Cross-border Conundrums

Managing international litigation was the main topic of concern at the latest Martindale-Hubbell Counsel to Counsel forum. It is a contentious issue for corporate counsel in more ways than one, writes John Malpas.

"You have got to cover your arse."

This was the somewhat colourful advice that one delegate offered during a high-level debate among corporate counsel on how to manage international litigation.

The Counsel to Counsel event, held by Martindale-Hubbell in association with Legal Week, saw a group of senior corporate counsel from a variety of international companies discuss the best way of handling complex disputes.

During the debate, delegates exchanged horror stories that highlighted just how badly disputes can spiral out of control if they are not managed properly. And often corporate counsel can find it difficult to stop disputes escalating.

A key piece of advice for corporate counsel proffered at the meeting was to keep their companies' management constantly informed about the progress of disputes.

Everyone agreed that companies' enthusiasm to have their day in court can quickly evaporate once costs start to escalate - and the prospect of executives actually giving evidence in court looms.

One delegate said: "People may be very enthusiastic to take a case to court at the start, but when the reality dawns that they might get taken to pieces in court, they often change their minds.

"And once you start looking for the evidence that you thought you had and discovering you do not have it, the point of principle that you want to fight over gets put into perspective."

That is why, another delegate said, a key job of corporate counsel is to keep everybody informed about the progress of particular disputes.

"Compile monthly reports to keep management appraised of what is going on," said the delegate.

"And when things do go wrong you can refer back to the advice that you gave a couple of years ago."

And my how things can go wrong - especially when you are trying to manage a piece of international litigation.

One delegate - from a UK-based company - went through a dispute he had been involved in that could have been settled relatively harmlessly at the outset, but which the company decided to fight on the basis of legal advice from a top German firm. Needless to say, it was a disastrous decision. The company lost a series of court cases and eventually had to settle on the terms that had been offered at the outset, after spending a great deal more money.

One key lesson, said the delegate, was the need to make business units responsible for paying for litigation out of their own budgets - so they appreciated the costs, and risks, of taking an aggressive approach to a dispute.

Another lesson, he said, is to centralise the management of litigation at headquarters.

"It may be over-centralised," he said, "but you have the advantage that you do not get people adopting entrenched positions in cases where the amount of money is large in their context, but in the context of the group as a whole it is small."

Nevertheless, there was some debate over the desirability of maintaining too tight a control on how divisions in foreign jurisdictions managed their cases.

Delegates agreed that dictating terms to business units in far off countries had its pitfalls.

One delegate warned: "If you try to impose yourself you may win the initial battle, but if you are not careful, they will trip you up at every turn. You need to get someone to feel that they are making the decisions - otherwise they will do exactly what they want anyway."

Another delegate, whose multinational company operated in a variety of jurisdictions, said that not only did it have lawyers working on the ground in those countries, but that it was also important that they were nationals of these countries, or, at the very least, from the region.

But, he stressed, his company also tried to hire people who had had experience working in what he described as an 'Anglo-Saxon' working environment - perhaps in a major law firm or an in-house legal department.

These people are invaluable, he said, because they know the environment they are working in. If they suspect the advice they have received from a local firm may be flawed, they can simply pick up the phone and get a second opinion. These people are also much better equipped to monitor the market and to keep tabs on any new legislation that may be coming through.

Another delegate said it was vital in multi-national companies that in-house lawyers spoke more than one language.

He said he favoured hiring people who were bilingual - not just because speaking a second language was useful, but that it reflected a broader outlook on life. "If you speak another language well, then you already have an understanding of a culture other than the one in your native country - that is a definite plus."

Managing litigation, everyone agreed, is a subtle art, especially when there is a cross-border element.

When the delegates were asked to sum up their views, many returned to the issue of communication and the need to ensure that, during all stages of a dispute, everyone relevant in the business, as well as any outside advisers that may be involved, know exactly what is going on.

Nevertheless, not all the delegates were impressed with the idea that one benefit of keeping management appraised of developments, and the likely impact, was to avoid the blame if things went wrong.

"If you are having to rely on an e-mail to 'cover your arse' you have almost invariably mishandled the case."

This is a report of the Martindale-Hubbell Counsel to Counsel forum in London