Legal firms facing shortage of high-earner deals

LEGAL BILLS: A new survey says that legal firms in the Middle East will face a shortage of lucrative oil and gas legal work amid the global slowdown.

Law firms in the Gulf will increasingly swap lucrative big ticket work in the oil and gas sector for servicing the real estate, telecoms and IT industries amid the global slowdown, according to latest research.

The study by legal sector researcher Acritas, which interviewed nearly 300 buyers of legal services in the Gulf region, revealed that law firms had been receiving in excess of $750 an hour from oil and gas firms compared to around $550 an hour for work in the telecommunications, IT and media industries and around $580 in real estate.

But half (50 percent) of all oil and gas firms surveyed expected expenditure in legal services to fall over the next 12 months, while just 14 percent foresee an increase in spend.

By contrast, 43 percent of legal buyers from real estate companies expect to see an increase in their expenditure on lawyers, and 41 percent of telecommunications, media and technology companies also anticipated higher legal spend.

Yet only a fifth of buyers in these industries believe that their total spending will decrease.

Acritas’s research also showed:

    * Just under one fifth of legal buyers across the Gulf (19 percent) believe that law firms in the Middle East will need to lower fees and provide better value for money over the next two years. In Dubai, over a quarter of buyers (26 percent) believe firms will need to drop prices.
    * The average hourly rate of a lawyer in the Middle East is 24 percent higher than UK and 30 percent higher than US with the Mideast rate of $595 compared with just $459 in the US.
    * Oman is holding up better than all the other Gulf States with a 47 percent increase in demand for legal services. Buyers in the UAE and Saudi expect the lowest increase in spend.
    * Nearly half of all legal buyers in UAE (49 percent) expect a financial downturn in 2009 compared to just over a quarter in Bahrain and Qatar.

Lisa Hart, CEO of Acritas, said: “The business environment in the Gulf is putting pressure on fees and forcing firms to reevaluate their fee structures.

"Over the next year or so clients are going to demand lower prices from both domestic and international law firms. The Gulf is not immune to the pricing pressures law firms face in the UK and the US."

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READERS' COMMENTS

Welcome to reality lawyers !
Posted by Sergei Kuk, Dubai, UAE on Tuesday 3 March 2009 at 13:28 UAE time


I hope that perhaps Lawyers might now come back to earth and reality on size of their fees. I think they have been in similar position to bankers, thinking they are invincible and can charge what they want, but I hope we now see $100 an hour maximum.

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