Saudi Arabia’s surge in dealmaking activities has captured the attention of top-tier law firms worldwide, seeking to offset the decline in mergers and acquisitions (M&A) in Europe and the United States. Kirkland & Ellis, the world’s largest law firm by revenue, is actively considering establishing a presence in Riyadh, recognizing Saudi Arabia as “an important market for international business and one of the world’s fastest-growing economies.”
Joining US firms Latham and Watkins, Greenberg Traurig, and Squire Patton Boggs, as well as Dentons and UK-based Clifford Chance and Herbert Smith Freehills, Kirkland & Ellis’s interest reflects recent changes in Saudi Arabia’s laws. The government now allows foreign firms to apply for licenses to operate locally, eliminating the need for partnerships with existing entities in the country.
These new regulations, effective this summer, were designed to boost the kingdom’s competitiveness and attract more foreign investments. Firms must appoint two partners spending a minimum of 180 days per year in Saudi Arabia and commit to not outsourcing more than 30% of their advisory work to lawyers outside the country.
The timing of these licensing laws aligns with the significant surge in deals orchestrated by Saudi Arabia’s $650 billion Public Investment Fund (PIF). The PIF has been involved in high-profile transactions, including the proposed merger of its LIV golf league with the PGA Tour and DP World Tour. It also holds substantial investments in sectors such as SoftBank’s Vision Fund, electric car manufacturers, ride-hailing apps, video game companies, and cruise line operators.
Law firms recognize the significant opportunities in Saudi Arabia. Firms are seeking enduring demand as borrowing costs increase in Europe and the US, impacting global dealmaking.
However, this influx of law firms into Saudi Arabia presents a potential clash between liberal values and the kingdom’s human rights record. Saudi Arabia has faced criticism for its treatment of dissidents, criminalization of homosexuality, and allegations related to journalist Jamal Khashoggi’s murder.
American law firms have faced increasing pressure to sever ties with certain clients due to political considerations. Nevertheless, firms proceed with a long-term vision of growth and excellence in Saudi Arabia.
As law firms strike a balance between business opportunities and global reputation, their entrance into Saudi Arabia highlights the region’s potential and attractiveness as a significant player in the global legal landscape.