Trowers first to fall prey to Middle East downturn
Trowers & Hamlins has become the first firm to cut jobs in the Middle East as cracks begin to show in the previously booming Gulf legal market.
The firm, which has built its reputation on the back of four decades in the region, has made seven redundant, with the bulk of the cuts affecting its banking and project finance practices.
Five of the cuts were in Dubai, which until recently was seen as the booming centre of the Middle East. Over the past few months work there has dried up.
“Dubai is dead,” said the Middle East head of an international bank. “The government’s trying to pass it off as a blip, but it feels much worse than that.”
The rest of the region appears to be less affected by the global slowdown. A Gulf HR manager at an international firm said: “Dubai is worst affected. It doesn’t seem to feel like there’s a recession in Abu Dhabi, even though it’s only one hour’s drive away.”
That said, Trowers has also cut one job in Muscat and one in Riyadh.
The cuts come as UK and US firms have been piling into the Middle East, launching offices and transferring lawyers (see table).
But Taylor Root Middle East recruitment consultant Hussein El-Zein said the demand for lawyers had waned.
“Law firms are becoming more selective,” he said. “They don’t want to hire as many lawyers from Sydney or London as they used to. They’re going to focus on lateral hires from the local market, with increased demand ;for ;bilingual lawyers in jurisdictions like Riyadh, where there are less expats among the clients.”
Although lawyers who relocated ;temporarily should be protected by UK redundancy law, those who moved permanently will not receive the same rights.
Trowers international HR head Malcolm Lewis said: “They’re governed by local law – they don’t have UK benefits and haven’t been offered outplacement services.”
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Readers' comments (21)
Dubai eye | 24-Feb-2009 8:48 am
On the ropes
Let's not get carried away - its very very grim at the moment here in Dubai. No clarity as to what is going on or what the plan is to get us out. No payments being made. Trowers will be the first of many to make redundancies.
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Eddie Bling | 24-Feb-2009 11:34 am
Dubai dumba$$es
Hey Expat Joe James Horton sorry to break the news to you, but Dubai is finished. The government hasn't had to pump in billions? You sure are clueless. They've already had to rescue the largest lenders there, Tamweel and Amlak. The UAE has had to "help" out Dubai with 10 billion in funds. Mark my words, this is only the beginning.
I used to be a lawyer, and trust me, when I was in your position, I was myopic about the market around me. Law firms are the last entities to wise up to what's going on around them. Property prices will collapse in Dubai. Foreign capital is exiting in droves and the financial system is being exposed as the chimera it is. Dubai is California II, except the property price declines will be much, much worse. I hope you can stand the 40 degree heat when they turn the power in your respective buildings because the tenants have all vacated and no one is paying the rent. Here's a tip, get out of Dubai before it's too late. Don't say you weren't warned.
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Anonymous | 24-Feb-2009 11:53 am
Dabai haters
Eddie Bling, as a lawyer based in Dubai who has been asked to advise on two US$ billion plus deals since yesterday (when the US$20 billion bond was announced), i have to disagree with your ill informed view of this part of the world.
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James Horton | 24-Feb-2009 12:12 pm
Bright comments
Always useful to have informed comment from someone like Eddie Bling. No-one is saying Dubai is perfect, just that the UAE (and Dubai) have less issues than other places in the world and happen to be sitting on hundreds of billions of dollars due to their oil reserves. I think turning out the lights is more likely to happen in the UK with its massive debt which it cannot service and a service led economy which is unlikely to return quickly, as well as a draing public sector. Still, carry on being bitter Eddie - did you lose your job in Dubai by any chance?
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Eddie Bling | 24-Feb-2009 1:55 pm
Fail
Hi Anonymous, you clearly fail at logic and hence I question your legal acumen. Let me guess, you're a junior lawyer? What you just stated is the fallacy of anecdotal evidence. Clearly, just because you worked on deals doesn't mean the market is running smoothly. Here's a newsflash for you. People were working on securitisations even after the securitisation market died. There are derivatives lawyers still doing derivatives now, does that mean that market is also thriving, no, it means deals are unwinding and many of those lawyers will be out of work unless they move to restructuring or insolvency in due course. Do you know what CDS levels are on Dubai? Of course CDS spreads aren't everything, but take a look at the number, 750bps, more than Slovakia and Austria. The market views Dubai as riskier than Casio Computers. Do you know what Dubai's foreign currency reserves are? Do you know what their debt to GDP ratio is? Do you know how much sovereign wealth funds have lost this year? Do you know that Dubai cannot break even on oil with the price of oil at its current level? Do you know that indebted foreigners are leaving Dubai and leaving their cars at the airport because Dubai arrests debtors who don't make good on their debt? Have you not learned from this whole crisis to heed the warning signs.
