Marco Lorefice, Edison Spa
This is an extract from the fourth edition of GAR’s The Guide to Advocacy. The whole publication is available here.
Advocacy – the art of persuasion
The role of advocates has always been that of convincing tribunals of the merit of their cases and advocacy is the methodology used to present their requests to tribunals. Written advocacy is used to draft the various submissions and oral advocacy is used at hearings for the cross-examination of witnesses and to deliver opening and closing statements.
Advocacy pertains more to the common law tradition than to civil law jurisdictions, though one should not ignore the fact that the first form of advocacy was created by Roman lawyers (advocatus) more than 2,000 years ago. At that time, the advocatus would represent the client before the tribunal but it was the orator who had the responsibility of presenting the requests of the client and convincing the tribunal to decide in favour of the client. Cicero was one of Ancient Rome’s greatest orators, though is often also considered to have been an advocatus. It was during this era that the first examples of advocacy took place, but since then, for various reasons, the tradition has been lost in most civil law jurisdictions.
In Italy, for instance, advocacy has become almost irrelevant. All civil proceedings are conducted exclusively in writing. All that matters is the legal reasoning and little credit is given to strategy or to advocacy. It is therefore easy to see how international arbitration in Italy is very different from the domestic proceedings that follow the same principles as civil litigation.
In the common law tradition, especially in the United Kingdom, this difference still exists: the barrister nowadays has a role similar to that of the Roman orator. In fact, in international arbitration, it is very common to see a barrister intervene at hearings.
A lawyer’s tone, style and skill in advocacy all still have an important role in international proceedings. However, one might also discuss whether all these qualifications need to be proven to show that a lawyer is a good advocate. All advocacy skills seem to stem from the formal approach taken by lawyers rather than relating to the substance of each case. We believe that advocacy should not prevail over the knowledge of the applicable law and of the rules that govern the proceedings, nor over analytical skills and the breadth of experience in the matter that is to be debated. In other words, an advocate with excellent advocacy skills could not necessarily be guaranteed a positive outcome to proceedings unless those skills are combined with a strong knowledge of the case and relevant experience.
There have been many cases in which advocates who do not demonstrate outstanding advocacy skills have achieved better results than lawyers who excel in terms of advocacy.
In fact, the decisions of tribunals are seldom influenced to any great extent by the exercising of advocacy but are focused rather more on the substance of the case. In addition, cross-examinations – which can last for several days – do not constitute a decisive part of the proceedings and are rarely taken into consideration by tribunals when determining their decision. Cross-examination could be considered the ultimate demonstration of advocacy. Indeed, there is an exception that confirms this rule. The most important cross-examination is that of the experts who explain the substance of the case to be decided. Substance is more relevant than form.
However, when in-house lawyers need to appoint external counsel to represent the company in any given proceedings, advocacy can make a difference.
Advocacy in any proceedings may or may not work. The importance of the advocacy skills, the style and the tone used by lawyers is most likely to depend on the arbitrators who form the tribunal.
It is the opinion of the author that there is a minimum standard of advocacy that is perceived in the arbitration arena as a must. However, there are lawyers who prefer to exceed this minimum standard and others, in terms of advocacy, who perform to a lower level. This does mean that there is a direct connection between the advocacy and the effectiveness of a lawyer. Some lawyers do prefer to take a quieter approach and rely on the strength of their case instead, although one might then question whether lawyers who rely heavily on their advocacy skills for the representation of their case are doing so because of the weakness of the case.
Ideally, there should be a balance between advocacy and the nature of the case. In other words, advocacy should be a part of the strategy for the proceedings rather than be used as one of the most effective tools. In-house lawyers generally prefer this approach, where the advocates engaged for the proceedings do not take the case too personally and become aggressive with the other party.
Tribunals will also appreciate this approach as they dislike confrontational hearings and submissions that go beyond the scope of defending the positions of the parties.
