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Foreign lawyers infiltrate Israel’s legal market

israel foreign lawyersAlthough its size and the security issues troubling its citizens, Israel has intensively developed its agricultural and industrial sectors over the past 20 years, and managed to establish a technologically advanced market economy. The acceptance of Israel as a member of the OECD in 10.15.2010, may demonstrate the stability and the strength of its economy

But we are here to discuss law and lawyers. The growing Israeli economy creates a consecutive increase in the legal activity in the country. Actually, the Israeli legal sector as of today consists of close to 50,000, on a population of ~6 million people, which brings the country to Guinness World Record for the highest ratio between the number of attorneys and the population- one lawyer per 163 citizens

This dazzling fact, along with the drastic competition still has not affected the increase of revenue of law firms. According to D&B Israel, during the last decade Israeli law firms enjoyed a sharp increase in their revenues: 2010 ended with an increased revenues rate of 9% comparing to 2009, while 2009 ended with 8% more revenues than 2008. In addition, the legal market’s revenues did not decline even during 2008, and at most became more moderate during the global crisis

The steadiness of the political atmosphere in the country, and the high level of certainty that derives from strong imposing of the rule of the law, combined with its economical achievements, turns Israel into an attractive country for foreign law firms that may well benefit from the international legal Activity in the country

However, until the last summer, the Israeli bar association act blocked the access of foreign lawyers to the local market by implementing limitations on their activity: legal counseling was permitted only to lawyers who hold Israeli bar license, and a strict limitations were imposed on local firms that wished to share revenues from legal activity inside Israel with foreign law firms

As a result, Israeli lawyers were unable to perform legal practice as part of a foreign law firm in Israel, and foreign lawyers could not be partners at local firms

The bar association act has changed recently by the Israeli parliament (The Knesset), in a way that opened the legal market for international activity, in order to match the global trends in the legal practice regarding international cooperation and the needs of the business community, following the increasing international trade in Israel, and in order to allow Israeli clients to enjoy from legal services in the highest international standards

The amended regulations currently allow foreign lawyers to provide legal services in Israel regarding the international law and regarding the law in countries they hold bar license for, without the necessity to own Israeli bar license, provided that they have a practical experience of at least two years in the legal profession in their countries, In addition to passing exams regarding professional ethics

Local law firms are also allowed to share their revenues from legal activity with foreign law firms, in contrast to the past. However, foreign lawyers will still have some limitations on their activity, such as representing clients in administrative tribunals, counseling and representing clients in issues regarding the Israeli law and arbitration in Israel

As a reaction to recent changes in the local bar association act, a high profile debate rose among the Israeli legal community regarding the consequences of the regulatory measures on the competition in the legal profession in the country and its results on the small local law firms. However, the majority of parties agreed that these changes will have positive effects on the quality of the legal services that the Israeli client receives

As a result of the recent changes in the regulation, international law firms had begun its initial search for cooperation and initiated contact with some major local law firms in Israel

As mentioned before, although the security issues, the financial numbers in the Israeli economy is dazzling. The Israeli economy enjoys prosperity and a fast economical growth rate, among other data worth indicating, is that Israel’s GDP grew about 5.2% per year (!) since 2003- among the fastest GDP growth rates in the western world

Well, Israel is opening up for international legal activity, some preliminary checks were performed by leading US and UK law firms, but the first branch of an international law firm was not opened in Israel, yet. Who will be the first to open this door? We will wait for future events

Adv. Zohar Fisher is the Ceo of Robus, Israel’s leading Legal Marketing Company, a strategic counseling office which specializes in legal marketing and counseling for law firms

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