As for James Horton, no, I didn't lose my job in Dubai, I'm retired, and have been retired for 6 years. I have had friends in the legal industry and financial industry who were considering Dubai due the ongoing problems in the UK and I advised them against it. Clearly, I'm aware the UK is in bad shape, but you are living in fantasy land if you think Dubai is the place to go. It is one of the many additional dominos to fall. All the best to you in any case. It seems you have a vested interest in Dubai. Take a break from drinking the Kool-Aid and wake up to reality, you'll thank me.
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Anonymous | 24-Feb-2009 2:12 pm
What oil reserves?
Dubai has minimal reserves left. It depends on logistics and tourism for its wealth. It has had to be bailed out by Abu Dhabi and at a price which will become apparent all too quickly. Key assets, key commercial reforms will be sacrificed to keep the Sheikh Mo Show just about on the road. The focus of life in the UAE will return to Abu Dhabi where growth will continue on a more sensible and sustained basis.
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Buzzard | 25-Feb-2009 7:31 am
Dubai in the Sky
Build it and they shall come...have you ever heard of anything so dumb?
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James Horton | 25-Feb-2009 7:32 am
Oil Reserves
They may not have much oil in Dubai but they are part of the UAE - that is like saying England doesn't have any but doesn't benefit from North Sea oil. Yes Dubai has been bailed out and will be more controlled by Abu Dhabi - is this a bad thing as it will control some of the previous excesses?
The fact remains that Abu Dhabi knows what Dubai has created is a successful "business model" and attracts business, wealth and people to the region. It will not let it falter and will make its own conservative progress over the next 20 years.
The 2 emirates will dovetail in what they offer to people, companies etc and be a powerful force with the world's "financial" powerhouses like New York and London stymied by regulation and higher tax. Where do you think profit seeking corporations and financial institutions will end up?
Eddie Bling, whilst there is some truth in some of what you said like SWF's losing money, people losing jobs etc, it is a bit glass empty rather than half full. The reality is that if the UAE is in deep trouble, then the rest of the world can forget about society as we have known it. With riots already likely over unemployment in the UK, there is a reason why people still want to come to the Middle East. I think you are deliberately missing the relative strengths/positions of the various economies and the amount of population they have to actually support. Take your pick - a government which is cash rich supporting a population of 4 million or a bankrupt government supporting a population of 60 million? Not rocket science even if the UAE does take a short-term hit.
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Anonymous | 25-Feb-2009 8:07 am
Reality
The Dubai "bubble" was always going to burst with or without a global recession. Dubai will come out of this experience stronger and better organised (with less bling!).
The likes of Eddie Bling needs to understand how the Dubai legal market works. Not more than 15-20% of the business undertaken by the major international firms (ie. not Trowers) based in Dubai relates to Dubai. The rest is work done in the GCC and the wider ME region and there hasn't beem much reduction in the amount of work in region outside of Dubai.
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Anonymous | 25-Feb-2009 9:19 am
pet project
The truth is no-one really knows what will happen, although I get the impression that when oil prices bounce back up Abu Dhabi will continue to pump cash into Dubai as much as it needs to - at the moment it is an unfinished pet project.
The UAE leadership has had a long term plan since the 70s, that will eventually see Abu Dhabi emerge as the financial capital, with its sparkly, glamorous little sister just up the road. Dubai was always designed to be a playground to attract the wealthy, where nothing exceeds like excess, and until the project is finished I doubt the leaders in Abu Dhabi would cut them off.
The government might seem like they want everything in a hurry but these plans have been in existence for 40 years - with probably another 10-20 left to go - so I dont think that them restricting the cash flow, especially during a time that they're making a loss on oil, is a valid indicator that Dubai is "finished".
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