As an example, tribunals do not like cross-examinations where the witnesses are embarrassed or grilled only so that the lawyers can show they are in command or try to disqualify the witness. Tribunals tend to prefer moderate hearings. In a very poor case of advocacy, a lawyer was interrupting the witness continuously without giving him the chance to complete his answer to the previous question. In another case, a lawyer showed no respect for the witness and was intentionally making things difficult by misspelling the witness’s name when referring to him. After a while, his own party-appointed arbitrator warned him to refrain from such behaviour. In those proceedings, it was not a great result for the lawyer.
Advocacy can play an important part in the proceedings provided that the lawyers are able to use it conscientiously and by taking a ‘cold feet’ approach, which is to say that the merits of the case, and the legal and factual arguments supporting it, are always put up front.
In-house case management
The road to success or defeat in any proceeding will start from day one of management of the case by the in-house lawyers. Indeed, the selection of external counsel and of the expert, the appointment of the arbitrator, the availability of the documentation to support the case and the strategy defined at the outset of the dispute, will be decisive.
In this section, the role of in-house lawyers in proceedings and what makes the difference between good and poor management of a case are examined, as are other factors, including the role of advocacy, that will have an effect during the different stages of the proceedings as well as on the end result.
Then there is the matter of costs. To put a budget limitation on a case is unlikely to be of much help. A party must be prepared to spend whatever amount is needed to achieve a positive outcome in the dispute. Therefore, to begin an arbitration for a claimed amount below €10 million is not advisable even though, according to ICC statistics, this is the threshold in most cases: one-third of the cases under the administration of the ICC in 2017 were below €5 million and 50 per cent were below €50 million.
On the subject of money, it is worth mentioning third-party funding in international arbitration. In these circumstances, a third party would finance the claimant, rather than the respondent, for the legal costs of the arbitration against a return of between 20 per cent and 50 per cent of the amount of money received with the award, if any. This is a good solution only if the claimant loses the case and would not obtain anything from the award. In these circumstances, the legal costs would be borne by the third-party financing. This is why only about 4 per cent of the requests for third-party financing are accepted. However, there are other methods of self-financing that can be implemented.
One aspect of engaging external lawyers is whether the selected law firm can make part of its fees subject to a risk or reward scheme, whereby (based on certain agreed milestones), on the downside, the firm may lose some of its fees, or, on the plus side, gain more than the amount it would have been entitled to bill. Under these circumstances, the premium to be paid by a party in the event that the outcome of the proceedings has been very positive would be less than would have been paid to a third-party financing. From the negative point of view, of course, a party should bear the legal costs but at a considerable write-off for the external lawyers. This is a more realistic and equitable approach in terms of the risk taken. It also demonstrates the reliance of external lawyers on the case being made by the appointing party. Ultimately, the first criteria for selecting external lawyers should be their confidence in the case itself and in the likelihood of a positive outcome to the proceedings.
Other criteria relating to appointing external lawyers and putting together a solid team must also be taken into consideration.
The selection of external lawyers is one of the most important decisions to be made by in-house counsel. It is not an easy decision and it is key. Indeed, the legal services market offers a variety of possibilities and choices and there are various criteria that might be taken into consideration. Some relate to the costs, knowledge and experience relating to the nature of the dispute and of the specific industry, familiarity with the company, legal background, knowledge of the law of the contract and the law of the country where the dispute is based and the lawyer’s own track record. Each criterion may work in principle and at the beginning of the proceedings, but it is only during the course of proceedings and, in particular, if and when the award is issued that in-house counsel will know whether they made the right choice.
There is a general assumption in the in-house community around the appointment of the external lawyers for proceedings, which is that a good litigator should be capable of performing effectively in all jurisdictions, before any arbitration tribunal and in relation to all kinds of disputes relating to any industry.
This approach is based on the paradigm that through the advocacy skills of a lawyer, the proceedings could be run irrespective of the nature or of the industry of the dispute. Based on these principles, a lawyer’s approach to every proceeding should be to replicate and adapt his or her advocacy model. However, this approach instead requires the case and its merits to be adapted to suit the advocacy of the lawyer. The replication and adaptation of advocacy becomes the hub of the case.
