Choosing a Law Firm could be a big decision making exercise for you. UAE has hundreds of Law Firms within UAE mainland as well as hundreds in DIFC (Dubai International Financial Centre) as well as ADGM (Abu Dhabi Global Markets). The pricing quoted by a Law Firm is based upon the following factors:
- The reputation/brand of the Law Firm including its vintage
- How gullible you are
- How much you care about the brand of the Law Firm
Every Law Firm specializes in a particular stream of business. For example, most banks in the UAE rely on just one or two firms that have 100+ lawyers each employed to keep answering questions from bankers and bill them by the minute. Just ask a few of your friends that work at banks and you will know which 2 firms I am talking about.
In our own experience, we had to draft a few agreements for an e-commerce related business that we were getting into
- Our competitor had paid US$160,000 for similar agreements from a popular multinational law firm
- The same popular multinational law firm quoted US$110,000 to us as they probably just has to change the name of the entity in the legal agreements
- We went to 2 other popular multinational law firms that quoted US$80,000 and US$55,000 for the same work
- We went to a local popular law firm that quoted us US$4,500
- We finally got the same legal agreements drafted by a popular law firm based out of India for US$500. To ensure this met the UAE legal framework, we asked for a “second review” by a popular UAE law firm and paid them US$1,500. There were no material changes made but we were happy with our overall savings
Some things that you need to know while finalizing on a legal firm
- Meet a minimum of 3 law firms before finalizing on one
- The first meeting with a law firm is always free. Make use of this first meeting to clear any questions you may have
- If a law firm suggests that BVI is a better jurisdiction to setup a holding vehicle than Cayman, do ask “why” to find out if there is a material reason behind such generalization
- If you are setting up an offshore entity, find out the annual cost as well as the cost of liquidation
- If a law firm is 100+ years old and has a name that sounds like “Adam & Eve”, they are expected to be expensive
- Do you need a “Adam & Eve” sounding name just to make an investor/client/third-party happy, do look at an option of getting the work done through a not so popular law firm and then getting the work vetted by a “Adam & Eve” sounding Law Firm. This will make the whole proposition cheaper by at-least 50%
- Just to save money, do not go to a lawyer who has no clue about what you are doing or has no experience in your area of expertise. For getting a real estate contract drafted, don’t go to a lawyer specializing in divorce 🙂
Just remember that you are a startup and your business model is expected to change as you actually start getting into doing business. Do you actually think you or your client would drag you to the courts? Do you really think that you would make multi-million dollar deals in the initial years for you to invest over US$100K initially for drafting the legal agreements? If you think you just need an agreement and do not ever expect taking someone to the court, is drafting something on your own with a free sample from the web feasible? Is your prior employment with a big corporation making you think that you need a big law firm?
To win, you need to have a workable business model and great execution…….spend time and money on that first before perfecting other elements of your startup.
Wishing you the best!