With signing-on fees of up to $500,000, Saudi lawyers are reaping the rewards of a scramble by international firms to find local partners.
International law firms are beefing up their Gulf operations, hoping to profit from construction deals, IPOs and M&A activity in the region as other markets start to feel the bite of a slowing global economy.
But despite years of economic reform, Saudi Arabia -- the top prize - remains out of reach for many firms, while demand for legal services in smaller countries like Kuwait is still limited.
There are some surprisingly big names who are going out and just paying obscene amounts of money to people.
Succeeding in the kingdom requires not only detailed knowledge of Islamic Sharia law, but also, perhaps more crucially, a local Saudi partner.
The upshot is a bidding war between international law firms that has led to some Saudi lawyers commanding massive six-figure salaries.
"There are some surprisingly big names who are going out and just paying obscene amounts of money to people," says Mohammed Al Sheikh, senior partner of the Law Office of Muhammed Al Sheikh, and legal partner of international law firm White & Case.
"A six-year associate [could] get paid a cheque for half a million dollars... just to join," he says.
Saudi Arabia has no bar association. Instead, international law firms who want to operate in the kingdom are required to partner with a Saudi lawyer to ensure they have adequate knowledge of the country's laws.
But a dearth of qualified candidates makes it difficult to enter the market, which is booming on the back of soaring oil prices.
Energy, infrastructure and capital markets have been the biggest growth areas in recent years, with the 2003 capital markets law, which requires all companies to seek legal counsel before offering shares to the public, being the single largest factor behind the rise in demand.
"One of the things that I have noticed... is, once you go through a major capital markets deal with a client, they realise the added value a lawyer provides, and then they start using you on their other work," Al-Sheikh says.
Saudi investors are also being influenced by their Western counterparts.
"Foreign investors are used to not moving an inch without their lawyer by their side. So the Saudi party, just to feel on an equal footing, goes out and hires a lawyer to represent them."
While few international law firms would even have considered moving into Saudi Arabia five or six years ago, most of the major players are now scrambling to find a partner who will allow them to gain a foothold in the kingdom.
The situation has led to calls for the system to be reformed to allow greater competition.
"I know it sounds a bit bizarre, it's in my interest that it doesn't change. But given what we're seeing in the market I actually hope it does," Al-Sheikh says.Over the last three years, a number of high-profile international firms have partnered with local Saudi practices, only to drop them a few years later.
DLA Piper, the largest US law firm by number of attorneys, ended its two and a half-year relationship with Abdulaziz Al Fahad in June this year. UK firm Trowers & Hamlins has also ended a Saudi alliance it entered into in 2005.
Al Sheikh says a mismatch of expectations is often behind the short-lived relationships, with Saudi partners often complaining of a lack of support from the other party.
Some observers go so far as to say that the Dubai market is in danger of being overstaffed.
"Sometimes the international firm comes in and they have their own agenda, they have their own vision, they have their own way of doing things, and they completely disregard the Saudi partner," he explains.
"Alternatively you have an incompetent Saudi partner who wants to travel the world and get a big fat juicy cheque at the end of the month for doing nothing."
As a result, international firms trying to set up shop in the country sometimes end up working with lawyers who lack the relevant experience, and then fail to deliver.
"If you're betting on a multimillion-dollar transaction and your lead Saudi partner is somebody who has had one year of working experience, or has had three years with no major transactional experience, chances are you're not going get the deal, because investors and potential clients are quite sophisticated," Al Sheikh says.
To ensure a steady supply of local talent, his international partner Case & White has begun training Saudi nationals internally.
"You cannot imagine how much money we spend on just people going out of our London and New York offices, chasing people who are in law school."
A trainee will be arriving in the company's Riyadh office this month after spending 14 months in London. Another three Saudis have been recruited from US law schools over the last six months.
"We'll send them to London or New York for a couple of years. It will range from 18 months to 36 months and then we'll bring them back here and hopefully they'll stay and we'll build a solid, prominent local practice," Al Sheikh says.
Of course, in the current marketplace there is no way of knowing how long they are going to stay.
"You know if they move on, they move on. There's nothing I can do about it," Al Sheikh shrugs. "So long as they move on because somebody is offering them more money, and it's not because they're unhappy."
In other parts of the Gulf, it's a very different situation. Some observers go so far as to say that the Dubai market is in danger of being overstaffed.
"One can argue now that Dubai is overstaffed," says Ayman Khaleq, a partner in Vinson & Elkins' Dubai office.
"I think there is a law firm fatigue among clients," he adds, referring to the number of international firms who have entered the market over the last few years.Most of them are hoping to use Dubai as a base for serving clients as far away as India and Africa.
But even Dubai, with its laid-back, Western lifestyle and with no requirements for firms to have a local partner, finds it difficult to attract experienced candidates.
Sachin Kerur, a partner in Pinsent Masons' Dubai office and previously in its London Construction and Engineering Department, says that while the city is a hotspot for anyone looking to work on construction deals, attracting skilled employees in other sectors can be difficult.
"There may be concern as to the activity levels, and that, combined with the cost of living here, might put you off," he says. "It's certainly not as easy as one would have thought."
The availability of quality education is often a concern for people with families.
Dubai is competing with sophisticated markets like London, Hong Kong and Singapore, but as activity there slows down and law firms find themselves "less than busy", experienced lawyers may start to look at Dubai with more interest, Kerur adds.
Attracting international lawyers is not a problem in Kuwait, simply because demand for their services remains very low.
"This is a jurisdiction that is completely different from what we have in Dubai," says David Pfeiffer, managing partner in Denton Wilde Sapte's Kuwait office.
Many Kuwaitis view lawyers as the people who go to court, and nothing else, he argues.
"It's always been overstaffed, as witnessed by the fact that we're the only international law firm here."
Over the years, many of the world's top law firms have come to Kuwait and failed.
Part of the reason is the first Gulf war, which discouraged foreign investors from committing to the country.
A high tax rate and strict limitations on foreign ownership, while Dubai, Riyadh and Doha were opening their markets, also kept them away.
As for Kuwaiti companies, most simply aren't prepared to pay the fees that are necessary to support a sophisticated, international legal practice, Pfeiffer says.
"They come from a long history of ‘on the spot' trading... and you don't spend a lot of time documenting transactions in those circumstances," he says.
"Putting an agreement together really isn't necessary."
That is not the kind of statement your average lawyer likes to hear.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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