Norton Rose‘s Dubai office was knocked sideways during the last year with its Islamic finance capability weakened by key partner losses, including the departure of managing partner Graeme Muir, who is leaving to become a consultant.
Herbert Smith was first to help itself to top partners Nadim Kahn and Zubair Mir in October last year. Then, earlier this year (17 January), The Lawyer reported on the departure of another key partner and Islamic finance specialist when it was announced that Tahir Ahmed was moving to Ashurst‘s Dubai office from Norton Rose.
Although Norton Rose has had a presence in Dubai, the hub of Islamic finance, since the 1970s, it has suffered from the onslaught of new firms moving into the area. The question now is whether Norton Rose can rely on previous successes to regain its position as an Islamic finance champion, or has the finite number of decent Islamic finance lawyers damaged the function beyond repair given its heavy personnel losses?Not many firms can withstand the loss of four partners in a specialist area. Norton Rose has had to hurry to fill the gaps, promoting Jane Clayton, Anthony Pallett and Andrew Tarbuck. Of the three, only Pallett has anything like a track record in Islamic finance.
With magic circle players such as Allen & Overy and Clifford Chance boasting high-profile international clients, including the likes of HSBC, Barclays Capital and Dubai International Bank, Norton Rose will need to protect its position.
Denton Wilde Sapte (DWS) structured finance partner Farmida Bi says ruefully: “It’s a fast-moving type of financing and it’s not easy to find really good Islamic finance lawyers. This is why you often see teams of partners being poached by rival firms.”
In spite of Norton Rose’s losses in the Middle East, former Bahrain managing partner Neil Miller insists it is not all doom and gloom for the firm.
“I don’t think our capabilities have been damaged at all,” he claims. “We still have strong relationships with clients and we’ve been told that partner departures haven’t affected the way we work and the service we provide.”
This year Norton Rose’s client list includes a host of Islamic banks, including the Dubai Islamic Bank, and a range of international clients, including HSBC, Société Générale, and BNP Paribas. The firm advised Citigroup on the development of a group of sharia-compliant hedging instruments as well as the $572m (£288.2m) IPO by Albaraka Bank listed on both the Bahrain and Dubai stock exchanges.
But can Norton Rose compete with the likes of Ashurst, Herbert Smith and Lovells, all of which have made aggressive moves in this area?Despite Norton Rose’s optimism, one magic circle partner based in the Middle East takes a more pessimistic view of the firm’s position. “Norton Rose has a fundamental problem in that it’s lost key capital markets partners, not just Islamic finance lawyers,” says the partner. “This is where the problem lies. They need to ask themselves: how do we reorganise the firm in the Middle East to make us strong again?”Yet instead of bolstering its Middle East practice with trainee lawyers, Norton Rose is launching its first dispute resolution practice in Dubai, as revealed in this issue.
The team, which will be led by former Hong Kong-based partner Patrick Bourke, is part of the firm’s strategy to create a stronger presence on the ground. Norton Rose global head of dispute resolution Antony Dutton says: “We’ve worked on cases such as Shamil Bank v Beximco Pharmaceuticals  in Bahrain. It’s now time to move into the area rather than run this practice area for the Middle East from London.”
Miller says: “Firmwide we’ve had a great year and Islamic finance has contributed massively to this. We’ve seen significant growth in Dubai, Bahrain and London, and it’s always been our strategy to continue strengthening this part of the firm.”
Indeed, Norton Rose has shored up its capabilities in Bahrain, Dubai and London, having flown in new Dubai managing partner Campbell Steedman, who took over from Graeme Muir last month (23 April).
The firm now has 23 lawyers handling Islamic finance in London, seven in Dubai and four in Bahrain. None has the experience, contacts or market recognition of either Miller or his ex-colleagues who have been lured elsewhere.
For the moment, Norton Rose’s institutional clout still holds. Clifford Chance Dubai partner Debashis Dey says: “When key partners leave it doesn’t necessarily mean that clients will follow. You may find that local clients will want to move with the lawyer they trust, but international clients will require a firm with an international perspective and not just capabilities in one area.”
As well as hanging on to big international clients, Norton Rose has attempted to position itself as a leader in London as the Government strives to make the UK the Western centre of Islamic finance.
Last month (30 April) The Lawyer revealed the firm’s involvement in the Government’s Islamic Finance Forum, which meets at 11 Downing Street once a quarter. Norton Rose and other market participants, such as the European Islamic Investment Bank, discuss how to develop the appropriate regulatory environment for Islamic finance to flourish in the UK.
Even though Norton Rose has lost many of the people that made its Islamic finance practice successful, it is not alone. Partners from other firms admit that it is not easy to keep hold of strong Islamic finance lawyers.
DWS, which lost its whole team, headed by Rahail Ali, to Lovells earlier this year understands exactly how difficult it is to replace the people who made Islamic finance work.
DWS’s Bi explains: “It takes time to find good people and everyone is fighting over them. I’m doing a lot of Islamic finance work at the moment and am travelling to Dubai to continue with this out in the Middle East.”
While there is a limited number of Islamic finance specialists for law firms to fight over, Bi can see a day when this will not be the case.
“It has to change because the speed of its development will mean that many other lawyers will be able to develop expertise in this type of financing. I think we’ll start to see a change,” she says.
Norton Rose still retains a brand for Islamic finance, yet that brand is increasingly centred on Miller himself. If he goes, then the Norton Rose business goes with him.