Commercial Litigation Summit | Winter 2017
The final session of the 2017 Commercial Litigation Summit sought the views of senior in-house counsel on managing disputes. Chairing the panel, Stephen Moriarty QC of Fountain Court Chambers kicked off the debate by tackling the perception of an in-house department as a cost centre – effectively, a necessary evil – citing the CV of Hausfeld’s Laurent Geelhand as an anecdote. Prior to joining the law firm, Geelhand was the European general counsel (GC) of Michelin, credited with turning ‘Michelin’s European legal department into a profit centre by systematically pursuing actions against third parties’. Moriarty asked the panel whether that is a realistic approach to running an in-house team.
John Keith, chief counsel for UK commercial litigation at BT Group, agreed it was a viable strategy but has to be put in the right context for the business. ‘You will have a challenge when you are talking about seeking monies back and how that impacts on the customer relationship. It is about negotiating internally so it is not simply seen as ambulance chasing.’
He referenced the former GC of DuPont – Tom Sager – who claimed to have brought in over £1bn worth of recovery through a culture of partnering with people within the business, rather than suing everyone at the drop of a hat. Keith noted that deciding to go for a particular opportunity required a business sell and there will be some ‘classic low-hanging fruit’. Other opportunities to litigate may exist in areas colleagues have not thought about, such as cartel claims or product liability disputes. However, he warned that lawyers have to be careful about overlaps with areas traditionally dealt with by other parts of the business. ‘Litigation should be the last resort. It is all about asking for what is rightfully yours and seeing that as a way of doing business rather than being shy and saying: “It could damage the procurement relationship.” If you are owed money, you are owed money.’
For Damian Bisseker, head of litigation, EMEA at Credit Suisse, the approach to disputes was very different. This is particularly true for a Swiss bank because of the nature of the relationships and the potential for conflicts of interest. He said the bank has had its fingers burned historically, where some parts of the business decided it would be a great idea to sue a counterparty, but another had a fantastic relationship that was devastated. If he wanted to bring litigation he would have to put a lengthy proposal together for the GC to sign off on.
‘There are large US shareholder actions where there is a pool of money and we may or may not have held shares or instruments at a particular time. If there is a particularly large potential recovery there, there may be a case for doing that. Generally, however, it is the absolute opposite. We are a burden to the bank financially.’
Reducing costs for a bank is a point that resonated with Tracey Dovaston, head of litigation, investigations and regulatory enforcement, EME at Barclays. ‘We focus our attention more on trying to reduce, diminish or avoid the costs associated with litigation more generally. That is where we can show that we are adding value for the business.’
Moriarty asked the panel about the extent to which in-house legal teams are tooled up in technology for conducting litigation and managing their casework. Dovaston said Barclays had invested in a more sophisticated case management system, developing it along with the team the bank had bought it from in a bespoke process. Now, at the touch of a button, you will know exactly what is happening on a particular case. ‘It means that the lawyers can spend more time on the casework rather than on just reporting.’
Tepo Din, EMEA head of litigation, enforcement and investigations at BNY Mellon, said reporting is a major issue for a large organisation. ‘I can pretty much guarantee, other than the formal reports that we have talked about, that at the end of a case – or even in the middle of a case – there will be someone senior somewhere who comes to me and says: “Why was I not told about this before?” It is just an inevitable part of working in a large organisation. The extent to which we can mitigate that is incredibly useful.’
He argued the next step is to invest in automation and to try to get the board to invest in the kind of system that improves reporting. Keith said that his priority is to try to make the case management dynamic: rather than producing a different report for a different person in a different format, have a central stack of data that an individual can cut in whichever way they want, rather than the legal team having to produce separate reports.
However, Bisseker warned against viewing greater efficiency in case management through artificial intelligence as a silver bullet: ‘There is a sense that, if we have it all laid out in nice, pretty bar charts, we will see where the problem is and we will have no litigation. I try to explain that it does not really work like that.’
