In a formidable shift in Saudi Arabia’s legal landscape, no fewer than 30 multinational law firms have opened branches or applied for licenses within the country in the past nine months. This rush to lay a foundation in the oil-rich kingdom comes in response to regulators now permitting outside legal labor. Firms such as King & Spalding have taken a lead, with its managing partner of Middle East offices, Nabil Issa, noting that the rapid expansion “dwarfs anything we’ve seen here in 25 years.”
Bloomberg Law reported.
Despite the competitive potential of Saudi’s evolving legal market, some firms are facing pushback because of Saudi Arabia’s human rights record. As an example, British firm Simmons & Simmons faced staff backlash following its announcement to establish an office in the kingdom, a matter initially reported by The Telegraph. Nonetheless, the firm maintains that its operations align with its values, irrespective of regional differences in customs and laws.
The developments in the legal sector reflect broader transformations within Saudi Arabia under Crown Prince Mohammed bin Salman’s Vision 2030 project. The modernization effort, backed by a $700 billion sovereign wealth fund, the Public Investment Fund, aims to diversify the Saudi economy through various ambitious infrastructural projects such as the planned city of Neom.
Among the law firms that have been operating in Saudi independently since last March are US powerhouses like Kirkland & Ellis, and Latham & Watkins, and UK “Magic Circle” firms Clifford Chance and Linklaters. All must meet a requirement mandating a workforce composed of at least 70% Saudi national lawyers, leading to a competitive race to procure local legal talent.
One crucial consideration for firms operating in Saudi is the necessity to navigate Islamic Law (Sharia) and local legal customs. While not all lawyers need to be trained in Islamic Law, misunderstandings can occur when attempting to adapt international precedents to Saudi legal norms, thereby underscoring the importance of some level of fluency in Sharia.
The Saudi legal framework has demonstrated noteworthy progress in recent years. In 2023, the Saudi Center for Commercial Arbitration released rules aligned with international arbitration best practices. This move fosters a dispute resolution procedure familiar to foreign lawyers and heightens the sophistication of the Saudi regulatory landscape.
However, ethical concerns persist due to Saudi’s controversial human rights record. Simmons & Simmons faced internal opposition upon announcement of its expansion into Saudi Arabia due to the nation’s views on LGBTQ+ rights among other issues. But advocates for engagement see potential for social change through continued economic interaction.
Finally, the new regulatory framework allows global law firms to function independently in Saudi, which previously required affiliations with Saudi-based firms. This shift is an opportunity for firms like Clifford Chance and others to solidify their presence in the kingdom, while allowing for different strategies and client targeting methods.