Clifford Chance (CC), Herbert Smith Freehills (HSF) and Latham & Watkins have become the first international law firms to be awarded licences to practise in Saudi Arabia.

Like many other international firms the trio previously operated in the Kingdom through an association with a local law firm, but following amendments to the Saudi Code of Law Practice they now need a licence granted by the Saudi Ministry of Justice. 

According to the Law Society of England and Wales the new law is intended to encourage firms to set up in Saudi Arabia so legal work is engineered within the Kingdom, as well as enable high-profile deals to stay within the country. It is also aims to increase opportunities for Saudi lawyers. 

Licensed firms have to meet certain obligations, including that two partners representing the firm must live in Saudi Arabia and at least half of its lawyers in the country must be Saudi nationals, though the proportion could rise to 70%. What’s more, work related to Saudi law cannot be passed to other offices and no more than 30% of fee income can go outside the Kingdom. Licences must be renewed every five years. 

The Law Society said it expected the changes to be implemented in June this year, after which associations will no longer be permitted. After that, firms must either structure their operations as a professional company in a joint venture with registered Saudi lawyers as co-shareholders, which allows for Saudi law advice to be given, or as a branch office of a foreign law firm, which must be held 100% by the parent entity and does not allow Saudi law advice to be given. 

CC, HSF and Latham were awarded their licences at the International Conference on Justice in Riyadh last Sunday (5 March), Arab News reported.

The next day CC announced it was entering into a 50:50 joint venture with longtime Saudi associate firm Abuhimed Alsheikh Alhagbani Law Firm (AS&H), effective 1 May. The JV will be known AS&H Clifford Chance.

AS&H managing partner, Dr Fahad Abuhimed, will become the JV’s managing partner, while Guy Norman, who previously led CC’s global corporate team, will be the senior CC partner in the new structure. 

Abuhimed commented: “This new joint venture cements the relationship that Clifford Chance and AS&H have enjoyed for the last six years in the Kingdom, and which has created an unrivalled legal powerhouse in Saudi Arabia.”

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For its part HSF currently advises clients in Saudi Arabia through an association with The Law Office of Mohammed Altammami but confirmed it would be establishing an office in Riyadh. 

Stuart Paterson, the firm's managing partner in the Middle East, said: "This region is strategically important to our clients and the firm, so we are very pleased to be one of the first firms to receive a foreign law firm licence in the Kingdom. This enables us to better serve our clients in the region and globally.

The office will be led by Joza Al-Rasheed, who was previously a partner in The Law Office of Mohammed Altammami. 

Meantime, Latham operates in Saudi Arabia in association with The Law Firm of Salman M. Al-Sudairi, with Al-Sudairi serving as managing partner of Latham’s Riyadh office. 

Latham recently lost M&A lawyer Homam Khoshaim in Saudi Arabia to UK law firm Addleshaw Goddard, which announced last week that it was set to open an office in Riyadh pending regulatory approval. 

US law firm Quinn Emanuel Urquhart & Sullivan also looked to Saudi Arabia recently, hiring Saudi litigator Nasser Alrubayyi as a partner last year to open an associated Riyadh office. 

And at the end of 2021 listed UK law firm DWF reshuffled its operations in the Middle East by creating a regional headquarters for its business services arms in Riyadh while also launching an association with local law firm Al-Ohaly & Partners to boost its legal division in Saudi Arabia.