Revolutionary amendment for Israeli legal competition.

• Author: Fisher, Zohar

A recent revolutionary amendment to the Israeli Bar Association law recently passed, transferring the Israeli legal market into the 21st century and accommodating the Israeli legal sector to the ever-growing global habits. The amendment releases the cork of what used to be a sealed bottle, and since August 2012, foreign lawyers and foreign law firms are now permitted to provide legal services in Israel.

A Few Facts about Israel

Many Israeli companies are international by nature and work closely with businesses from numerous countries across the globe. The startups industry in Israel--often referred as "The Start-Up Nation"--has a unique influence on tech industries worldwide. Agriculture companies provide innovative solutions to countries around the globe and the list goes further, not mentioning the vast number of Israeli companies based overseas.

Such tendency is part of the 'global village' environment we all live in, but for Israel, a country small in territory with scarce natural resources, there are no alternatives but to find in-house and outsourcing solution for its ever-growing financial and economical markets, as well as for its legal sector.

The Israeli legal market adjusted itself to facilitate the needs of its clientele, acquiring remarkable knowledge and experience in providing services to global operations--from M&A transactions to complex distribution arrays, collaborations and agreements and so on--all meant for counseling Israeli companies operating abroad, as well as foreign companies active in Israel.

The current timing for allowing foreign law firms to operate in Israel is quite surprising. The fierce competition in the Israeli legal market is already overwhelming, as about 60,000 lawyers serve a population of 7.5 million--the highest amount of lawyers per capita in the world.

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Some law firms have taken this competition to the extreme, using manipulative competition strategies. Such conducts are especially prevalent in the real estate practice, where some firms reduced their fees to less than 0.5 percent of a transaction's worth--a non-profitable rate according to any standards. By doing this, they harm the entire practice. This recent phenomena triggered the intervention of the Israel Bar Association, which is promoting a resolution that will set a minimal fee rate in the real estate practice, in order to bind law firms from dropping under a certain legal fee level.

New Regulations and...