Out-Law Analysis | 23 Feb 2021 | 11:37 am | 3 min. read
As businesses in the Middle East adapt to the impact of the global pandemic, economic recession and unprecedented low demand for oil, in-house legal teams are more important than ever.
The coming year promises to be challenging and exciting for in-house legal teams, particularly in the energy sector, as new pressures and opportunities arise. Recognising how the role has changed and what can be done to ease the strain on in-house legal staff will be vital for businesses, to ensure that the team can continue to perform successfully for the whole company.
Despite the ongoing pandemic, sights are firmly set towards the future in the region. The delayed Dubai Expo 2020 is set to go ahead in October, with organisers confident that the Covid-19 vaccination programme will be sufficiently advanced at that point to allow them to proceed.
The signature pavilion at the Dubai Expo is focused on sustainability, and is designed to prompt visitors to think about their consumerism - just one example of how the Gulf states are beginning to shift their focus from the traditional oil and gas industries towards green energy.
Partner, Managing Director of Vario
Across the Gulf, in-house legal teams are already seen as a vital resource, helping to drive innovation and cost efficiencies across the business. However, with finances constrained, legal teams are often having to do more with less
The Expo, Siemens and the Dubai Electricity and Water Authority (DEWA) have collaborated to construct the region's first solar-powered hydrogen electrolysis facility, and Siemens Middle East's senior vice president of business development has said green hydrogen "could be the new oil" in 20 years' time. Abu Dhabi is also investing in green hydrogen, with the state-owned Abu Dhabi National Oil Company recently forming an alliance with Mubadala Investment Company and ADQ to produce hydrogen from renewable energy to market both at home and overseas.
Around $150 billion was being invested in solar power and $28bn on wind, waste to energy, hydro and geothermal power plants across the Middle East as of October 2020 according to Middle East Eye, citing figures published by Middle East Economic Digest (MEED), the business intelligence tool. Oil and gas companies are also looking to develop and adopt new technologies which reduce their carbon footprint as part of their diversification plans.
However, while the Gulf states' pioneering approach to energy is a great leap forward, it is not without its challenges, particularly for in-house lawyers at these companies. To use hydrogen as an example, the legislation and regulatory framework are underdeveloped and still relatively immature. Without a well-established regime, projects run the risk of running into problems, or having to change operations mid-project to adapt to incoming legislation.
The economic impact of the pandemic has meant more companies, especially in the energy sector, are now looking for new ways to drive profit, as well as adapting to the shift towards renewable power across the Middle East. It's clear that businesses in the region will need to rely heavily on both in-house and external legal teams to ensure that these changes are reflected in their practices and processes.
Across the Gulf, in-house legal teams are already seen as a vital resource, helping to drive innovation and cost efficiencies across the business - and evolution of this sort makes the role more vital than ever. However, with finances constrained, legal teams are often having to do more with less.
But even with budgets under pressure, we are seeing businesses take steps to ensure that their in-house teams are not just functioning, but performing for the benefit of the business as a whole. In-house legal teams are investing more than ever in technology, and becoming more attuned to the benefits of applications such as artificial intelligence. The annual Legal Technology and Innovation Middle East conference has run in Dubai since 2019, and explores how to "raise awareness about the applications of advanced technologies in legal practice". By investing in legal tech, in-house teams can offload some of their more routine but time-consuming work and concentrate on 'mission critical' strategic jobs.
We're also seeing more businesses looking to outsource some aspects of their legal work, or to bring in consultants. Although consultants are relatively new in the legal market, the oil and gas industry in particular has always been very open to bringing in contractors to help with this kind of work due to their familiarity with this model of working from elsewhere in the business.
The pandemic, and with it an increase in working from home and more acceptance of video meetings as an alternative to those in-person, has also led to more Middle Eastern businesses using remote legal advice, available from anywhere in the world. This means that a company which might be working on a very specific issue which requires a very specific set of legal skills can access that talent easily, with borders and distances no longer presenting the same barriers.
Temporarily engaging a consultant or using flexible resourcing models, such as Pinsent Masons Vario, can also be more cost effective for businesses dealing with financial constraints – especially for project-specific work.
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