As Middle East nations try to diversify their oil dependent economies through large-scale renewable energy, construction and real estate projects, they are courting international financial investment.
As part of this drive, the UAE has been modernising and liberalising its laws. Afridi & Angell corporate and commercial partner Danielle Lobo explains: ‘It is clear that these legal reforms are not just to encourage inward investment into the UAE, but also to ensure that it has a suitably developed and robust legal and regulatory environment going forward.’
From a corporate and commercial perspective, the most comprehensive regulatory evolution has been the new Federal Commercial Companies Law, which came into force in February 2022. One of its more remarkable elements was the abolition of the Emirati majority shareholder requirement, a move which raises opportunities for overseas investors and which is expected to help further drive a bounce-back in M&A activity in the region, particularly in key sectors such as tech and cyber.
For Sadiq Jafar, managing partner of Hadef & Partners, ‘the key legislative change of 2023 is corporate tax’. A new decree has introduced a 9% corporate tax rate from June 2023, with exemptions in many of the free zones. Following the introduction of VAT in 2018, this is another step for the UAE in attempting to increase non-oil revenue. Jafar predicts a ‘substantial demand from clients who need to assess the effect on their business’, with ‘extensive corporate and commercial structuring required’, as well as ‘UAE related transactions now needing to be designed and documented to optimise for tax’.
‘These legal reforms are not just to encourage inward investment into the UAE, but also to ensure that it has a suitably developed and robust legal and regulatory environment going forward.’
Danielle Lobo, Afridi & Angell
Lobo adds: ‘This will not only generate work in its own right throughout 2023, but also impacts the practice of other areas such as M&A, where there will be a move towards more robust tax covenants and warranties.’
At the same time, firms are also benefiting from an overhaul of labour and residence laws, which have boosted employment and immigration work over the last year.
When the new Labour Code came into force in February 2022, it replaced a system that had been in place for more than four decades. With changes to laws surrounding fixed-term contracts, terminations and an abundance of other employment matters, firms’ employment practices have been advising clients on how to ensure their businesses comply; from redrawing contracts and handbooks, to shifting policies.
Luke Tapp, head of Pinsent Masons’ Middle Eastern employment offering comments: ‘The implementation of the new Labour law has been extremely positive for international and regional clients operating within the UAE. This is a major milestone development and will only increase and improve working arrangements, as well as help businesses within the region to attract and retain world class talent.’
Another consideration for large employers is the government’s push for Emiratisation. This initiative aims to increase the contribution of UAE nationals to the economy by upping their proportion in the workforce.
From January this year, private sector employers registered with the Ministry of Human Resources and Emiratization (MoHRE) with more than 50 employees have been required to ensure that at least 2% of their workforce are nationals. Residence laws have also been overhauled, with a new range of visas, introduced in September 2022, loosening the link between rights to reside and employment. These amendments were intended to attract skilled workers and their families to the UAE.
‘The UAE’s new Labour Law is a major milestone development and will only increase and improve working arrangements, as well as help businesses within the region to attract and retain world class talent.’
Luke Tapp, Pinsent Masons
Separately, efforts have also been made to update laws around data protection, cyber crime and digital assets, signalling to large international businesses that the region is at the forefront of such innovations, as Gulf states look to diversify their economies by embracing technology and cyber-related sectors.
‘The digital future is playing a pivotal role in the landscape of the Middle East,’ says Tapp, observing the growing influence of technology in the UAE and adding that ‘Dubai is emerging as a critical hub for designing the future of the globalised digital economy.’
Afridi & Angell’s Lobo predicts that ‘the digital asset space is likely to be an important sector moving forward, as the UAE positions itself as a hub for blockchain and virtual assets’, with IP work also likely to surge in response to updated trade mark laws. Tapp, meanwhile, adds that: ‘cyber security is at the forefront of people’s minds and there is an increase in demand for such services’, with new laws seeking to crack down on false advertising and criminalise the unlicensed trade of cryptocurrencies.
Law firm expansion in the Middle East
But it is not just the UAE that is busy. Recent months have seen significant expansion by international firms into Saudi Arabia. The kingdom dramatically altered rules governing how law firms operate in the country last year by amending the Saudi Code of Law Practice. The changes, which are due to come into effect in the coming months, mean firms have to end any existing affiliations with Saudi law offices if they want to continue to work there. Instead, they will be able to set up their own firms offering non-Saudi law advice, or practice local law via joint ventures with Saudi firms, as long as they abide by the strict new licensing rules.
The move has already led to a wave of expansion news from international firms. In March this year Squire Patton Boggs announced that it would be ending its affiliation with its existing partner and opening its own office through an alternative cooperation with The Law Office of Looaye M. Al-Akkas. Greenberg announced that it would be entering the region, while Latham & Watkins, Linklaters, Herbert Smith Freehills (HSF) and Clifford Chance are among the international firms to have been granted licences to practise, although several of HSF’s Saudi lawyers have since been recruited by rival Norton Rose Fulbright.
