Law firms across globe rush to cash in on $150 bn West Asia deal boom

By Anthony Di Paola, Nicolas Parasie and Dinesh Nair

 

Top law firms from New York, London and Chicago are deepening their presence in the Gulf, chasing profits from a region that’s announced more than $150 billion in deals this year.  

Lawyers are winning big business from regional behemoths Saudi Aramco and Abu Dhabi National Oil Co., which have spun off businesses and tapped debt markets. Adnoc is emerging as one of the world’s most active energy dealmakers, pursuing Germany’s Covestro AG for a $13 billion deal. 

 

Sovereign wealth funds wielding more than $3 trillion have also been on a buying spree. Meanwhile, a flurry of share listings have raised about $12 billion. All that’s driven surging demand for legal advice. 

 

The surge in dealmaking is likely to continue as oil-rich governments from Riyadh to Abu Dhabi spend to develop their own economies and boost their international heft. All that has American and British heavyweights like Kirkland & Ellis LLP and Linklaters LLP expanding in the region. 

 

“It’s a healthy sign,” Essam Al Tamimi, an Emirati lawyer and founder of Al Tamimi & Co., said about the foreign entrants and development of regional economies. The rising competition pushes local and international firms to attract top talent because “you need a good lawyer to sit with an international investor,” he said. 

 

The region’s boom has allowed top partners working on international deals involving Gulf companies to bill at levels close to New York and London, people familiar with the matter said. High ranking lawyers can now easily make more than $1,000 an hour in the region, though others may charge less, they said. 

 

The $150 billion of deals involving Gulf firms in 2024 marks a 62 per cent increase from the same period last year, according to data compiled by Bloomberg. 

 

The vast spending in the region has other financial giants, from bankers to consultants, piling in as well. But for legal firms it’s a sharp departure from earlier times when they were mostly focused on advising energy companies on concession agreements that gave international oil producers the rights to pump crude.

 

These days, law firms are moving high profile partners to the Middle East, while others are setting up new offices in Riyadh and Abu Dhabi.

 

The Gulf looks particularly attractive amid slower deal activity in the UK. Linklaters advised Covestro on the German chemical maker’s takeover offer from Adnoc, according to a statement from the firm. The firm has also expanded its practice for global investment funds in the Middle East and moved a senior lawyer to the region to lead that business, Linklaters said in an announcement last month.

 

Historically, the Middle East has been a region where the UK’s so called ‘Magic Circle’ firms — the most prominent ones there — have dominated. Now US firms are pushing in as well, and competition is rising much like in other financial centers.  

 

Kirkland & Ellis has set up in Saudi Arabia to focus on financial transactions and flows of private equity capital into and out of the market. “The government is working very hard to ramp up the private sector and spending on starting new industries,” said Kamran Bajwa, managing partner for Kirkland & Ellis’s Riyadh office. 

 

Meanwhile, international legal heavyweight A&O Shearman has the co-chair of its executive committee and board based in Abu Dhabi. Sidley Austin has added senior lawyers with an expertise working with Gulf companies to support its business in the region. 

 

Business in the Gulf was very different a decade ago. At that time, Adnoc was parceling out 40-year rights to its biggest onshore fields for upfront payments valuing the project at $22 billion. But there have been fewer such deals as resources have already been locked up. 

 

Instead, the national oil companies are restructuring to sell assets, spin off units or monetize infrastructure. And they’re often calling on a broader roster of legal advisers to do so. 

 

For instance, Adnoc has diversified beyond its long-standing relationship with Shearman & Sterling, one of the firms that’s now part of global legal giant A&O Shearman, people familiar with the matter said. The energy giant still works with A&O Shearman but it has also attracted different firms and some of its units use panels of about six law firms to choose from, the people said. An Adnoc spokesperson said it uses a variety of legal services. 

 

“The traditional trend in the oil industry was that companies would have one go-to law firm. That’s changing,” said Chris Gunson, a Dubai-based oil and gas lawyer with the firm Amereller. 

 

A long-time stalwart in the Gulf is White & Case LLP, which has a large team of lawyers covering Aramco, people familiar with the matter said. Rivals have often hired teams from White & Case in an effort to prise away the Aramco account, but so far they’ve been unsuccessful, people familiar with the matter said. White & Case and Aramco declined to comment.

 

Still, as oil trades at levels below what the Gulf countries need to balance their budgets, spending is tightening in the region. Growing competition coupled with a potential economic slowdown could pressure profits for law firms as well. 

 

Clients are already pressing firms to limit fees, people familiar with the matter said. Even if a downturn comes, lawyers are confident they’ll keep growing. Tightening sanctions on Iran and Russia have raised the need for compliance. State-owned Gulf entities will need legal advice even when deals go wrong, and firms lean on their restructuring and dispute practices.

 

As the industry becomes more complex companies are looking for law firms “that are more specialized in one area or another,” Gunson said.