Saudi Arabia Tightens Local Hiring Rules for Foreign Law Firms

Saudi Arabia, the largest economy in the Middle East, is intensifying its efforts to localize its legal sector. The Kingdom has recently increased the required percentage of Saudi nationals in foreign law firms from 50% to 70%, putting additional pressure on international legal practices operating in the country.

This move is part of Saudi Arabia's broader Vision 2030 plan, which aims to diversify the economy away from oil and develop local talent across various sectors. The legal industry is no exception, as the country seeks to build a robust domestic legal workforce capable of handling international matters.

James Lavan, executive director at specialist legal recruitment firm Buchanan Law, highlighted the challenges faced by firms: "There's only a limited number of Saudi nationals that are practising at the required standard to work at a law firm. [There's] a real interest in trying to hoover up the best local talent as soon as possible because that is going to be one of the major stumbling blocks to firms growing and expanding within the region."

To attract and retain Saudi talent, law firms are employing various strategies:

• Offering partner promotions to Saudi lawyers
• Fast-tracking Saudi associates to partnership
• Relaxing requirements for postgraduate law degrees
• Providing six-figure signing bonuses

These efforts are not only aimed at meeting regulatory requirements but also at competing with state-owned companies like Saudi Aramco, which offer attractive benefits packages to lure top legal talent.

The current situation stems from reforms initiated by Crown Prince Mohammed bin Salman in 2022, which removed restrictions on foreign lawyers working in Saudi Arabia without partnering with local practices. This change sparked a "gold rush" among international law firms, with magic circle firms like Clifford Chance, Linklaters, and A&O Shearman expanding their presence in the region.

However, the increased quota is causing concern among some industry professionals. Matt Yore, Middle East director at recruitment agency Jameson Legal, stated: "I would say 70% is disproportionately high considering the volume of firms in, expanding, and entering the market at the moment – there doesn't seem to be a harmony between the numbers."

The new requirements present significant challenges for British law firms, which already struggle to find Saudi nationals with experience in international legal matters. Mark Burnell, co-founder of legal recruitment agency Clark Burnell, suggested that training local junior talent could help address the "discrepancy" between Saudi and London-based lawyers.

As Saudi Arabia continues to modernize its legal system and invest in various sectors, including renewable energy and tourism, the demand for skilled legal professionals is likely to grow. However, the stringent localization requirements may force some international firms to reconsider their presence in the Saudi market, especially as the Kingdom reduces spending on its flagship megaprojects.

One Riyadh-based law firm partner noted: "A lot of firms don't have a strategy in terms of how they're approaching the market. What you might have is that some firms will leave the market because they haven't really cracked it."

As the legal landscape in Saudi Arabia evolves, international law firms will need to adapt their strategies to balance regulatory compliance with their business objectives in this dynamic and challenging market.