Special report: Bahrain
10 December 2012 | By James Swift
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Civil unrest is holding Bahrain back but lawyers believe that slow transactional work is down to more than the political situation
Bahrain’s lawyers are set to play a key role in the country’s development. However, the civil unrest that has been going on
for two years now means transactional business is slow while litigation is flourishing.
Business for lawyers in Bahrain is slow at the moment and nobody is entirely sure who or what to blame.
“There’s a downturn in business,” says Norton Rose partner Joanne Emerson Taqi, who has been based in Bahrain since 2006. “But it’s difficult to say how much of that is down to the general recession and how much to civil unrest.”
ASAR Legal member Rob Little argues that since Bahrain has only really felt the pinch in the past year or two, the blame for slow business must lay with the civil unrest that kicked off in 2011.
“The first downturn came in 2008, but the real slowdown came with the civil unrest,” says Little. “It has not dried up completely, but whatever recovery there might have been seems to have stalled and I don’t see us expanding much in the next year or two.”
On the other hand, Emerson Taqi argues that Bahrain’s history has not stopped its development.
“Bahrain has a history of civil unrest, but that has not stopped it from becoming the centre for Islamic finance and insurance - and that requires stability and liberalism,” she says. “[Bahrain has] a good combination of western-style living and well-regulated banks. It’s a stable situation and people accept the underlying unrest as part of the package of living in the country.”
Qays Zu’bi, name partner of Zu’bi & Partners Attorneys & Legal Consultants, agrees that it is most likely the banking crisis that has stalled progress.
“I think it’s the general economic crisis because we’re a banking centre and there’s a domino effect [from what’s happened in other financial centres],” explains Zu’bi. “Also, with a lot of the Islamic banks, almost everything they did was in real estate.”
Zu’bi adds that while many major projects have been put on the back burner and banks have stopped acting except for the occasional sukuk, there has been an upsurge in litigation and restructuring work.
And he is not letting poorly performing deal and project markets stand in the way of his firm’s progress. In July Zu’bi merged his practice, Qays H Zu’bi, Attorneys & Legal Consultants, with his father’s firm - Hatim S Zu’bi & Partners, Bahrain’s oldest local law firm, created in 1979. The resulting firm is one of Bahrain’s largest in local terms. Hatim was more focused on litigation than Qays, which concentrated on project and bank work.
Zu’bi is planning to expand in the coming months into Saudi Arabia’s eastern province and also Qatar. In both jurisdictions he has designs on establishing local-law practices and is in discussion with local lawyers.
“I’ve already got clients in the eastern province - mostly commercial ones,” says Zu’bi, whose firm also has a presence in Dubai. “But a law firm without a litigation team is not a law firm, so somewhere down the line we’ll probably try to add litigation lawyers.”
Before establishing his own firm, Qays worked at his father’s firm and then at White & Case, which he left to open an office under Clifford Chance management. He says he learned a lot about running a practice from his time at international firms. Consequently, he has established his new firm as a limited liability company because LLPs are not an option in Bahrain, and he now has plans to put in place structures that will let him give his lawyers shares in the firm - almost certainly a first in the realm of Bahraini law firms.
Indeed, it appears to be an apt time for innovation in Bahrain’s legal sector, as the government looks to lawyers to help in the jurisdiction’s development.
In one example, Tamkeen, a government body set up to help private sector companies develop, has signed an agreement with Newton Legal Group, whose general manager is former Freshfields Bruckhaus Deringer partner Joseph Huse, to train 10 Bahraini law graduates. The two-year training programme is aimed at graduates who have less than three years’ work experience and includes academic courses as well as the chance to work with government entities and corporations.
In a statement, Huse said: “Legal affairs play a significant role in supporting modern economies and it is extremely important to have trained national professionals in this field. We look forward to co-operating with Tamkeen to develop local talent in the profession.”
GDP (2010): $23bn
Annual inflation (Oct 2012): 1.6%
Population (2011): 1.3m
Life expectancy at birth: 75
Unemployment rate (Q2 2012): 3.8%
Source: World Bank, Central Informatics Organisation