Why Law Firms Are Moving to Saudi Arabia

Commercial Awareness Update – W/C 28th April 2025

April 29, 2025

Published by Shwetha Sivaraman at May 10, 2025

Article by Tommaso Johannes Forni

Over the past few months and years, there has been a remarkable rise in international law firms looking to expand their presence in Saudi Arabia. Dozens of leading UK and US-headquartered law firms have set up new offices in the country or are actively looking to do so. In February 2025, BCLP announced that it was planning to open two new offices in Saudi Arabia, while Reed Smith stated it had secured its licence from the Kingdom’s Ministry of Justice. Clifford Chance and Linklaters opened offices there in 2023, while many other firms have also recently expanded into the jurisdiction, including Kirkland & Ellis, Hogan Lovells and Herbert Smith Freehills.

Three main factors are driving this trend: the diversification of the Saudi economy, a rise in capital markets work, and regulatory changes enabling law firms to operate more effectively in the country.

Saudi Arabia is following a colossal programme of economic diversification known as ‘Vision 2030’. The Vision 2030 initiative is a government-led programme launched in 2016 that aims to diversify the Saudi economy to reduce its dependence on the petroleum sector. A key part of Vision 2030 involves investing the vast resources of Saudi Arabia’s Public Investment Fund into fast-growing sectors like manufacturing, green energy, mining and technology. Accelerating the shift from oil & gas to renewables is a major objective of the programme, as the country has set a target to source at least 50% of its electricity from renewable sources by 2030. The initiative also seeks to reinforce Saudi Arabia’s status as a regional logistics hub by the creation of public-private partnerships which will aim to complete, improve, and link the country’s infrastructure internally and across borders.

To unlock private capital, Vision 2030 aims to draw on the resources and expertise of prominent national institutions like the Saudi Central Bank to build a modernised financial system with evolved capital markets and cutting-edge Fintech services/products. Additionally, Vision 2030 is striving to attract high levels of foreign direct investment into the economy by privatising government services, creating special economic zones and effecting significant regulatory changes to boost the ease of doing business in the country. These regulatory changes have included new investment laws aimed at protecting investor rights and facilitating the settlement of investor disputes, changes to Saudi labour laws to align them with international standards and new civil transactions laws designed to clarify the legal framework for economic activity. Saudi Arabia has the ambitious goal of attracting $100 billion worth of foreign direct investment annually by 2030.

These developments create several opportunities for law firms to work on new lucrative projects. The sharp rise in energy & infrastructure projects in Saudi Arabia is driving demand for real estate and project finance-related legal work. Meanwhile, the influx of foreign direct investment and the modernisation of the country’s financial system will generate vast amounts of financial services work for law firms.

The second factor pushing law firms to move to Saudi Arabia is the booming activity of capital markets. The country’s capital markets have been growing rapidly, driven by Vision 2030 and a robust economic environment. Hundreds of billions of dollars have been raised through IPOs on the Saudi Stock Exchange over the last few years. For example, Saudi Aramco, the world’s largest oil company, listed on the Saudi Stock Exchange for the first time in 2019. Through that IPO, Saudi Aramco raised $25.6 billion by selling just 1.5% of the company’s value in shares. As a result of a greenshoe/over-allotment option, the company bumped up the size of its IPO to $29.4 billion. That was the largest IPO in history. IPOs lead to increased demand for corporate and regulatory lawyers.

A third reason for this trend is a regulatory change which has made it easier for law firms to operate in the Kingdom. In 2023, Saudi Arabia amended its Code of Law Practice to allow foreign law firms to set up their own offices in the country. Prior to this change, international law firms could only operate in the nation through associations with Saudi law firms. This regulatory change requires law firms to obtain a licence to operate a branch office, and strict requirements must be met once a licence has been issued. These requirements are that, amongst other things, at least two partners from the law firm’s branch office must live in Saudi Arabia for at least 180 days a year, at least 70% of the firm’s lawyers in the country must be Saudi nationals, Saudi legal work cannot be outsourced to foreign offices, at least 70% of fees generated by the office must stay in the country, and no more than 30% of advisory work can be exported to lawyers outside of Saudi Arabia.

Conclusion

Saudi Arabia’s robust economic growth rates and its exciting Vision 2030 programme are attracting large numbers of global law firms who seek to capitalise on the country’s economic transformation. However, law firms face the challenges of complying with the licensing requirements mentioned above to maintain an office in the Kingdom. In particular, the requirement that at least 70% of the firm’s lawyers in the Saudi office should be Saudi nationals could lead to intense competition for Saudi legal talent between law firms. Law firms also need to be careful about the rules prohibiting sharing Saudi legal work with offices in other countries and limiting the amount of advisory work that can be handled outside of Saudi Arabia.