The Legal Market in Syria
Syria started 2017 with signs that the conflict in the country was beginning to wind down as international and local dynamics push in the direction of a resolution. As the government’s objectives turn to rehabilitating infrastructure projects such as in the energy, electricity, industrial and construction sectors to name a few, more work is anticipated to be created for lawyers. More private sector investment among both local and foreign investors is envisioned as public-private partnerships (PPP) have been adopted within the framework of governmental policy. Such moves are evidenced not only by provisions contained in the Constitution of 2012 to this effect but also by the passage of the PPP Law and the Electricity Investment Law. A new general investment bill is also the subject of ongoing deliberations and is expected to cater to the requirements of the reconstruction phase.
While the timing of the current crisis at the start of the present decade was unexpected by Syrians in general, the contrast between the years 2010 and 2011 was particularly striking for Syria’s lawyers. The final years of the 2000s, especially from 2008 to 2010, witnessed international lawyers shuttling in and out of Damascus and building close ties with their local counterparts. Optimism was at an all-time high as the government during that period unveiled an infrastructure investment program that would no doubt require the expertise drafting of foreign law firms and the local know-how capabilities of Syrian lawyers. Such collaboration was on display in the drafting and review of the PPP Bill at the time. As 2011 moved along, expectations shifted downwards for all the parties. However, sentiments have begun to change once again.
Syria’s leading lawyers always maintained their presence in the country but the decline in commercial transactions obliged them to seek other opportunities elsewhere such as in the Gulf region. For a number of them, it was a strategic move since they intended to accompany their Syrian clients who chose to invest in the Gulf markets as an alternative to Syria. Such lawyers are now steadily refocusing their efforts back on their home country as consideration turns towards reconstruction while maintaining their services to their expatriate clientele.
A number of them who scaled down their operations in the country at the outset of the conflict have started to rebuild capacity within their firms and among their teams. They supply legal services to local investors who are present on the ground and active in a variety of sectors, such as those involving electricity generation projects for example, which are currently a priority for the economy. In addition, these lawyers are anticipating a growth in contractual and commercial work that will also result from Russian, Chinese, Iranian and now potentially Brazilian, Indian, Omani and Armenian investments in Syria. Moreover, they will be expected to give advice on corporate, real estate, finance, insurance, employment, investment and PPP legislation, which is likely to be in high demand.
Even throughout the war, some foreign investors began preparing for the potential reconstruction of Syria. Many of them are Lebanese and Iraqi investors who saw benefits in incorporating companies in Syria and keeping them dormant until the situation settles down. The depreciation of the Syrian Pound by more than 90% made the foreign exchange rate lucrative for them given the inexpensive incorporation fees. Syria after all is one of the few countries in the Arab world that permits 100% foreign ownership of companies. Such demand from Lebanese and Iraqi investors kept Syrian corporate lawyers busy over the recent years.
While commercial work slowed down in general for these law firms over the last seven years, their services were still sought by clients. Businesses that wished to exit the Syrian market at the start of the unrest solicited their legal services for winding down their companies for instance. As is usual under such exceptional and unforeseeable circumstances, legal disputes increased as force majeure clauses were exercised, which led businesses to seek out advice from lawyers for contentious matters.
The imposition of international sanctions against Syria also caused concern for Western companies with interests in the country. The result was a scaling down of operations or exposure to Syria by these businesses for fear of attracting unnecessary attention even though in a number of cases, there was very little risk of non-compliance with the embargoes. In any event, the consequence was more demand for legal services from local lawyers in cooperation with international law firms that were retained by these foreign businesses. While not as much as before, international firms still seek the advice of local counsels in Syria on certain matters.
The Syrian government has made it clear that European and other Western companies are welcome to participate in the reconstruction stage on the condition that their governments lift the sanctions imposed on Syria. Were these measures to be taken, particularly by the European Union, it would no doubt unlock much potential for collaboration between local and foreign lawyers as evidenced in previous years.
