Firm shakes up Middle East practice amid client payment debate

DLA Piper is restructuring its Middle East practice amid claims that the firm has been in talks with a major client to resolve payment issues in the region.

The law firm said last week it had laid off eight associates in Dubai, equating to around 8% of the office's fee earners, but it has also emerged that it has placed almost 20% of the remaining lawyers on either a six-month sabbatical or secondment. Those taking the sabbatical are not guaranteed a job when it is over.

Additionally, DLA Piper has relocated a number of lawyers from Dubai to Abu Dhabi and agreed reduced working hours and pay for other staff.

DLA Piper, which has around 97 fee earners in Dubai following the job losses, blamed the cuts on reduced client demand, with lawyers in the corporate, finance and projects practices affected.

The firm's staffing issues in Dubai come amid claims it has been in discussions with a local client about alleged late payment of fees. The company is a substantial client of DLA Piper in the region.

It is understood that DLA Piper was owed a seven-figure sum in fees by the company between January and September 2008 – with one former DLA Piper lawyer claiming the issue was enough to affect local profit distributions. However, DLA Piper denied any distributions have been delayed.

Two other DLA Piper partners also acknowledged there had been discussions with the client regarding fees, though one partner said the issue had now been resolved.

DLA Piper declined to comment on specific discussions with the client over fees. The client refused to comment.

Joint chief executive Nigel Knowles said: "It is a valued client of DLA Piper. We have undertaken a lot of work for them and continue to do so. The relationship between us is wide, deep and strong and mutually beneficial."

The episode underlines the current pressure on advisers in the region.

Commenting on the market, Denton Wilde Sapte Dubai construction partner David Courtney-Hatcher said: "Some big companies are -experiencing serious liquidity problems.

"This has led to a slowdown in payments and a great deal of payment rescheduling. Dubai has been hit hardest because of the scale and pace of development."

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