Lots of M&A Work in Saudi Arabia - Liberal Values Might Slow But Not End Chase of US Law Firms After that Business

Talk to most transactional lawyers in the US (or read professional anonymous networks such as Fishbowl and Reddit) and the issue is: How slow M&A practices remain, at least for those struggling to find business with the usual suspects. Recovery in that niche has been predicted again and again but that really hasn't happened. Any increase in demand has been firm-specific, not throughout the sector.

Therefore it makes good business common sense to go after new target markets. As Financial Times reports, US law firms ranging from Latham to Greenberg Traurig have already set up shop in Saudi Arabia and Kirkland & Ellis is considering it. M&A activity is brisk there. New regulations, going into effect this summer, permit foreign firms to do business there without having to form partnership with local firms. They, however, can only ship 30% or less of the assignments back to their US bases to be done by lawyers there. 

The opportunity is massive. FT notes:

"[There has been] a burst of blockbuster deals by Saudi Arabia’s $650bn Public Investment Fund, including the proposed merger of its LIV golf league with the US’s PGA Tour and Europe’s DP World Tour. The PIF is also heavily invested in Japanese technology group SoftBank’s Vision Fund, and has large stakes in electric-car makers, ride-hailing apps, video gaming companies and cruise line operators."

But an obstacle could be the human-rights issues baked into the values of Saudi Arabia. This potential impediment is, of course, not new. 

In the US law firms have been vilified for representing entities such as fossil fuels and personalities ranging from Harvey Weinstein to Leon Black. In some situations, as with Boies Schiller, that actually had a negative impact on the business. But for most, despite the bad press, drama on social networks and protests, Profits Per Equity Partner kept increasing.

So, watchers of this who understand the ethos of the legal sector in America don't expect US law firms, even those with progressive values, to miss out on developing the market in Saudi Arabia. Essentially the public relations party line by those firms has been: We don't judge. And, isn't the mission of defense firms to not judge alleged wrong-doing? Instead their role is to bring clarity to the situation, through evidence-based processes. 

But a lot will depend on how aggressive the push-back will be from constituents ranging from the media to social networks to international associations to current clients - and how effective that will be and for how long. About the latter, intense heat can be temporary. Or, as we are bearing witness with the outcry against Bud Light for using a transgender in promotions, the business impacts can be sticky. Only now after the 2017 The New Yorker article about how David Boies was representing Weinstein is the firm showing signs of a comeback. Insider documented that Paul Weiss no longer represented Black. 

In the expose "Servants of the Damned," journalist David Enrich argues that large laws have mutated from being purpose-driven to primarily focused on building wealth (along with power and influence) for partners. If we agree with Enrich's point of view then we might tend to smirk about any concern Big Law might have about human rights in a lucrative market. 

The cliché to apply – which is made explicit in the FT coverage – is Follow The Money. Right now, a law firm partner can earn more annually that managing directors on Wall Street. Here is my analysis of that development.

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