Even the Middle East has fallen victim to the financial crisis, Sarah Sharples asks if Australian lawyers can still capitalise on the now limited opportunities in the region
"For Abu Dhabi in particular, and the UAE generally, I think they will weather the global financial crisis better than some other parts of the world"
The Middle East was once seen as a place where lavish excess was a part of a culture which was awash with cash. Many Australian lawyers wanted a slice of this pie as well as the opportunity to evolve their skills in a rapidly developing and ever-changing part of the world.
With law firms set up across Dubai, Abu Dhabi, Oman, Qatar, Bahrain and Kuwait City, there was plenty of choice for Australian lawyers. But then the global downturn struck and the Middle East has not remained untouched by its rippling effect.
Dubai has been noticeably affected by the crisis. Property prices have declined in both sale and rental value by approximately 20 to 25 per cent. Also, European banks have imposed far stricter lending requirements, with financing more difficult for prospective purchasers to obtain.
The number of disputes in the region has increased - a by-product of the scale of development there - with construction now a particularly contentious area. Small developers which are not backed by the government or oil-rich families have felt the impact in cases where investors may have defaulted on their payments or sub-contractors cannot be paid, resulting in projects stalling.
However, there are still a number of major property and infrastructure projects planned, with an estimated $600 billion worth of ventures still in the pipeline around the United Arab Emirates (UAE).
Mimi Fong, managing director of international recruiting firm Amicas Global, says that law firms with a longer history within the region still have a number of ongoing projects.
"Those who have had a long-standing, on-the-ground presence in the Middle East may be faring slightly better than the newer players due to their strong connections established over time and their in-depth understanding of the region," she says.
Miranda Hilton, managing director of Spencer Scott Hilton, agrees that long-established firms are still busy across most practice areas, but the focus of the work has changed. "For example, as opposed to managing major deals in the corporate groups, they are managing major corporate restructures," she says.
Some practice areas are quiet, including financing, M&A and real estate, according to Michael Bromley, senior consultant at EA International. "But on the bright side, a lot of oil and gas and general energy-related projects are still ongoing, as the lead-in time and time it takes to complete such projects is so long," he says.
The experience on the ground
Hamish Walton, partner at Clyde & Co, which is based in both Abu Dhabi and Dubai, says equity capital markets and M&A work at the firm has slowed down as a result of the credit crisis, but their intellectual property, disputes and construction groups are busy dealing with the downturn fallout.
In financial services and corporate law, the group is still reasonably busy, says Walton. Deals they are acting on include a high-profile consortium bidding for a major telecommunications asset in the UAE, and the Abu Dhabi Investment Council acquisition of a majority stake in the Unitra METS Group.
"We are also beginning to see the promoters of distressed asset funds making inquiries about the region and setting up here. Asset prices are low and everyone here thinks prices won't stay low for long, so they want to move quickly," he says.
Meanwhile, many firms are now focusing their presence in places like Abu Dhabi and Qatar, where growth is predicted at 4 and 6 per cent respectively in 2009.
Andrew Beatty, partner at Baker & McKenzie, has just returned from a trip to the Middle East where the firm is currently setting up an office in Abu Dhabi. While there, he attended 14 client meetings in five days, where he talked to clients in the oil and gas sector about opportunities in the global carbon markets. He says the current downturn did not deter the firm from moving into the Middle East.
"For Abu Dhabi in particular, and the UAE generally, I think they will weather the global financial crisis better than some other parts of the world," he says.
"Because of the cash reserves that these sovereign wealth funds in particular have as a result of the oil revenue, there are businesses who are quite cashed up and who are looking for opportunities, not only in their own region but in other parts of the world. We of course have clients and opportunities, and naturally offices, to help these businesses."
Walton says the incredible wealth within the region, with Abu Dhabi making substantial funds available for a struggling Dubai, means things are expected to pick up later in the calendar year. "Any slowdown will be far less severe than in most other parts of the world. The scale and number of infrastructure projects slated for the region over the next five years is staggering, and there is no doubt about the money being here to carry it off," he says.
The Australian opportunity
The crisis has meant that it is now a client-led market and the bar is extremely high for any Australian lawyer looking for a job, says Fong. She lists strong technical skills, first-class academic scores and a top-tier firm background as important in obtaining a position, as well as the need to be commercial, client-facing, adaptable, resilient and culturally sensitive.
Fong advises Australian lawyers to ensure that their CV is up-to-date, apply for a position immediately and to be opportunistic. "When a role comes up you need to be able to act on it very quickly, because guaranteed as soon as the word gets out that there is a role available, [firms] are going to be flooded with applications and you don't want to be lost in the mass of CVs."
Hilton agrees that there is a definite element of "wait and see" from a recruitment and growth perspective, but opportunities still exist. "For senior lawyers, the Middle East market still represents a much better opportunity to progress through to partnership, as areas like Abu Dhabi and Qatar have a significant amount of further growth and development as emerging markets, as opposed to a mature market like Australia," she says.
"There will be an increase in opportunities for talented arbitration and back-end construction lawyers and those with niche experience in areas like strata law, which is just being introduced across the UAE, and energy law specialists.
"Newcomer firms will continue to bolster their presence across all core areas but will first look to their foreign offices to source lawyers internally first before looking externally."
Hilton says the region has grown so aggressively over the past few years that the current climate is providing a welcome period for firms to reflect and plan.
"Focusing on the positive outcomes of the downturn, it's no bad thing for firms to have to go back to the drawing board and ensure that they are on the right track. It will be interesting to see if there is consolidation in the legal market and which firms are here in two years time," she says.
"There are [also] some major benefits for individuals relocating to the region. Right now, from a personal perspective, housing costs are much more reasonable in Dubai, there are less people on the roads so there is less traffic, and the cost of basic living expenses and services are down. So there is now more financial upside to being here than perhaps if you had relocated here last year or the year prior."
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