Small country, big opportunities for international law firms
Israel. A small Middle Eastern country that you have all heard about. This tiny country has been one of the focal points of the world during the past 7 decades, since its establishment back in 1948.
Until about two decades ago, the focus was on Israel’s disputes with its neighboring countries, but in the past 20 years - and to a larger extent during the last 5-10 years - the focus about Israel shifted. Israel’s technological superiority and strive for innovation have made the country to be known and described as the Start Up Nation – one of the world’s leaders in cyber and everything that ends with tech.
It seems that the Israeli “climate” and chutzpa (audacity) acts as a catalysis for the formation of startups, and a lot of them. Israel is one of the world’s leaders in the number of startups per capita, with almost 7000 active startups. This technological activity led to a tremendous boost in the Israeli economy, with one of the implications being the fact that the market became much more global.
In the past years you probably heard that Israeli companies are leading the Hi-tech market, find alternative energy sources, new medicines or re-defining agriculture.
Indeed, Israel is selling innovation and technology to almost every country in the world, transforming its market into an international one, and enjoying outstanding transactions in the process. Just to name a few:
Mobileye - acquired by Intel for 15.3 Billion $
Frutarom - acquired by International Flavors & Fragrances for $7.1 Billion
Mallanox - acquired by NVIDIA for $6.9 Billion
Playtika – acquired by Caesar’s Interactive Entertainment for $4.4 Billion
SodaStream – acquired by PepsiCo for $3.2 Billion
Waze - acquired by Google for $1.1 Billion
As a result, Israel is an interesting market for international law firms, which are rushing to Israel, hoping to get in on the next billion dollar deal.
Another milestone that amped up the rush of international law firms to Israel was new legislation. In the beginning of the Millennium, there was already significant international activity in the Israeli business market, and therefore - international law firms, along with their Israeli counter parts led various international transactions.
The presence of international law firms in Israel at that time was not formal, and usually based on an international law firm’s commuting representative to Israel, that would arrive multiple times per year.
In September 2012, with the understanding that the Israeli business and thus legal market is becoming more and more international, the Israel Bar Association made a reform, which opened the Israeli legal market to foreign law firms - the reform allowed international law firms to open a branch in Israel, in which they can practice their respective foreign law, in cross border transactions related to Israeli companies and entities.
International law firm’s presence in Israel
Following the 2012 reform, some international law firms have opened Israeli branches, amongst them are Freshfields and BLP. The entry of these legal giants led many other international law firms to the understanding that Israel’s business market should be explored further.
Today, there are more than 110 international law firms that currently active in Israel, 70% of them are US or UK law firms, and about 30% of them come from continental Europe (mainly France and Germany), Asia (mostly China and Hong-Kong), and lately BRIC countries like India and Brazil.
Not all of foreign law firms that are active in Israel have a formal branch. The presence of international law firms in Israel occurs in a number of different models the main ones are as follows:
Israel desk –the law firm has a formal team that handles Israeli related clients and transactions. Many law firms around the world work according to this model including – Cooley, Dentons, Skadden and many others.
Commuting representative – the firm has a specific representative that visit Israel a few times every year, facilitating closer relationships with key individuals in the business and legal sectors. To name a few - Howard Kennedy, Taylor Wessing and K&L gates.
Representative is Israel – in this format, in which a firm has a representative living and working in Israel, we usually see international law firms that have upgraded from the 2 first stages to this one – such as Clifford Chance, Allen & Overy, Fox Rotschild and Bersay.
Branch – opening a branch in Israel is reserved for law firms that have already explored the market and decided that Israel is a strategic and key destination for the firm for example - Greenberg Traurig and Asserson.
Merger – It should be stated that there are less common modules such as mergers (in 2013 the Israeli firm Eyal Khayat, Zolty, Neiger & Co merged with the Chinese firm – Yingke) and exclusive partnerships (Kennedys with the Israeli firm Zalichov, Ben Dan & Co. in 2019 is one of them).
The entry process to the Israeli market
Indeed, there are many ways in which international law firms can operate in Israel, and many law firms that wish to enter Israel’s lucrative market. The question is - how to do it right.
In order for an international law firm to obtain clients in Israel, it should form relationships with Israeli decision makers in the legal and business sector. The target audience changes with respect to the different practice fields of each firm, but it is safe to say that the main target audiences are Israel’s significant law firms and accounting firms, CFO’s, corporate counsels and high-level directors in companies.
This is done by investing in the firm’s business development and marketing plan with regards to Israel. In general, the plan should consist of the following:
1. Precise Road Shows with key individuals – business trips that include one-on-one meetings with relevant decision makers, such as top partners in Israeli law firms and accounting firms. Needless to say, the vast majority of large-scale cross border corporate transactions is led by law firms, and being acquainted with the partners who are in charge of the international work is crucial.
The meetings must be precise in order for them to create relationships that can actually be fruitful (i.e. bring clients) and that is why the research process for these meetings must be thorough. In many cases, and especially if we are not talking about one of the world’s biggest law firms, it will be best to try and meet not only the most well-known law firms in Israel, but with smaller law firms that might actually refer work.
2. Events and conferences – law firms that are active in Israel, tend to host conferences and events targeted to their relevant audiences. This is a great way to step up a firm’s presence in Israel, taking your relationship building process from the necessary stage of ‘one on one meetings’ – to the next phase that allows firms to catch more birds with one Martini (or coffee).Some events are aimed at showing the firm’s professionality in a specific practice field and will consists of more professional content like a morning professional seminar. These events are especially relevant if your target audience consists of corporate counsels, for example.
Other events are more social and aimed to brand the firm as one that is operating in Israel, for example: “XXX’s Annual Israel Event”. These kinds of events are usually held as evening cocktails. The atmosphere in these evening events is somewhat less formal, and that is exactly the time in which relationships go to the next level.
We recommend to set events in Israel, because it is the ultimate way to meet again with contacts that the firm has (whether you know them before or met them on one of your road shows) and also provide a great way to invite and meet other key individuals that you haven’t had a chance to meet on a one-on-one basis.
3. Ongoing marketing in Israel – it is crucial for a law firm to be somewhat physically present in Israel - but some of the international law firms manage to obtain large scale clients and still – do not operate a branch or even a permanent representative in Israel.
These law firms make it a point to be “present” even when not physically in Israel, by investing a lot in their marketing in Israel – having Israel designated newsletters, writing articles (that are sometimes translated to Hebrew), being a part of publications in the Israeli financial media and they make sure to stay in touch with their contacts – gapping over the fact that they are not physically present.
To conclude – Israel’s fast-growing economy and super active hi-tech ecosystem - along with vast activity in cyber security, autonomous vehicles, real estate, energy, agriculture and many other sectors - makes it a key destination for International law firms. It is vital to build an accurate entry plan, but if a law firm does it right, it will be able to enjoy the opportunities that the Israeli market produces on a daily basis.
About the Author
Adv. Yaara Deitcher is head of Robus’s International department, consulting international law firms interested in operating in Israel.