In fact, it should be the other way around, that is to say the external lawyer should be capable of adapting his or her advocacy skills to the nature and the merits of the case, which should remain the focal point during the preparation of each stage of the proceedings.
It could be said that the ability of external lawyers to adapt their advocacy to the case rather than be limited to replicating a customary approach is one of the first checks that should be made by in-house counsel when selecting the external lawyer to represent the company in the proceedings.
However, there are also other criteria. It is the author’s opinion that is a pretty much essential that the external lawyer has direct experience of the industry of the dispute, and if possible of the particular sector of that industry. The legal world has undergone a process of a high level of specialisation during the past 30 years, and this process should also apply to the litigation sector. Another factor that should not be overlooked is the track record and the achievements of the external lawyers being considered. Finally, generalist litigators should not be preferred to those who have specific in-depth experience and knowledge of the area and the sector of the dispute.
Less important in rating lawyers are other criteria such as the legal background (e.g., common law or civil law) and specific knowledge of the law of the contract.
The second pillar for putting together a solid team by in-house counsel is the choice of experts, who are key in all proceedings, especially those relating to damages. They are frequently asked to assess the level of damages suffered by the claimant or to give an interpretation of the rights and obligations of the parties to a contract, which are technical in nature and which could not be addressed by the lawyers. Traditionally experts are chosen from consultancy firms. In some instances, however, lawyers may be engaged as experts to opine on foreign legislation or technical regulations.
The role of in-house counsel is to ensure that there is proactive cooperation between the expert and the external lawyers engaged for the proceedings. The reports drawn up by the experts often represent the core of the written submissions and the cross-examination of experts could be decisive to the case. It is therefore important that external lawyers are fully conversant with experts’ reports so that they can reflect their content in their own legal documentation and in preparing to cross-examine the other party’s expert.
The external lawyer who is not fully abreast of the expert’s report or does not consider it to be essential element in the process is the one who assumes that everything can be reconciled through advocacy. This attitude is likely to result in an outcome that is very different from the one expected by the party.
A third important task to be carried out by in-house counsels is to assist the litigation team to identify the arbitrator to be appointed.
It might not be easy as the advocates may suggest appointing someone who is considered a possible candidate owing to their experience without taking into consideration his or her experience in the specific industry of the proceedings.
It is a difficult decision and the result is likely to depend on the experience of the in-house counsel and on previous working relationships, if any, with the lawyers engaged for the arbitration.
In sum, in-house counsel have a decisive role in the proceedings. Indeed, their role is not only to put together a solid team for the proceedings and to assist the advocates in the selection of the arbitrator. One of the most important tasks is to ensure that all the documentation needed for the case is made available to the lawyers and to the experts. This can be more difficult than one might expect as businesses are often reluctant to produce or allow access to documentation that they consider to be ‘trade secrets’.
In-house lawyers also need to take account of the decisions made by the team and align them with the expectations of the company; ultimately, in-house counsel should have full control of the management of the case.
However, not all in-house counsel are capable, or desirous, of taking on such a position in the team. There have been cases where in-house counsel have preferred to leave almost all decisions to the external lawyers without exercising any form of coordination. It might be that same external lawyers prefer to assist a client without the ‘interference’ of the in-house counsel. However, there are two possible risks if this approach is taken by the external lawyers: (1) they will bear all the responsibility in the event of a negative result to the proceedings, and (2) the case will be managed in a less efficient way.
Advocates engaged to represent a company in any proceedings should consider the in-house counsel as a fundamental resource of the team, rather than as an obstacle to their advocacy.
The last role of the in-house counsel is to ensure that the team works as a single entity and to remind all its members that the case is not theirs but the company’s, which will ultimately bear the consequences of the management of the proceedings. This is very important: some external lawyers tend to consider a case their own, without taking into proper and due consideration the reasons behind any proceeding and the related plan of action of the client.
Subscribe here for related content, breaking news and market analysis from Global Arbitration Review.
Covering commercial and investment arbitration, Global Arbitration Review is the unofficial broadcaster for members of the international arbitration community, keeping them feeling up to date and informed.