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Bahrain, like other smaller Gulf jurisdictions, has managed to avoid the worst of the financial crisis, as one partner explains: "Bahrain has never been a boom and bust place, and that's continued." Although historically the jurisdiction is a centre for banking in the Gulf it has been not been hit as hard as the saturated market in Dubai thanks to the absence of complicated product structures....

Bahrain, like other smaller Gulf jurisdictions, has managed to avoid the worst of the financial crisis, as one partner explains: "Bahrain has never been a boom and bust place, and that's continued."

Although historically the jurisdiction is a centre for banking in the Gulf it has been not been hit as hard as the saturated market in Dubai thanks to the absence of complicated product structures. "There's not great liquidity but just less exposure," says one partner. "Bahrain has always been steady – it has not been a galloping horse like Dubai."

However this is not to say that the country has been unaffected, "In common with the rest of the world there is a slowing down," says one partner. Most firms have found that deal size is reducing and transactions are not moving as quickly. "The deals that have closed have been smaller," says one partner.

In the Islamic finance area firms have also found that volumes have decreased. "There are a number of sukuks (Islamic bonds) sitting and waiting to happen," says one partner. "A lot of the assets in Islamic finance went into real estate, and we all know what happened there."

There has also been scepticism about how much the country would benefit from the problems seen in conventional finance. "Rightly or wrongly, Islamic finance is seen as a safer option because Islamic banks are seen as safer," says one partner. "But conventional banks also have Islamic departments and issue products."

For M&A departments work flow has remained steady, although the focus has changed. "Consolidation is increasing in importance," says one partner. "We're seeing a decline in people getting into new joint ventures – a number of internationals are holding back and instead looking to consolidate."

There was also optimism about the coming year: "M&A is stronger than before; there are opportunities for family-held companies which need fresh capital, and that's where Bahrain entities are better placed than their European counterparts," says one partner.

In February 2009 another interesting development was the new law issued by the Central Bank of Bahrain in regard to takeovers. Although the true effect is yet to be seen, one partner says it should "give much more transparency to the market and allow the central bank and the stock exchange a greater role".

A partner says: "What we're finding with the government of Bahrain work is that the project finance sector is active. [There is] no slowdown in Bahrain."

One of the growing areas is work connected to privatisation of the energy sector. As well as outsourcing from the Bahrain oil field, there has also been work arising from the import of gas into the country. Work in infrastructure is also continuing apace: "Infrastructure investment is one area which is looking strong," says one partner.

The legal market itself has remained relatively stable over the last 12 months, with DLA Piper and offshore firm Appleby the only new entrants. However there is encouragement for other firms looking to follow suit, with the government keen to encourage international investment and the legal diversification that goes with it. "They're very keen to encourage new firms in here," says one partner, adding: "They want more international investment."