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A flurry of deals in Saudi Arabia has drawn some of the biggest names in the legal world to the Gulf state, making up for a drop in European and U.S. M&A activity.
Kirkland & Ellis, the world’s largest law firm by revenue, said it was “actively considering” options in Riyadh, calling it an “important market for international business and one of the fastest-growing economies in the world”.
It will partner with Latham & Watkins LLP, Greenberg Traurig LLP and Squire Barton Boggs LLP, Dentons LLP, Clifford Chance LLP and Herbert Smith Freehills Firms are pouring into the world’s largest oil exporter.
Previously, the Saudi Arabian government changed the law to allow foreign companies to apply for licenses to set up shop locally, rather than relying on partnerships with existing Saudi groups.
The new regulations were designed by Mohammed bin Salman’s government to “enhance the kingdom’s competitiveness” and “attract wider foreign investment”. They require firms to appoint two partners who work in the state for at least 180 days a year and pledge not to outsource more than 30 percent of their consulting work to attorneys working in other states.
The introduction of the licensing law, which came into force this summer, coincides with a series of blockbuster deals from Saudi Arabia’s $650 billion public investment fund, including a proposed merger of its LIV golf league with the US PGA Tour and Europe’s DP World Tour.
PIF is also heavily invested in Japanese tech conglomerate SoftBank’s Vision Fund, and holds large stakes in electric carmakers, ride-hailing apps, video game companies and cruise operators.
“Law is a ‘follow the money’ profession . . . the Saudis have a lot of money,” said Kent Zimmermann, a consultant at the large law firm Zeughauser Group.
Companies were seeking “evergreen” demand after rising borrowing costs in Europe and the United States became a drag on global deals, he added.
However, big law firms are moving into Saudi Arabia, where there is a potential conflict between liberal values espoused by senior staff in the U.S. and elsewhere and Saudi Arabia’s human rights record, where dissidents continue to be imprisoned and homosexuality remains a capital offense . . The CIA also believes the country has authorized a “catch or kill” mission against Washington Post reporter Jamal Khashoggi, and determined that Khashoggi was dismembered in the Saudi consulate in Istanbul in 2019.
U.S. law firms have come under increasing political pressure to drop some clients, with Kirkland and Ellis parting ways with two star attorneys representing the gun lobby NRA last year after the Texas school massacre sparked widespread outrage . Other companies refused to work for anti-abortion groups or opioid manufacturers, while former US President Donald Trump and his associates were rejected by numerous elite institutions.
Richard Rosenbaum, executive chairman of Greenberg Traurig, said his company’s move into Saudi Arabia is “part of a long-term vision to grow and add excellence and value in this dynamic region”, which he believes The firm is represented in the country by “good guys and good lawyers”.
He added: “We do not independently judge the local customs, religious views and value systems of each jurisdiction and culture we enter, and we have no right to judge in this way. We do, however, comply with all applicable laws, Maintain high standards of ethics, integrity and excellence throughout the firm and expect us to be able to assist clients around the world legally and ethically.”
Herbert Smith Freehills said it was “a business that takes (human rights and ESG) issues seriously and responsibly, and has policies in place to ensure we receive the right clients and mandates in Saudi Arabia”.
Dentons did not comment specifically on the kingdom’s human rights record, but said the country’s “presence in the Middle East dates back 50 years.”
Latham & Watkins did not respond to a request for comment. Squire Patton Boggs and Clifford Chance declined to comment.
Kirkland did not comment on Saudi Arabia’s human rights record. Many of its customers are “active and growing” in the country, the company said. The American Lawyer first reported the company’s decision to enter the state.
Zimmermann of the Zeughauser Group said the industry has struggled to find a balance. “If law firms only focus on clients who are in demand globally, then that will be a very small market,” he said.