Despite increased protectionism in the wider economic and political spheres in recent years, the globalisation of the legal industry has shown no signs of slowing. On the contrary, it has accelerated. In the first quarter of 2023, significant developments towards the liberalisation of legal markets in emerging economies, such as India and Saudi Arabia, took place, presenting new opportunities for international law firms.
Following decades of deadlock and resistance, India is finally opening its legal market to foreign law firms. Last month, in a surprising move, the Bar Council of India introduced new rules permitting foreign firms to launch offices in India from which they can practice foreign law on a reciprocity basis. The move marks a major milestone, not just for the Indian legal industry, but the global legal industry more generally. For years, foreign law firms, as well as the Law Society of England and Wales itself, have been advocating for greater access to India’s legal market. Until now, however, India had resisted these pressures due to concerns about the potential impact the presence of foreign firms would have on domestic firms and the Indian legal profession. The new rules, therefore, constitute a major reversal in policy, one which the Law Society of England and Wales described as “historic”.
While it is too early to understand the full implications of the rule changes, the initial reaction has been positive. Baker McKenzie and Herbert Smith Freehills, for example, have both lauded the announcement as an “exciting” development. These and other UK and US firms will likely be examining the new legislation and trying to navigate its ambiguities. With time, however, it is not unreasonable to foresee India becoming a crucial jurisdiction where every major international firm has an office.
Another nation taking steps to widen access to its legal market is Saudi Arabia. In February 2022, the Kingdom set out new proposals for how foreign law firms can operate in the country. Following the amendments to the Saudi Code of Law Practice, foreign firms may now apply for a licence, granted by the Saudi Ministry of Justice, permitting them to practice in the country. They can then do so either by opening an office from which they can provide international law advice or by entering into a joint venture with a local Saudi firm. In essence, the new rules make it easier for foreign firms to enter the country, as they are now able to practice there independently.
These changes, which are due to take effect later this year, have led to a wave of activity amongst law firms looking to move into the region. Last month, a notable development occurred when Clifford Chance, Herbert Smith Freehills, and Latham & Watkins became the first foreign firms to be awarded licenses to practice in Saudi Arabia. Within weeks, a host of other firms quickly followed suit in announcing their plans to enter the country. Addleshaw Goddard, for example, announced that it plans to open an office in Riyadh, whilst Greenberg Traurig announced that it would enter the country by registering as a joint venture with a local Saudi firm, Khalid Al-Thebity. These developments are merely the beginning of the expansion of foreign law firms into Saudi Arabia, with other firms sure to follow.
New Opportunities for Foreign Law Firms and their Lawyers
The liberalisation of the Indian and Saudi legal markets presents significant opportunities for foreign law firms. India, the ‘I’ in the ‘BRICS’ acronym used to refer to fast-growing economies, currently has the world’s fifth largest economy. Meanwhile, the Saudi economy is the largest in the Middle East and is growing steadily, consistent with the country’s Vision 2030 of reducing their economic reliance on oil and diversifying into other industries. Operating in these countries would allow foreign law firms to capitalise on the growth and success of these economies, increasing their revenue by taking on more business.
Access to new jurisdictions also allows firms to expand their global footprint and diversify away from the traditional mainstays of the UK and US markets, better safeguarding themselves against external shocks to those economies. In recent years, for example, both India and Saudi Arabia have experienced strong capital markets activity. Most notably, in 2019, the $25.6 billion IPO of Saudi Aramco became the world’s largest IPO in history. This comes at a time when British companies, such as Arm, are snubbing the London Stock Exchange to list in the US and other jurisdictions instead, a trend partly induced by Brexit. Diversifying the portfolio of jurisdictions that they operate in will allow firms to protect themselves against the various adversities that individual economies encounter.
The prospect of firms opening offices in new jurisdictions also presents new opportunities for their lawyers. By establishing bases in India and Saudi Arabia, firms would presumably be able to offer two new locations for their lawyers to complete secondments in or relocate to permanently. The rules governing foreign firms’ eligibility for a licence to practice in Saudi Arabia, for example, allow for up to 50% of the lawyers in that office to be non-Saudi nationals. As a result, lawyers in London may soon be able to relocate to Saudi Arabia, either by transferring internally or by making a lateral move. Although it is too early to understand the full extent of the Bar Council of India’s announcement, it is likely that the same will be true for lawyers wanting to relocate to India. Thus, the expansion of foreign firms into these new markets should further the realisation of the concept of the “international law firm”, making it an exciting time for lawyers looking to pursue a global career.