x Abu Dhabi, UAEWednesday 26 July 2017

If there were no lawyers, there would be anarchy

The Middle East's need for foreign-trained lawyers, to help create the legal framework for everything from drilling for oil to building power plants, has increased.

When Shakespeare's Dick the Butcher said, "Let's kill all the lawyers", it was because the law and understanding of it are what keep civil societies operating. Without them you would have anarchy, just what Dick the Butcher espoused. As many Middle East countries have prospered and diversified their economies and built up their military capabilities, the need for foreign-trained lawyers to help create the legal framework for everything from drilling for oil to building power plants to arranging Sharia-compliant financing has also increased. Without them, much of the modernisation would not have been possible.

Relatively few home-grown lawyers in the UAE, Oman, Saudi Arabia and other Middle East countries have the experience in handling the kind of hundred-million-dollar and billion-dollar transactions that the US, British and other international law firms do. That should certainly change over time as more firms do what New York-based Dewey & LeBouef did a few years after Saudi Arabia hired it to settle a boundary dispute with Yemen.

A Saudi lawyer, Khalid al Thebity, joined the firm and set up its Saudi office in 1998. He became a partner in the firm in 1999, the first time a US firm had ever made a Saudi citizen an equity partner. In the past decade, Mr al Thebity has no doubt learnt that what John Lonsberg of Fulbright & Jaworski said about the work of defence contractors and the US government's export control laws - "It takes years to learn their system" - applies to many of the issues international law firms deal with.

Mr Lonsberg once led the team of lawyers handling US$100 billion (Dh367bn) in claims Kuwait held against Iraq after the 1991 war. So he knows a bit about the complexities of big-money deals. He also knows that the stereotype in the United States is that the Middle East's countries are the same. "In order to do business, you have to know the industry" and the cultures of the countries in the region, Mr Lonsberg said. "They are all different, fundamentally, categorically different."

He was joined by a group of lawyers, who have a combined 150 years of experience, in his office in Dubai's Festival City recently to talk about their work, which includes heavy involvement in advising companies about how to get the oil out of the ground in this part of the world. "We work with people, putting the deal together, dealing with the politics, parliament and legislation," Mr Lonsberg said as he explained the intricacies of horizontal drilling.

In looking at the work of these law firms, many of which base their regional operations in Dubai, because of its central location and attractive lifestyles, the amount of money involved is staggering. The advisory work of Chris Sioufi of Dewey & LeBoeuf alone explains the financial magnitude of the business: a $2bn infrastructure fund in Bahrain, a Middle Eastern investor group on a $300-million acquisition bid in Africa; a North American public company on a $100m acquisition in Bahrain; an Abu Dhabi-based investment bank on a $150m private equity fund and a $150m Mena public equity fund, an Islamic investment bank on the setting up of a $250m Sharia-compliant Mena private equity fund.

Mr Sioufi said most firms' work here could be divided into three basic areas: advising Middle East clients, be it a company or government, on transactions within the region; advising them on interests outside the region; and representing interests of US clients within the region. Benjamin Newland, of King and Spalding, said of his firm's work in the Middle East, which goes back about 25 years: "It's international. Almost every deal is a cross-border deal."

In touting the work of Dewey & LeBoeuf on a $40bn Saudi natural gas initiative, Thomas Freeman, the firm's communications director in London, probably best explained the reach and influence of his and all the other US law firms: "The natural gas initiative gave the firm the chance to have more than 30 lawyers from more than seven different offices work on many aspects of the project for nearly three years," he said in a statement.

"They developed the regulatory body and established a regulator for electricity and water; developed environmental laws and regulations; revised the upstream tax laws; helped revise the foreign investment laws and regulations; and drafted the definitive agreements for the international oil companies." Complex? Indeed. But without those regulations and the lawyers to write them, anarchy might have prevailed.