Addleshaw Goddard, meanwhile, has confirmed it is applying for approval to open in Riyadh – a launch that will mark its fourth office in the MENA region.
The new code means that foreign firms wishing to practice Saudi law have to be structured as joint ventures, with registered Saudi partners holding at least 25%. At least two partners representing the foreign firm must live in Saudi, at least half of the lawyers must be Saudi and at least 70% of fee income must remain in Saudi. Licences will have to be renewed every five years.
The expansion is not confined to Saudi. Gibson Dunn has added a second UAE office in Abu Dhabi, while Baker McKenzie opened UAE offices in Dubai and Abu Dhabi last year after splitting from its former Gulf partner firm Habib Al Mulla in the wake of a social media scandal involving the local firm.
Overall, the legal landscape for both domestic and international firms is incredibly promising. As Jafar comments, the UAE ‘has witnessed significant growth and development in recent years’, with the thriving business environment leading to ‘international firms establishing or expanding their presence, particularly in Dubai or Abu Dhabi’.
Clyde & Co is another firm that has been expanding significantly in the UAE as well as the Middle East more broadly. The firm secured a 13-strong team from PwC in Dubai in June, expanded its Riyadh offering and has also launched in Cairo. The new offering in Egypt, Barakat, Maher & Partners Advocates & Legal Consultants, will operate in association with Clyde & Co.
This expansion into Egypt comes against a backdrop of instability in the country, where the flotation of the Egyptian pound in October 2022 initially took the currency down to a record low against the US dollar. However, the country continues to be viewed as a gateway to North Africa and M&A and private equity activity has picked up in response to investor demand in the region.
Elsewhere in the Middle East DLA Piper strengthened its long-established Oman presence by entering into a collaboration with Mehdi Al Lawati Law Office (Al Lawati Law), an Omani law firm led by managing partner Mehdi Al Lawati.
‘The UAE has witnessed significant growth and development in recent years, with the thriving business environment leading to international firms establishing or expanding their presence.’
Sadiq Jafar, Hadef & Partners
Oman, which like many Middle East nations is attempting to diversify its economy away from oil and gas, is on track to become the sixth largest exporter of hydrogen in the world and the largest in the Middle East. Other firms in the country include Kennedys, which opened in 2021, Dentons and Addleshaws.
While firms are expanding across the Middle East generally, Tapp argues that the UAE remains the strongest legal market, followed by Saudi Arabia and Qatar.
Whether looking at the legal or economic markets of the UAE and wider Middle East, the impetus is very much geared to the future. Whether it is the modernisation of laws on the UAE’s 50th anniversary, Saudi’s ambitious Vision 2030 projects, or Qatar’s continued growth following the 2022 FIFA World Cup, new policies are aimed at placing these states at the forefront of the global economy in the coming decades. As these plans continue to materialise, the need for legal services is only going to increase, with both domestic and international firms set to play an instrumental part in their success. LB
MENA 2023: Top-tier firms by country and sector
| Sector | Egypt | Israel | UAE |
|---|---|---|---|
| Corporate | – ADSERO-Ragy Soliman & Partners – Al Kamel Law Firm – Baker McKenzie – Matouk Bassiouny & Hennawy – MHR & Partners in association with White & Case – Shahid Law Firm – Shalakany Law Office – Sharkawy & Sarhan Law Firm – Zaki Hashem & Partners, Attorneys at Law – Zulficar & Partners Law Firm |
– Arnon, Tadmor-Levy – Erdinast, Ben Nathan, Toledano & Co. with Hamburger Evron – FISCHER (FBC & Co.) – Goldfarb Gross Seligman & Co. – Gornitzky & Co. – Herzog Fox & Neeman – Meitar Law Offices – Naschitz, Brandes, Amir & Co. |
