Cautious signs of optimism for the legal sector in the Middle East

Chris Lipscomb BA, MSc(Hons), FCIPD, COO Blue Pencil

Having worked across the region myself, I know only too well the dangers of making generalisations for a region that is so diverse with countries at very different stages of economic development. Clearly, the most obvious sign of positivity for the region rests in the dramatic recovery in the oil price which is now sitting comfortably above $100 per barrel and is likely to rise further due to the ongoing conflict in the Ukraine. Given that the break-even price for extracting and producing oil is typically rumoured to be around $40 per barrel, optimism is not hard to find in countries like the UAE and KSA which are once again stockpiling cash.

According to the World Bank’s MENA update for April 2022, growth for the region this year is forecast to be around 5.2% compared with 3.3% in 2021. However, some negative variables persist which cannot be easily ignored especially given the fact that most countries in the region are net importers of food. Rising food prices fuel global instability and supply issues can lead to food insecurity and even civil unrest. A number of countries in the region such as Egypt, Yemen and Iraq are particularly vulnerable to this set of circumstances.

The main hubs of legal activity in the region are the UAE, KSA and Qatar. For the moment at least, oil/gas producing countries are the net beneficiaries of global turbulence. Evidence of this can be found in the “Construction Project Momentum Index” which puts the MENA region in 6^th place out of 11 regions for March 2022. This is itself an improvement on the previous month when it ranked in 8^th place. It is also important to note that there are some sector indicators where the MENA region is actually out-performing almost all other regions such as Commercial & Leisure, Residential and Energy/Utilities.  If construction momentum and economic activity in these critical areas are rising, the demand for legal services will invariably rise too.

Our own firm focuses heavily on the Middle East where many of us have previously worked and still have extensive networks. We are already seeing a rise in the number of opportunities for lawyers with a particular emphasis on construction and niche Corporate work e.g. M&A/Capital Markets work.  This increasing demand for lawyers has not been mirrored though by any significant corresponding changes in salary levels. In truth, salaries in the region which have remained fairly stable for a number of reasons. In KSA for example, as the country becomes more mainstream socially/culturally, salaries no longer need to have the same “hardship premium” as they have done in the past. Likewise, the desirability of living in countries like the UAE and Qatar similarly means that law firms are not having to pay a premium to attract candidates.

Further evidence of the attractiveness of the MENA region came in February this year when one of the big four consulting firms with a legal arm announced that it was now looking to expand beyond the standard locations of the UAE, KSA and Qatar and into Egypt, Oman and Jordan. As reported in legal publications earlier this year, this will entail a doubling in the number of lawyers they employ and underscores their rapid regional growth. My own former firm, Al Tamimi, which is the largest MENA regional law firm, has also just recently extended its coverage to include Morocco whilst other firms too have been increasing their regional footprint. This lends further weight to the air of optimism in the region.

Opportunities for the legal sector in the MENA region continue to grow led in part by KSA which is motoring ahead with its programme of radical social and economic reform.  The recovery in the oil price has meant that transactional activity in KSA has once again ramped up and the demand for Corporate and Finance lawyers is particularly strong. Whilst KSA in the past was often serviced by firms using bases elsewhere such as Dubai and Bahrain, this is now less true with preference being given to firms working on the ground in collaboration with local partners.

I recall vividly the Managing Partner of my former firm saying that “if you want to track how our business will perform, track the oil price”. Whilst countries in the MENA region are busy diversifying their economies to lessen their dependence on oil, the oil price is still a good pointer to the economic health of the region, not least because oil related cash helps fund economic diversification.

From our vantage point, if you are a lawyer looking to relocate out of the UK and commence a new life abroad, the MENA region may just be what you are looking for and I say this without wearing any rose-tinted glasses!

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