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No rush for Middle East moves: consultants

No rush for Middle East moves: consultants

WHILE THE number of international law firms setting up camp in the Middle East is growing at an exponential rate, commentators argue that Australian firms would be wise not to attempt expansion…

WHILE THE number of international law firms setting up camp in the Middle East is growing at an exponential rate, commentators argue that Australian firms would be wise not to attempt expansion into the area.

It may well be the fastest growing legal market in the world, as some argue, but Phil Clark, formerly managing partner of Minter Ellison and now a strategic management consultant, said he was “not convinced the Middle East is a good proposition for either Australia or New Zealand”.

“I’m not too wound up about the Middle East,” Clark said, explainingthat he struggled to see a real Australian investment connection with the region.

“There are certainly trade connections, but lawyers don’t make money out of trade, they make money out of investment, and I don’t think we have the investment flow there yet.”

International firm Baker & McKenzie has offices in the region. But Australian firms are thin on the ground, with only a handful retaining clients there. The offshore law firms operating there are primarily UK- or US-based — the latest include Ashurst, and shipping specialists Ince & Co and Hollman Fenwick & Willan.

Maciek Motylinsky, consultant at EA International, agreed that the market for Australian firms to expand “doesn’t go far beyond Asia”. He argued that the Middle East is a burgeoning market on the talent side, so lawyers will get there quite easily and that for them it is a very good career step.

But you need an established network in order to succeed in this market, he said. “As for the firms, any of the top six firms here will struggle to establish themselves in the Middle East because they don’t have the established relationships in the region.

“From an economic point of view, we’re seeing a lot of the international firms, that have the networks that you need in a market like Dubai to succeed, struggle — particularly at the initial stages.

“There is no reason to believe that Australian firms would be any different in that regard — and would in fact probably find it a lot more difficult because they don’t have the international networks and exposure from the work point of view,” said EA International’s Motylinsky.

He added that much of the work that international firms in the Middle East do is leveraged off other places, and other markets in which they work, particularly on the banking side. “You will see that firms that don’t have the international reputation or connections will really struggle to do well in the Middle East.”

There are no firms planning to do that, said Motylinsk, adding that there are good reasons for it.

A number of top UK firms have had offices in the Middle East for some time, including Clifford Chance, Allen & Overy, Denton Wilde Sapte and Simmons & Simmons. A host of Magic Circle firms are now setting up in the region, including Freshfields, Herbert Smith, DLA Piper Rudnick Gray Cary, and Linklaters.

But UK firms have “gone a little bit overboard on it — everybody’s there and they’re all ‘monstering’ the same deals,” Clark said. “I think it’s a fashionable thing at the moment — it’ll be interesting to see how it pans out in a year’s time. If I was running a law firm, I wouldn’t be rushing to get there.”

“It may be in five or 10 years’ time, if the Middle East lasts — and I’ve got some doubts about that — that there’ll be opportunities for Australian firms, but I don’t see them yet. I think for the short-term there’s going to be a talent bleed for Australia and New Zealand, rather than an opportunity. I just don’t see the synergies.”

Clark speculated that law firm expansion into the Middle East might be comparable to that into the Asian market, “where initially the UK firms come in, and they and the American firms control the investment flow and get first mover advantage, then work out it’s pretty hard slog, pick up stumps and go home”.

Additional reporting by Shaun Drummond.

Andrea Milner is the Editor of Lawyers Weeklys sister publication NZ Lawyer.

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