– Al Tamimi & Company – Allen & Overy – Clifford Chance – White & Case |
| Finance | – Al Kamel Law Firm – Al Tamimi & Company – Baker McKenzie – Matouk Bassiouny & Hennawy – MHR & Partners in association with White & Case – Shalakany Law Office – Zaki Hashem & Partners, Attorneys at Law – Zulficar & Partners Law Firm |
– FISCHER (FBC & Co.) – Gornitzky & Co. – Herzog Fox & Neeman – Meitar Law Offices – S. Horowitz & Co |
– Clifford Chance – Linklaters – White & Case |
| Litigation | – Baker McKenzie – Matouk Bassiouny & Hennawy – Shahid Law Firm – Shalakany Law Office- Zaki Hashem & Partners, Attorneys at Law – Zulficar & Partners Law Firm |
– Erdinast, Ben Nathan, Toledano & Co. with Hamburger Evron – FISCHER (FBC & Co.) – Meitar Law Offices – S. Horowitz & Co |
– Al Tamimi & Company – Allen & Overy – Clyde & Co – DLA Piper – Hadef & Partners |
MENA 2023: top 20 firms by Total rankings and by top-tier rankings
| Position | Firm | Total rankings | Position | Firm | Number of top-tier rankings |
|---|---|---|---|---|---|
| 1 | Al Tamimi & Company | 46 | 1 | Al Tamimi & Company | 21 |
| 2 | Dentons | 37 | 2 | FISCHER (FBC & Co.) | 19 |
| 3 | Baker McKenzie | 30 | 3 | Baker McKenzie | 17 |
| 4 | Goldfarb Gross Seligman & Co. | 25 | =4 | Herzog Fox & Neeman | 15 |
| =5 | DLA Piper | 24 | =4 | Meitar Law Offices | 15 |
| =5 | Eversheds Sutherland | 24 | 6 | White & Case | 13 |
| =5 | Meitar Law Offices | 24 | =7 | Arnon, Tadmor-Levy | 12 |
| =5 | White & Case | 24 | =7 | Goldfarb Gross Seligman & Co. | 12 |
| 9 | Herzog Fox & Neeman | 23 | =9 | Gornitzky & Co. | 11 |
| =10 | FISCHER (FBC & Co.) | 22 | =9 | S. Horowitz & Co | 11 |
| =10 | S. Horowitz & Co | 22 | =11 | Allen & Overy | 9 |
| =12 | Arnon, Tadmor-Levy | 20 | =11 | Clifford Chance | 9 |
| =12 | Gornitzky & Co. | 20 | =11 | Dentons | 9 |
| =12 | M. Firon & Co Advocates and Notaries | 20 | =14 | Clyde & Co | 8 |
| 15 | Norton Rose Fulbright | 19 | =14 | DLA Piper | 8 |
| =16 | Clyde & Co | 18 | =14 | Erdinast, Ben Nathan, Toledano & Co.with Hamburger Evron | 8 |
| =16 | Shibolet & Co. | 18 | =14 | King & Spalding | 8 |
| 18 | Clifford Chance | 17 | =14 | Zaki Hashem & Partners, Attorneys at Law | 8 |
| =19 | Allen & Overy | 16 | =19 | Bennani & Associés | 7 |
| =19 | Erdinast, Ben Nathan, Toledano & Co. with Hamburger Evron | 16 | =19 | Gide Loyrette Nouel | 7 |
North Africa 2023: top 20 firms by Total rankings and by top-tier rankings
| Position | Firm | Total rankings | Position | Firm | Number of top-tier rankings |
|---|---|---|---|---|---|
| 1 | Baker McKenzie | 13 | 1 | Baker McKenzie | 9 |
| 2 | Dentons | 11 | 2 | Zaki Hashem & Partners, Attorneys at Law | 8 |
| =3 | ADNA | 10 | =3 | Bennani & Associés | 7 |
| =3 | Al Kamel Law Firm | 10 | =3 | Gide Loyrette Nouel | 7 |
| =3 | Matouk Bassiouny & Hennawy | 10 | =5 | Matouk Bassiouny & Hennawy | 6 |
| =6 | Al Tamimi & Company | 9 | =5 | Shalakany Law Office | 6 |
| =6 | Bennani & Associés | 9 | =7 | Al Kamel Law Firm | 5 |
| =6 | Zaki Hashem & Partners, Attorneys at Law | 9 | =7 | Shahid Law Firm | 5 |
| =9 | Gide Loyrette Nouel | 8 | =7 | White & Case | 5 |
| =9 | Shahid Law Firm | 8 | =10 | ADNA | 4 |
| =9 | Shalakany Law Office | 8 | =10 | Al Tamimi & Company | 4 |
| =12 | ADSERO-Ragy Soliman & Partners | 7 | =10 | Allen & Overy | 4 |
| =12 | LPA-CGR | 7 | =10 | Clifford Chance | 4 |
| =12 | UGGC Africa | 7 | =10 | Norton Rose Fulbright | 4 |
| =15 | Allen & Overy | 6 | =10 | Zulficar & Partners Law Firm | 4 |
| =15 | DLA Piper | 6 | 16 | Eversheds Sutherland | 3 |
| =15 | Riad & Riad | 6 | =17 | DLA Piper | 2 |
| =15 | Sharkawy & Sarhan Law Firm | 6 | =17 | Ferchiou & Associés | 2 |
| =15 | White & Case | 6 | =17 | Herbert Smith Freehills | 2 |
| =20 | Afrique Advisors | 5 | =17 | King & Spalding | 2 |
| =20 | Bakouchi & Habachi – HB Law Firm | 5 | =17 | L&P Partners | 2 |
| =20 | CMS | 5 | =17 | Linklaters | 2 |
| =20 | Kettani Law Firm | 5 | =17 | Meziou Knani & Khlif | 2 |
| =20 | Norton Rose Fulbright | 5 | =17 | Riad & Riad | 2 |
| =20 | Rizkana & Partners | 5 | =17 | Sharkawy & Sarhan Law Firm | 2 |
| =20 | Zulficar & Partners Law Firm | 5 |