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We’ll keep you informed about the flurry of dealmaking happening in Saudi Arabia. The Gulf state is attracting some of the biggest names in the legal sector as it aims to compensate for the decline in M&A activity in Europe and the United States. Kirkland & Ellis, the world’s largest law firm, has expressed active interest in exploring opportunities in Riyadh. They recognize the importance of this market for international business and its status as one of the world’s fastest-growing economies.
Saudi Arabia’s recent regulatory changes have opened up exciting opportunities for foreign law firms. These changes allow firms to apply for licenses to establish a presence in the country without relying on partnerships with local groups. As a result, top US-based firms, such as Latham and Watkins, Greenberg Traurig, and Squire Patton Boggs, are flocking to the world’s largest oil exporter. They will join Dentons, Clifford Chance, and Herbert Smith Freehills, among others, in seizing the potential offered by the Saudi Arabian market.
The revised regulations, set to go into effect this summer, were implemented by Mohammed bin Salman’s administration to enhance the kingdom’s competitiveness and attract more foreign investment. Under these laws, firms must assign two partners to spend a significant amount of time in the country and limit their advisory work exported to other states to 30% or less.
The issuance of these licensing laws coincided with Saudi Arabia’s Public Investment Fund’s active pursuit of major deals, including the proposed merger of its LIV golf league with the PGA Tour and DP World Tour. The Public Investment Fund also has substantial investments in various tech companies, electric car manufacturers, ride-hailing apps, video gaming firms, and cruise line operators.
Law firms are keen to tap into the lucrative opportunities in Saudi Arabia, as the country offers substantial financial potential. According to Kent Zimmermann, an advisor to leading law firms at Zeughauser Group, the legal profession follows the money, and Saudi Arabia has a lot of it. These firms are seeking sustainable demand, particularly given the challenging borrowing conditions in Europe and the United States, which have dampened global dealmaking.
However, this move into Saudi Arabia presents a potential conflict between the liberal values advocated by senior staff in the US and elsewhere and Saudi Arabia’s human rights record. The country continues to imprison dissidents, and homosexuality remains a crime punishable by death. Furthermore, the CIA deemed Saudi Arabia responsible for a “capture or kill” mission against journalist Jamal Khashoggi, who was dismembered in the Saudi consulate in Istanbul in 2019.
American law firms have faced increasing pressure to cut ties with certain clients. For example, Kirkland and Ellis parted ways with attorneys who represented the National Rifle Association following public outrage over a school shooting in Texas. Other firms have declined to work with anti-abortion groups and opioid manufacturers. Elite firms have even turned down former US President Donald Trump and his associates.
Despite potential ethical concerns, law firms like Greenberg Traurig and Herbert Smith Freehills emphasize their commitment to abiding by applicable laws and maintaining high ethical standards. They believe they can make a positive impact by providing legal assistance to clients in Saudi Arabia. Dentons, which has had a presence in the Middle East for 50 years, did not comment specifically on the kingdom’s human rights record. Latham & Watkins, Squire Patton Boggs, and Clifford Chance chose not to provide a comment on this matter.
The decision of Kirkland & Ellis to enter the Saudi Arabian market was reported by The American Lawyer. Kent Zimmermann from Zeughauser Group reminds us that law firms are constantly trying to strike a balance between client demand and aligning with popular public opinion.
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