CC gets it together in Saudi Arabia
11 March 2013 | By Joshua Freedman
6 January 2014
10 March 2014
10 March 2014
10 March 2014
14 October 2013
Trailblazer firm tests mixed partnership water in the desert kingdom
Clifford Chance announced last week that it had received regulatory approval to set up a mixed partnership in Saudi Arabia comprising foreign and Saudi lawyers. Although this has been allowed for several years, the magic circle firm claims to be the first international outfit to take the opportunity.
The rules permit up to 75 per cent of a law firm operating in Saudi to be owned by a foreign person or organisation. In fact, the rules are stricter than they seem: the 25 per cent must be under the ownership not just of a Saudi, but a Saudi-qualified national. This excludes Saudis whose legal qualification was obtained in the US or UK.
Clifford Chance’s plan is to bring aboard two partners from its longstanding co-operation firm Al-Jadaan & Partners as partners from 1 January 2014. These are banking lawyer Abdulaziz Al-Abduljabbar and corporate and capital markets specialist Khalid Al-Abdulkareem. Both are Saudi-qualified and will own the required 25 per cent of the local business. The remaining 75 per cent will be held by Clifford Chance as a firm.
The team on the ground will consist of four partners, one counsel, 17 associates and 20 support staff. It is expected the two partners alongside Al-Abduljabbar and Al-Abdulkareem will be current English-qualified duo Tim Plews, the most senior figure in the office, and Omar Rashid, who carry out banking and corporate work respectively. But nothing is set in stone and adjustments such as partner promotions are far from decided.
Al-Abduljabbar and Al-Abdulkareem are both deal lawyers and will bring all their transactional associates and a number of support staff with them to Clifford Chance. This is a key feature of the firm’s decision: it is sticking to transactional work in Saudi and has no intention of breaking into the local litigation market after winning a licence to practise Saudi law for the first time. The reason for this is clear: disputes are a tricky beast in Saudi and do not lend themselves to foreign firms quite like corporate, finance and capital markets do.
Plews points out: “You have to bear in mind that litigation in the Saudi courts is all carried out in Arabic. It’s very specialist - we’re not ready to go into that. We wanted to expand our ability to conduct transactions on the ground in Saudi.”
Plews’ argument rebuffs any claims that this story is really one of a fissure at Al-Jadaan. In truth, it is not that Clifford Chance wanted only half of the Al-Jadaan team, but rather that it does not feel litigation is the thing to do right now.
The other potential claim is that we are seeing a break-up of Al-Jadaan’s lengthy friendship with Clifford Chance, which started in 1998. True, the co-operation agreement is now ending, but managing partner and founder Mohammed Al-Jadaan will be a ‘special adviser’ to the Clifford Chance team and run the local firm as a niche boutique focusing on litigation and mediation, legal strategies and structuring. The UK firm will still use Al Jadaan for its contentious work.
“Litigation continues in the Al Jadaan law firm but with assistance for us from Mohammed on structuring and innovation that he enjoys,” says Plews.
It seems the termination is less acrimonious than some others in the country. Allen & Overy (A&O) made its first foray into Saudi Arabia in 2007 by setting up an association with local firm Abdulaziz AlGasim Law Firm, but the five-year agreement expired in June last year. The two firms discussed whether to perpetuate the arrangement, but Linklaters came along and established its own relationship with Abdulaziz AlGasim, which took effect in December 2012. A&O responded the same month by launching a tie-up with Zeyad S Khoshaim Law Firm.
Magic circle rival Freshfields Bruckhaus Deringer has had rather more stability. It co-operated with Fares Al-Hejailan (FAH) from the 1990s (when FAH worked with Clifford Chance) and in 2008 turned this into a formal association. It then switched in 2010 to The Law Firm of Salah Al-Hejailan, run by Fares’ father.
Plews does not see any such tit-for-tat in play in his firm’s Saudi operations. “You need to be comfortable with your Saudi partners - we’ve had a strong monogamous relationship,” he says.
Plews says the two firms had “been dating for quite a long time” and had long had integration at the back of their minds, although there was no reference to a potential merger in the original co-operation agreement.
Clifford Chance has a habit of doing things first: it was the first foreign firm to submit a preliminary application to launch in South Korea, for example, and mulled a merger with Australia’s Mallesons Stephen Jaques (now King & Wood Mallesons) well before most rivals were interested in the Antipodes.
Plews insists the firm’s strategy is not about winning a race to launch an initiative before everyone else. But he does think Clifford Chance may be setting a trend in Saudi with the mixed partnership.
“There’s a new generation of Saudi lawyers who will try and sell this as their model,” he suggests.
Perhaps the best thing about the firm’s model is how steady it has been. The question is how the latest shake-up will affect this.