The Ministry of Justice (Ministry) has just released draft of the proposed Implementing Regulations for Advocacy Law for public consultation (Regulations). The Regulations will replace the existing regulations and will become effective from the date of its publication in the official gazette.
Continuing with reforms in the judicial sector which include enabling foreign law firms to set up their offices in the Kingdom on their own or through a Saudi licensed lawyer, the Ministry has stated that the objective of the revisions to the Regulations is to increase the level of professional competence and efficiency of practitioners in accordance with the best practices with a view to improve the business environment in the Kingdom.
While most of the issues related to code of practice are covered in the current regulations, yet there are several new provisions in the Regulations as well as provisions elaborating the issues covered in the existing regulations.
This short note covers the most salient provisions under the Regulations:
Licensing Requirements:
The Regulations provide in detail the procedures and process for obtaining of advocacy license as well as provides for transferring of lawyers from the list of practicing lawyers to the list of non-practicing lawyers upon occurrence of certain events and conditions which also include not having a valid membership of Saudi Bar Association.
General Duties and Obligations:
Besides having an office, the practicing lawyers shall be required to develop internal policies and procedures to ensure compliance and develop an annual plan for training of employees in their offices. The lawyers will have to submit an annual report indicating their commitment to transfer of knowledge and impart training.
The Regulations continue to restrict lawyers from combining the practice of profession with other works whether in the public sector or the private sector. However, the Regulations enable practice of profession along with other professions that do not conflict with the nature of the law practice subject to controls by the relevant department.
Although, a lawyer may become a partner or a shareholder in companies where the liability will be restricted to his / her contribution in the capital and could also be a member of the board of directors; yet, a lawyer cannot manage a commercial company or become an executive manager of a commercial company.
The Regulations extends the responsibility of lawyers towards maintaining confidentiality of the data of their client to works that involve submission or exchange of information on electronic portals and platforms. The Saudi Bar Association will be tasked to prepare an indicative list of approval electronic portals and platforms.
While the Regulations require lawyers to abide by the provisions related to returning of the original documents to their clients, provided that the clients have paid all of the fee, it provides an exemption if the same had been agreed with the client.
Being a Partner in a Professional Company:
The Regulations restrict a lawyer to be a partner in more than one professional law firm. Besides, two or more lawyers cannot work together without forming a professional company.
The Regulations restate the possibility of mixing of professions (subject to obtaining of approval by the Ministry). However, the shareholding of lawyers in such a company should be more than 25% of the company’s capital and they are entitled to more than 25% of the net profits of the company.
Lawyer’s Fee and Dispute with Clients:
The Regulations restate the right of the lawyers to claim their fee for the services rendered as well as expenses incurred by them in claiming the due fee from the client.
The Regulations continue with the provision that the venue for resolution of any dispute between a lawyer and his/her client shall be the court which had heard the lawsuit on which the lawyer had rendered his/her services. However, if any dispute is related to services rendered on matters not involving any litigation, the courts having jurisdiction over the subject of the dispute shall have the jurisdiction.
The Regulations provide clarity regarding the basis on which the attorney’s fee (in case of dispute) will be determined and that includes consideration of the lawyer’s professional experience and reputation besides the type and nature of work, efforts exerted by the lawyer.
Trainee Registration:
The relationship between the lawyer and the trainee will be governed under an employment contract as per the Saudi Labor Law. The Regulations restate the training requirements and experience for obtaining of practice license as available in the existing regulations. However, the period of practice required by a lawyer for training law graduates is reduced from (5) years to (2) years.
Non-Saudi Consultant:
The Regulations restate the earlier requirement that all Non-Saudi lawyers be registered in the list of ‘Non Saudi Consultants’ for rendering services through a Saudi licensed lawyer. The Non-Saudi consultants will be obliged to comply with the applicable provisions of the Saudi Arabian Advocacy Law, the implementing regulations and other relevant laws.
The Regulations require the Saudi licensed lawyers to submit applications along with the required documents of Non-Saudi practitioners requesting their addition in the list of Non Saudi practitioners as well as inform the competent department upon end of their contractual relationship within 15 days from the date of end of relationship.
As an exception, the Regulations allow ambassadors of the States to represent before the courts, provided that they have powers of attorney issued by the competent authority.
The Regulations continue to enable qualified lawyers under the employment of companies to represent the entities before the courts and judicial committees. However, they will require authorization from the competent department and their names will be registered in a special register.
Foreign Law Firms:
The Regulations refer to the requirements under the Advocacy Law for setting up their offices in Saudi Arabia and elaborates on the requirement of having offices in at least (3) countries considered as economically developed countries in accordance with the relevant international indicators. In case of a merger or acquisition, the Regulations provide that the year of establishment of the senior law firm shall be considered for calculating the period of experience required for obtaining license.
The experience requirement for a partner of a foreign firm continue to be the same (10) years of practice out of which (3) years must have been spent after obtaining of the license to practice.
The foreign law firm will be required to obtain membership of the Saudi Bar Association before commencing their practice and obtain premises to perform services.
The Regulations restate the earlier provision that the Saudi licensed lawyer with whom the foreign law firm forms a joint company should have an experience of not less than (7) years and one of the Saudi partners shall be the manager of such a company. However, a Non-Saudi manager may be added to the board of managers provided that the representation of Saudi partner shall not be less than 25% in the board.
The foreign firm will have to maintain the Saudization ratio covering the legal professionals (which is currently 70%) as well as commit to provide at least (20) training hours annually for each employee, have a policy of seconding the Saudi employees to work in their head offices or branches, implement a program to train university graduations, contribute or sponsor scientific and professional conferences and events in the Kingdom.
The Regulations provide that the foreign law firm will have to submit its audited financial statements and annual report indicating its commitment to transfer of knowledge and training plan to the competent department (upon request).
Consultation on Saudi Law by the Branch Office:
The Regulations restate the possibility of a branch office of a foreign firm providing consultation related the Saudi Laws provided that the lawyer providing such consultation is registered in the list of the Saudi practitioners and be in the employment of the firm and having experience of not less than 3 years from the date of obtaining of license.
The Regulations continue the restriction of non-transference of consultation work outside the Kingdom exceeding 30% of the total work by the firm in a year.
Temporary License:
The Regulations restate the provisions related to granting of temporary license to foreign firms for specific or specialized projects for which the required expertise is not sufficiently available in the Kingdom under certain conditions which include non-granting of more than one temporary license in a year, requirement of letter from the project owner evidencing that the project is a specialized project, assigning at least 10% of works to a Saudi licensed lawyer.
Disciplinary Controls:
The Regulations empowers the officials of competent department to inspect compliance by entering the places of business and hearing statements of complainants and requesting statements from the lawyers.
The competent department shall, after initial investigations shall transfer the case to the Disciplinary Committee which shall conduct meetings, obtain the necessary documents and if required seek assistance of experts and specialists.
The Committee shall issue its decision within 60 days from the date of its filing and may be extended for a similar period, when needed.
The Regulations lists several instances which will be considered as impersonation which include practicing of profession without obtaining a license or declaring oneself a lawyer without having a license or providing consultation through electronic platforms without being a lawyer.
Comments and Suggestions:
The Ministry invites public participation in providing suggestions on the draft within (20) days and communications be sent via email: legislationsoffice@moj.gov.sa
AlGhazzawi & Partners