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FIRM NAME: King & Spalding LOCATIONS: Atlanta, Washington, D.C., New York, Houston SIZE: 554 attorneys MANAGING PARTNER: Walter W. Driver Jr. Atlanta’s King & Spalding has what firm lawyers believe may be the only Islamic finance and investment practice group in the country. The group’s practice description gets more hits on the firm Web site, www.kslaw.com, than any other practice area, according to firm officials. That reflects a rapidly growing interest among Islamic investors for financial vehicles that are acceptable under their religious law, says Isam Salah, a New York finance partner who leads the group with W. Donald Knight Jr. An Atlanta partner, Knight concentrates on real estate investment. “A lot of … Western banks have actually formed Islamic units or separate banks,” Knight says. Adds Salah: “When there’s money looking for [investment] products, you’ll have smart bankers looking to give this money a home.” Islamic investors began looking to invest more outside of the Middle East after the Gulf War, says Knight. Before the war, those concerned with meeting the tenets of Islam tended to invest closer to home, he says. But once Kuwait was invaded, investors recognized the need to diversify. Islamic law generally prohibits the payment or receipt of interest, and encourages risk-sharing arrangements as opposed to investments without a stake in an enterprise, Salah says. “They’re much more in favor of equity investing than lending. … There’s a general feeling in Islam that they should invest in productive assets.” Islamic banks and investment institutions have advisory committees that rule on whether investments are acceptable under the religious law, or Shari’ah. Part of the K&S group’s pitch, Knight says, is that “we’ve had enough experience that we have a good idea of what will satisfy the Shari’ah scholars.” Salah and Knight formed their practice group in 1994, when they noticed a common client base. Neither has formal training in Islamic scholarship; they’ve picked up their expertise by doing deals. In 1996, King & Spalding lawyers helped Citibank, an affiliate of Citigroup Inc., create the Islamic equivalent of a real estate mortgage. It was the first time such a mortgage had been successfully created in the United States, Knight says. “You have to come up with a structure which is not characterized for Islamic purposes as interest bearing, but on the other hand, for U.S. tax purposes, will be characterized as interest bearing so the client will get the necessary tax advantages,” he says. “At the same time, our client, which was Citibank, [had] to be satisfied, even though the documentation was very different from the traditional.” The practice group includes three partners who spend most of their time in this area, as well as five partners and about eight associates who spend some time on the practice. Three tax partners also advise on deals. The group has lawyers in Washington, D.C., as well as New York and Atlanta. In addition to real estate, the lawyers do transactions in the areas of project finance, leasing, fund investments, corporate acquisitions, construction finance and trade and manufacturing finance. The firm does not have an office in the Middle East, but group members have lived and worked in the region and travel there frequently. Islamic finance may be the most exotic of the niche or specialty practices developed by King & Spalding. Others include focuses on German and Latin American clients, medical devices, controlled substances, Federal Trade Commission matters, energy, biotechnology, and the Internet and e-commerce.

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