Given the significant costs and challenges associated with cross-border litigation, it is critical for companies to implement a strategic plan to address these disputes as early as possible. Delegates at LACCA’s regional meeting in São Paulo discussed the importance of conducting early case assessments, getting the right resources on board and properly understanding local culture to successfully manage the most complex cases.
Many GCs will be comfortable managing their domestic litigation because they understand how the process works and because the risks they face will be more predictable. However, when it comes to handling disputes abroad or across multiple jurisdictions, the litigation landscape becomes much more uncertain and difficult to manage.
Companies faced with a cross-border dispute will, therefore, have to navigate differences not only in the substantive law of each jurisdiction, but also its procedures, culture, language and the legal environment in which lawyers practise, not to mention the local political and economic factors that one might encounter. In addition, litigation is expensive, and cross-border litigation invariably costs more, so how can legal departments manage these cases as efficiently and effectively as possible, particularly in a company that has dealings all over the world?
Early case assessments
Conducting an early case assessment (ECA) is the first step when dealing with a cross-border dispute. ECAs are simply a systematic way for the legal department to thoroughly gather, analyse and review data about pending or potential litigation to make informed decisions about how to proceed.
“Given that the case is going to be disputed in a number of jurisdictions, it is essential that the in-house counsel conduct a proper initial assessment of the case in order to put together a plan with all of the necessary steps and measures that must be taken,” says Eduardo Palinkas, head of legal for Brazil and senior litigation manager for Latin America and Canada at IT multinational Hewlett-Packard Enterprise. “You need to treat a complex dispute like a project rather than a process, so you can put together a strategy rather than simply following procedural steps.”
Panellists discussed the benefits of analysing the dispute from legal, political, and regulatory angles, thinking holistically about how best to solve the problem, highlighting that not every legal problem can or should be solved through litigation or arbitration. GCs should also make sure the strategy takes into account local realities, and that they have reliable facts and the right advice from which to base their assessment. “Understanding local culture is absolutely crucial,” says Maria Helena Bragaglia, partner at Demarest Advogados. “When it comes to disputes outside of your own jurisdiction, you have to deal with lawyers from other countries, different legal systems and ways of conducting business, so it is important that you familiarise yourself with the differences in order to adapt and respond accordingly or to obtain the best results.”
Evaluating the details of the case and local business and legal environment is also crucial in helping GCs develop a more fulsome litigation strategy, including how best to defend the company and any potential settlement options, but it will also help to identify the resources you need for the task. “By conducting a strategic analysis of the case before you start, you will be able to identify exactly what resources you need on the team,” says Gabriel Costa, managing counsel for litigation in Latin American at global oil company Shell.
It is also especially useful to look at each dispute multidimensionally to formulate the best strategy. It includes an assessment of the business goal at stake, the likelihood of reaching that goal, the cost of doing so and the involvement of management in getting there. “Some cases will need a multidisciplinary team, but others might not. If something requires purely legal expertise, it’s worth thinking about whether or not you should involve other executives from the business and take up their time,” Costa explains. “However, if a case requires knowledge of a specific business or operational aspect it might result in the need for others to be involved.”
Once GCs have a clear understanding of the value and scope of the case, the next step is to put together the best team for the job. Effectively managing cross-border litigation requires law firms with a comprehensive knowledge of local law, procedure and market conditions, but also those skilled at combining that knowledge with broad international experience. “It is fundamental that the firm has international scope,” says Costa. “The firm does not necessarily need to be an international firm, but here must be some international expertise or links with firms elsewhere from law firm networks.”
While hiring a firm with an international scope is important, sometimes it can be much more efficient to use local firms with more specialised expertise, according to Palinkas: “As a US multinational, HPE have agreements in place and relationships with a number of international firms, principally from the US, that are highly competent in cross-border litigation, but given the idiosyncrasies that form part of Latin America, sometimes it is better to use local counsel for quicker results when specific expertise is needed.” He goes on to provide an example of a case he handled for HPE relating to maritime law and products coming into Brazil from Asia, instead of going for the firms the company usually hired, he ended up using a small local firm in Santos that had the specific expertise and the case was resolved in one week.
Hiring advisors who thoroughly understand the local environment is crucial, but relationships are equally as important when facing complex cases. “A strong relationship is the fundamental priority when choosing which firms you’ll work with,” says Palinkas. Shell’s Costa agrees and suggests that it is a lot easier to rely on firms that he has a strong relationship with and those that he trusts thoroughly get the business and its ultimate goals. “It’s very easy for us to understand how the structure of a law firm works, but it’s not the same the other way around – firms do not have the same visibility, because every company will maintain a difference structure,” he says. Given that the structure of in-house teams will be different in each company, law firms who have the sensibility to truly understand how their clients operate and adapt their services to provide the most efficient and value added services for clients to facilitate the work they do, are those that differentiate themselves in Costa’s opinion. “I value long-standing relationships above other things,” he says. “It doesn’t mean I’m not going to hire new firms now and then, but loyalty pays off in the end.”
The formation of a team that is engaged, properly qualified and experienced is going to make all of the difference in the successful outcome of a dispute, but it is also just as important to define leadership early on. Indeed, given the pressure and unpredictability of complex cross-border disputes, the principles of project management can and should be applied, according to Palinkas. “I’m a big fan of project management and having a project manager in place,” he says. “When it comes to a complex dispute that involves different areas of the business and different jurisdictions, it is important that you have a broad view and the oversight of people who are not from the legal side of things is fundamental for me - you need a diversity of point of views.”
For Costa, leadership should be defined according to the company structure as well as the complexity of the specific case or dispute. “I think it all depends on the complexity of the case. If it makes sense for me to have my litigation counsel working mainly with the law firm to define strategy and I also have a lawyer who was involved in the deal, then it would work to have them lead specific areas,” he says.
When it comes to the higher value or more complex disputes it can be difficult for one person to oversee the entire case, so some teams prefer to spread the responsibility of leadership across the team, particularly when there are often a number of different teams working on the issue. “I have worked with some companies that have sub-leaders for each area, in addition to the leader, so that there can be some accountability in each area,” says Demarest’s Bragaglia. By the same token, it is also important for external counsel to take the lead in certain aspects according to Palinkas: “there will be areas where external counsel are better suited to take charge. I want them to be proactive and take the lead where they can and come up with ideas,” he points out.
GCs at the meeting agreed that it can be useful to divide leadership and spread accountability to obtain the best results, but Costa believes that the in-house team should retain overall oversight of any litigation case, particularly since they retain the most in-depth knowledge of the business, its culture and its ultimate goals. “The in-house lawyers should always be in charge,” he says. “At the end of the day, the GC is part of the business and is involved in it, he cannot hide behind a legal opinion and must take ownership of the issues. We have the privilege of working with fantastic law firms that understand our modus operandi, but ultimately the in-house counsel will be accountable.”
Finally, while defining the scope of the dispute, the resources tasked with managing it and who will take the lead are the most important steps to take when looking to manage complex litigation across borders, overall success will likely be dependent on good communication. “Most of the time, we are managing cases that involve other areas of the company that are based in other jurisdictions – which means we have to conduct the case remotely, so you must establish an open line of communication, whether it be with local in-house teams, external service providers helping the company or with all of the stakeholders involved inside and outside of the organisation,” says Costa. “Communication for me is the most important step to successfully managing cross-border disputes.”