Dubai's once relentless growth has been halted, but its resilience during the current financial storm may see a more sophisticated economy emerge, writes Angela Priestley.
While the legal markets of the globe succumbed to the early stages of the global financial crisis, Dubai remained one of the few bastions where legal work was steady and business carried on as usual.
But it wasn't long before the good times soured, and Dubai too saw its once seemingly unstoppable growth halted.
The Emirate, once revered for its limitless potential, relentless growth and plentiful job market, very quickly did a major u-turn as the impact of the global economic downturn set in, and employment opportunities consequently dried up. As Christopher Aylward, a partner at Denton Wilde Sapte and an Australian who has been living in the Middle East for almost six years puts it: "It was the case two years ago where if you had a calculator, you could get a job in a bank in Dubai. Law firms were similarly employing anybody who had walked past a university."
Things have certainly changed. Earlier this year, the London Times reported that thousands of cars had been abandoned in a parking lot at Dubai Airport - left behind by debt-ridden foreigners. Confidence in the Dubai real estate market dramatically collapsed, while banks froze their loans, foreigners lost their jobs and those with real estate debts and car loans moved to get out of the city quickly. Dubai's once remarkable construction and property market has taken a major hit, resulting in a higher unemployment rate and drop in real estate values.
"Many projects and developments have slowed, or been postponed, and some projects that were announced before the GFC may never see the light of day," says Tony Holland, another Australian lawyer and partner at DLA Piper in Dubai. "That said, there are developments proceeding and new projects are being announced around the region. The whole world has been affected by the GFC, but the strength of many of the Gulf economies has enabled them to come through it in a better state than other countries."
Opportunity for change
Indeed, this strength may lead to a more resilient and sophisticated economy in the future for Dubai.
One side-effect of the GFC, according to some of the lawyers contacted by Lawyers Weekly for this report, has been the fact that some highly experienced professionals - including lawyers - have found themselves out of work around the world, ultimately encouraging them to take advantage of opportunities in Dubai. In this way, the GFC may well be the crisis the region needs in order to reach the level of business sophistication experienced elsewhere.
According to Aylward, the personnel entering the region - although arriving in limited numbers - are certainly much more experienced than the workforce the city has previously hosted. "There are people with backgrounds like Lehman Brothers, or UBS, Goldman Sachs, Morgan Stanley - places that have in the last year or so, offloaded people. You see a lot of clients and a lot of law firms are trading up in terms of personnel," he says.
Meeting legal needs
It's this changing level of sophistication that presents some unique challenges and opportunities for Australian lawyers already working in the region, or interested in working there in the future. Dubai is certainly an exciting city, and its good times are likely - albeit differently - to come back again.
Aylward says that one of the major challenges he finds in undertaking legal work in the region is the unsophisticated state of legislation - especially without the history of common law to fall back on for interpretation. "Courts and government bodies that interpret law and enforce legislation have broad discretion and have generally no concept of binding precedents," he says. Again, the changing economic conditions and increased disputes coming through might encourage such legislation to be further enhanced, and become increasingly sophisticated moving forward.
Holland agrees, noting that the laws are not as detailed or clear as in say the UK or Australia - especially in relation to mortgages and securities - while laws in general remain somewhat uncertain, having rarely been tested in litigation. "There has been a trend that disputes would be settled, rather than go to court," he says. "But even if they do go to court, it's very difficult to predict the approach of the court because of the lack of precedent and access to case laws that we have in Australia, or the UK, or other common law jurisdictions."
Clash of cultures
Hamish Walton, a partner at Clyde & Co and an Australian in the region, believes that the current economic crisis is forcing foreign law firms to better adapt to the local culture and obtain a better understanding of local law issues. "The days of foreign law firms retaining local firms to do the local law work on a deal are gone, with a few exceptions," he says. "Clients, particularly big government clients, are telling us more and more that they want their legal advisers to provide the full service."
Walton adds that the general cost of legal services is becoming a much bigger factor in view of the global economic crisis, and that clients are looking for law firms to be more innovative in the way they price the provision of legal services.
Culturally, foreign lawyers entering the Dubai legal market might be faced with some similar legal work to what they might experience in the UK or Australia, but they do face a remarkably different business culture to that of the West. "The government is a very powerful player in the economy," says Walton. "The nationals have different personal goals, with the family and the tribe being all important. In subtle ways, these and other differences affect many of the transactions that we are involved with."
Such differences, says Aylward, resonate in the fact that it's not uncommon to come across many uncertainties in how the government may interpret various aspect of the law at any given time - a difficult cultural difference that can be a challenge to communicate to foreign clients, he says.
Worth the wait
While it may take some time for the market to pick up and the once numerous job opportunities to flourish again, Holland says the lifestyle is well worth the wait. "Over the cooler months - probably from October or November through to March April - the weather is superb; it's outdoor weather [and there are] a lot of outdoor activities," he says. "There are many organised sporting and cultural events going on in Dubai and Abu Dhabi over the cooler months, with everything from golf and tennis tournaments, Rugby sevens, to musical events, cultural events and concerts. They have arts, music and fashion festivals, and are about to have a Formula One Grand Prix!"
Walton agrees, noting the endless opportunities for travel and the financial rewards. "The work quality is also good and there are some huge deals around, reflecting the enormous economic resources of the Gulf."
But to get there, notes Walton, it's important to do your homework and ensure work is acquired with a stable and well-resourced enterprise. His firm, Clyde & Co, can certainly boast such resilience. "It has survived two Gulf wars and the GFC, and will be around for many years to come," he says.
And resilience, in a part of the world that experiences the most extreme aspects of the boom and bust cycles, is certainly an impressive quality in a law firm.
Selective recruitment continues
The seemingly unstoppable growth of the Middle East over the past decade has seen it become an attractive region for Australians, with its tax-free salaries, top quality work and lifestyle opportunities. Unfortunately, it wasn't immune to the downturn, with lawyers being made redundant over the past 12 months.
Confidence is returning to the region, with both law firms and in-house starting to recruit selectively. It is hard to predict the pace of recovery at this stage, as the months of August to October are generally quiet there, owing to the summer heat (which partners and general counsels do their best to escape) and the onset of Ramadan.
For the Australian lawyer looking to move there, the same rules apply as for any international location. Work in a transferable practice area for the region and get the best experience in your area by working in an internationally recognised practice. Also think outside the square - looking outside Dubai opens up great locations such as Oman and Bahrain which will provide you with top work and an excellent standard of living; and regional firms as well as UK and US firms will have you working with some of the most well-respected partners in the Middle East.
As with any international market right now, there are still some great opportunities around, but they are few and far between. It won't be long before there is demand again in the Middle East for Australian lawyers, but the pace will most likely be less frenetic this time around.
- Sandra D'Souza, manager of International at Taylor Root