x Abu Dhabi, UAEMonday 22 January 2018

Lack of regulation leads to a free-for-all in legal practices

International law firms complain that local lawyers do not do their work properly; local lawyers complain that international lawyers lack an understanding of the UAE's legal system.

For international law firms, setting up a practice abroad usually requires jumping through a number of regulatory hoops. But in the UAE, it can be as simple as just choosing where to set up shop.

This country is one of the few legal markets lacking any real regulations on international legal practices. It is also one of the few environments where a legal practice, at least for lawyers who do not litigate, operates under very few restrictions.

The legal profession has, until now, been as liberal as could be, but there are questions as to whether that needs to change.

The role of an international lawyer working in the UAE is that of a legal adviser. Obviously to fulfil that role, lawyers should have a deep familiarity with UAE law, which really can only come from an extended stay in the country to fully learn the nuances of the law. But most legal firms' placement schemes shift lawyers from country to country regularly, so a real understanding of UAE law becomes the least of their priorities.

At present, foreign lawyers practise UAE law without any prerequisite knowledge. A number of the foreign law firms now employ law school graduates from the country or consultants on UAE law because they need the local expertise - and because so many big firms have been slapped with complaints over erroneous legal advice.

Cooperation between international and local law firms is limited to litigation, where local lawyers are required to represent international firms' clients before the local courts. International law firms complain that local lawyers do not do their work properly; local lawyers complain that international lawyers lack an understanding of the UAE's legal system.

The question of new regulations for international lawyers has gained prominence, especially as the number of local lawyers increases: there are now 436 local practitioners registered with Dubai's Legal Affairs Department, and about 600 with the federal Ministry of Justice. Just in Dubai's jurisdiction, there are 227 local law firms practising, and 100 international law firms, in addition to about 80 international firms licensed by the DIFC and Jebel Ali Free Zone.

Because the UAE is "over-lawyered", most of us believe that regulation is urgently required. But the exact form is still very much up in the air. Dubai's recent announcement on licensing and fines for lawyers (the Dubai Executive Council Decision No 22 of 2011) unified some regulations for legal practitioners, but little was done to regulate international lawyers. Besides a requirement that a licence be hung on the wall facing the entrance and a registration fee of Dh5,000 for every legal consultant, not much was established. Further regulation, for both local and international lawyers, is clearly required.

There is no doubt that local firms have learnt from foreign firms, and the larger ones have modelled themselves on the international operations. The Government and key sectors of industry recognise the vital role played by international law firms and are keen to ensure that the legal market remains open to foreign firms. The presence of international firms in the UAE helps to foster business by encouraging foreign investment.

The question is how new regulations will be adapted that provide for that role. Last week I attended two meetings, one with the Dubai Legal Affairs Department training and development arm and another with Dr Hadef Al Dhaheri, the Minister of Justice, who has courteously agreed to confer with a group of 10 female lawyers to discuss the challenges that we face in our careers. The subjects of international legal advice and the regulation of local law firms were discussed at length. Regulation is on the agenda, but regulatory debates in the UAE have a tendency to drag on.

So how should the UAE approach regulation, and how much should international legal firms be limited in their practices?

The global standard that is most common in developed legal markets allows foreign lawyers to open law firms, but requires them to hire or partner with local lawyers if they advise on local law.

There are more restrictive models as well, in countries such as Saudi Arabia, Egypt and Indonesia, which are designed to protect local business. And countries such as South Korea, Malaysia and India, bar foreign lawyers entirely.

So the current free-for-all may work better than the very restrictive systems in light of globalisation. But surely there is a compromise regulatory initiative that could allow international firms to practise, while at the same time ensuring that legal advice on local issues is provided only by those who are qualified to give it.


Diana Hamade is an Emirati lawyer and legal consultant. She is the founder of International Advocate Legal Services in Dubai