Some junior and in some cases senior lawyers who were working in Syria prior to the conflict found employment with international and local law firms based in the Gulf region, especially in the United Arab Emirates. Others meanwhile have been retained as local counsels to Syrian and other foreign investors based in the Gulf. The similarities in the civil legal systems between Syria and countries such as the United Arab Emirates proved to be an appealing point. Moreover, salaries overseas are an attractive feature given the depreciation of the Syrian Pound and rising inflation at home. Their exposure to major transactional work has allowed them to build sufficient experience and knowledge in global business and cultural practices that they can utilize in Syria during the reconstruction phase if they choose to return to their country. Their resourcefulness will be particularly useful in this respect for Gulf investors if the latter resume their interest in Syria.
Some Syrians have also attained the status of partner in international law firms and could potentially steer corporate policy and direction towards Syria in the post-conflict phase. A number of these partners are based in regional offices located across Europe and in the Gulf. It is foreseeable that should these firms begin focusing again on Syria as they did before the conflict, they will ask their offices in the Gulf, particularly in Dubai, to take the lead on initiating potential engagements.
Generating business by developing stronger ties with local practitioners in Syria could result in a significant source of revenue for international and local firms given the demands for advice on infrastructure and other projects that are predicted to be pursued. For local firms, sustained interaction with their foreign counterparts helps them to further build and strengthen their capabilities through the exchange of knowledge and ideas.
A significant number of law students in Syria continue to graduate each year and enter the legal market so there is no shortage of local talent. However, there is more competition among them to find jobs given the economic situation in the country. For those based in areas under government control and capable of finding employment or starting on their own, they have seen their workloads increase over the years as lawsuits were transferred to courts in safe regions from those in conflict zones by the Supreme Judicial Council, the body responsible for overseeing the judiciary. As the authority of the judiciary is extended over regions that have recently returned to state control, the courts in those areas are expected to resume their operations. Throughout the conflict, numerous decrees have been issued to set up new courts in certain parts of the country to cope with the increased volume of lawsuits.
The sudden rise in casework has also resulted in the establishment of new types of specially designated courts to deal with specific disputes, such as banking and insurance courts. In terms of financial cases, lawyers have had to focus much attention on lawsuits involving debtors who failed to repay their loans to banks, which had major detrimental effects on the latter as the value of the Syrian Pound depreciated over the years. Similar considerations characterize disputes involving the insurance industry as the conflict led to a rise in disagreements between insurance companies and policyholders. Real estate cases have also produced much work for lawyers for a variety of reasons stemming from ownership and rental disputes in stable areas where demand for properties increased substantially. As a result, lawyers have had to devote much time to attending hearings at the real estate courts where a scarcity of specialized judges in this respect has not helped speed matters along.
As for the judiciary, there are approximately 1,800 judges in Syria and they preside over around 200 cases a day not least because lawsuits in conflict zones have been transferred to safe areas. Judges suffer from much of the same problems as lawyers and ordinary citizens. Their incomes for example slid from a pre-war average of $1,300 to $1,500 (US) per month to $120 to $130 per month due to the depreciation of the Syrian Pound.
In the midst of this legal scene arrived the Syrian Law Journal in January 2015. While it is considered to be a leading online publication offering in-depth legal, economic and business news about Syria, it also oversees relationships and collaborates with lawyers in the country. Furthermore, it has built strong networks with international law firms based in the Middle East. It plans to support them when their attention shifts back to Syria to offer advice on major infrastructure and other projects once reconstruction gets underway.
While the legal market in Syria has been struggling since 2011, a certain degree of optimism is returning to the profession as the conflict in the country winds down and the spotlight turns towards a potential resolution. While some time is needed to rebuild confidence among Syria’s lawyers that sufficient work awaits them, preparations are already underway as local businesses as well as investors from Russia, China, Iran, Lebanon, Iraq, Brazil, India, Oman, Armenia and other countries start assessing their potential participation in the reconstruction phase. It remains to be seen how precisely the legal market will develop but one conclusion is worth noting- the expectations of Syria’s lawyers are gradually improving for the first time since 2010.