Islamic finance is currently one the fastest growing areas of law. Lawyers in this field are required to make sure that their clients’ instructions and transactions are compliant with Shari'a – the body of jurisprudence that has developed over the last 40 years, derived from the Qur’an and secondary sources known as the ‘Hadith’.
Although Shari'a jurisprudence has some similarities with certain aspects of the English common law, an important material difference lies in the fact it is not linked specifically to a territory or embedded in a state. Sharia law recommends a way of life and resides within the individual Muslim – he or she is expected to observe that legal framework wherever he or she lives in the world, whether that individual is seeking a mortgage to buy a house or needing finance to grow their company or increase their property portfolio.
Do Islamic finance transactions take longer to complete than regular transactions?
The role of the solicitor advising on Islamic financial matters is to acknowledge this potential conflict of law, look at deals from a different perspective and then write contracts that are intrinsically compliant with Shari’a law. Islamic transactions can take longer to complete, given these additional elements of complexity. Solicitors advising on Islamic financial transactions can expect to run their own deals and also support their colleagues on deals led by other solicitors in the firm, where that deal has an Islamic angle.
The increasing range of Shari’a compliant investment activity means that transactions in many different sectors can potentially have an Islamic element. As such, lawyers in this field may work on shipping, aircraft, real estate and infrastructure transactions, as well as mergers and acquisitions, investment funds and the setting up of new Islamic banks or the design of new financial products that don’t involve the charging of interest.
As with all transactional areas of law, working hours are driven by the client’s requirements and the stage the deal is at. There are plenty of opportunities to travel: western-trained lawyers may work on Islamic finance deals in the UAE and Malaysia as well as in London.
How has the recession affected Islamic finance deals?
Islamic finance co-exists with conventional financing, banking and commerce and so is not immune to peaks and troughs in the global economy. The Islamic finance world was affected in two waves at the time of the global financial crisis: up until the Lehman Brothers insolvency, Islamic finance played the role of observer to the collapse in America as ‘toxic assets’ came to the fore (a class of asset that Islamic firms could not invest in). Unfortunately, in the aftermath of the Lehman Brothers collapse, Islamic institutions started to suffer alongside their conventional counterparts from the subsequent drop in real estate and private equity values (sectors where Islamic firms were heavily invested around the world). On the other hand, certain Islamic finance institutions have also benefitted from being perceived as safe havens – as the world witnessed runs on conventional banks – and received large cash deposits from investors. In 2013, the outlook among Islamic finance practitioners is optimistic.
Good Islamic finance solicitors have…
- Strong teamworking skills.
- A good, broad training in commercial law first, before specialising in Islamic finance.
- Arabic language skills (helpful, but not essential).
- Strong drafting skills.
- The qualities to be a self-starter and self-learner.
- The ability to think laterally, innovatively and clearly.
What sort of work will you be given as a trainee solicitor?
Trainees get involved in drafting, due diligence, structuring discussions, research, writing articles and engaging in face-to-face discussions with clients.
The types of law Islamic finance solicitors use in their job
- Capital markets.
Neil Miller is the global head of Islamic finance at Linklaters LLP, based in the law firm’s Dubai office. He graduated with a law degree from Kingston University.