Moriarty asked the disputes specialists the extent to which they get involved in advising on whether to arbitrate or litigate – and, if so, where – or is it decided by the commercial teams when drafting disputes clauses in contracts?
According to Keith, the decision is likely to be sector specific. In certain jurisdictions, he would want to consider arbitration rather than the courts or tribunals in those countries. Traditionally, BT has been keener – particularly given its UK roots – on the High Court. However, he can now see the benefit of the confidentiality aspects of arbitration, particularly in large-scale commercial disputes.
While Moriarty cited the benefits of enforcement under the New York Convention, Keith said there is still an institutional bias towards English law and English courts, and a tendency not to go down the arbitration route, although he noted he could not explain why. ‘To a degree, historically, we have had our fingers burned in arbitration in terms of inability to enforce in certain jurisdictions such as the Middle East and having to stump up the other side’s share of the costs. If you are doing an International Chamber of Commerce arbitration, those costs can be fairly substantial.’
Din said his team has to think a bit more about some of the more ‘exotic’ jurisdictional requests that it gets. ‘In an ideal world, I would like a situation where any proceedings were completely confidential and entirely predictable, which I know is never going to happen. Most of the time, however, the issues arise because the client insists on them arising.’
‘As a transatlantic bank, it is English law and courts, or US law – and maybe New York law or certain states rather than others,’ said Dovaston. ‘Where we have had litigation or arbitration elsewhere, it has been client driven. You have your experience in a country like Italy, where you could be in proceedings for up to ten years, going through the various courts. It always brings you back to thinking that we are probably better off sticking to what we know.’
Moriarty concluded by asking the panel the million-dollar question: what do each of them find most irritating about external counsel?
Unsurprisingly, billing remains a central issue. Bisseker noted that Credit Suisse has a small panel of firms, which generally know how the bank’s legal team likes to work so there are fewer issues than in the past. However, he added: ‘Firms that will send you no narrative at all, or a narrative which means absolutely nothing, so you cannot work out how much has properly been spent; overshooting estimates – these are real problems. Giving too high estimates in response to my complaint that you have overshot your previous estimate is even more annoying.’
Dovaston reiterated the well-trodden mantra that the days of hourly billing are numbered: ‘We are always looking for alternative fee arrangements, by which I mean effective fee arrangements. They do not necessarily have to be something rather alternative – they need to work. You are much more likely to get instructions from us if you have thought very carefully about billing generally.’
Keith said a particular bugbear of many is not receiving straight, short advice. ‘More cannot mean more in terms of volume communication: keep it short and punchy, and just give me the advice straight.
‘If a matter is complex, I am grown-up enough to understand it is complex. Just give me a view, because that is what my finance colleagues want. If you are wrong, that is fine, but just give me a view.’
The point was echoed by Dovaston who said a particular irritant for her is ‘when you ask for advice and you say: “This is going to someone very senior in the business and they are not going to have a lot of time to read this, so I would like a two-page summary,” and you get back a 20-page note saying: “There are lots of issues that are very difficult to assess, so I have set them all out, with a short summary at the end.” When you ask for a two-page note, you expect a two-page note.’
For Din, ‘surprises are the worst thing’ for an in-house lawyer. ‘When we instruct someone, we put a bit of faith in them. Try to work out enough about the business so that you come across as someone who has not just walked in off the street. At the very least, know the name of the CEO, if he is going to be in the room. That kind of thing is important. If you fail to do that, you have lost credibility. And it impinges on my credibility too.’
Stephen Moriarty QC Fountain Court Chambers
Damian Bisseker head of litigation, EMEA, Credit Suisse
Tepo Din EMEA head of litigation, enforcement and investigations, BNY Mellon
Tracey Dovaston head of litigation investigations and regulatory enforcement, EME, Barclays
John Keith chief counsel – UK commercial litigation, BT Group