Smart budgeting 2013 implies looking at Islamic world, interview of Prof Laurent Marliere, CEO of ISFIN

Many law firms are currently going through their budget planning. What is your advise ?

Since 2008, many firms have predominantly looked at cost cutting. Strategy was not the prime factor in their financial planning. They wanted to reduce their costs, sometimes quite irrelevantly as the frenzy was short-minded. However, sound budget planning is not just about spending money. It is about investing in the right sectors to manage income streams, as well. A budget is a two channels process.

Managing partners and their board have to look at macro-economics. Where will the economic and financial activity take place ?

The Eurozone is dry and is unlikely to come back to substantial growth factors. Households are at threat and the retail industry just like real estate will provide poor results. It is election year in the US. We will see what it brings. Nevertheless, the United States are still heavily affected by the subprimes.

The real areas of growth are Asia, GCC and Africa. These regions will not only experience growth locally, they now have huge amount of liquidities to invest. These investments occur on a global scale and sovereign funds for instance go shopping in Europe or in America.

How can they look at those markets ?

In Asia and the GCC, law firms generally had a country approach. We have seen those « Chinese desk », « Indian desk », « Turkish desk »,… flourish. Small offices have been opened in the Middle East with a limited amount of resident partners.

That is one way to do it.

Another way to do it, is to put you “Islamic spectacles” on. Most of the emerging countries are homogenously or partially Muslim countries. Figures tell: In 2020, a third of World’s population will be Muslim, 65 % of the Muslims are Asians, India is the second largest country in the world, there are more Muslims in China than in the Arab world…

Africa is currently going through an important process of islamization.

The conventional industry has clearly understood these trends and has started developing a “Islamic capacity” also called a “Halal capacity”. That means that the clients of the law firms in the Food, Cosmetic, Pharma, Transport, Banking, Real Estate,… sectors have embraced those market segments.

Lawyers tend to be reactive rather than proactive and have still not anticipated what is becoming the world’s fastest growing area of world industry. The Halal industry is there to stay. The investment power from the Muslim world, boosted by the high energy prizes, is there to stay.

Law firms will realize this when their clients will ask them to operate with that “Islamic capacity”. For some firms, it will be too late and they will lose market shares to more innovative or clairvoyant firms.

To acquire that capacity is a substantial investment. How expensive in a budget can this be ?

You can of course play the heavyweight and hire, poach or train qualified lawyers in the area; open offices and develop the project from scratch. This is what global city firms are doing.

Or you can look at the value of networking which offer excellent value for money. This is where our ISFIN project has proved to be very innovative. We were granted the attention of the Financial Times Innovative Awards 2012 for our corporate strategy in the sector.

You do not need to have Shariah lawyers in-house when most of the investments or transactions happen in a conventional way. When a deal has a shariah compliant dimension than you can pull the expertise of the highly qualified lawyers of the network. ISFIN which now covers some 40 jurisdictions with 40 top tier law firms accompanies investors from the Muslim world into the the Western world and vice-versa we help our member firms accompany their Western clients into the Muslim world.

We are an entrepreneurial project dedicated to facilitating the exchange of business and legal consultancy in the Islamic world. A company only specializing to promote the benefits of our member firms and their clients when they deal in this fast growing sector.

The real challenge when dealing with the Muslim world or when dealing with the Western world is not the technicality of the law, it is the cultural gap.

In 16 months of existence, we have become the world leader in the supply of legal advice to the Halal industry.

We are confident that ISFIN will keep growing as it is a worldwide project with member firms in Latin America, Africa, Asia, Europe,…

Intelligence is not a crime and partners, in charge of budget within law firms, will look at figures that open alternative income routes for their structure…

Author

Prof. Laurent Marliere is CEO of ISFIN, the world’s leading network of law firms specializing in Islamic and sovereign funds. http://www.isfin.net

Contact Email: LM@isfin.net