Vanessa Ip summarises a recent roundtable on global litigation and key considerations for in-house counsel

The increasingly global nature of commerce and the rapid expansion of multinational trade have had a profound impact on the way international business disputes are resolved. Globalisation and the economic downturn have presented greater challenges for litigators in recent years, which include the management of international disputes in challenging jurisdictions and greater regulatory and compliance concerns, as well as the ongoing and ever-present debate over case and cost management.

These issues, based on a broad market survey of more than 200 in-house lawyers from this year's Litigation Benchmarker Report, were discussed at a roundtable in conjunction with Hogan Lovells last month (29 March). Delegates covered a range of litigation-related topics including the shifting role of the general counsel and in-house function, nuances of various international jurisdictions, cost control and the rise in legal process outsourcing (LPO).

GCs' rise in power

There has been a marked upsurge in regulatory disputes across a number of areas in the past year. Commercial and contractual disputes were selected by 39% of respondents as the area that has seen the greatest rise in litigation, followed by regulatory (34%), employment (29%) and fraud/bribery (26%).

According to Hogan Lovells' global head of litigation Patrick Sherrington, the increase in disputes is "hardly surprising, considering the increase in regulations companies must now comply with". An increased fear of regulatory oversight, coupled with the recession, has arguably elevated the position of general counsel in a trend that is seeing companies make greater use of their in-house resources.

Fifty-three percent of respondents reported an increased need to advise their board, with 28% also seeing an increase in their litigation budgets in the last year. Moreover, a quarter of respondents said that they were handling more disputes in-house. While GCs are becoming an increasingly valuable resource within their companies, less than half (40%) currently sit on the board.

Jonathan Pearl, corporate vice president and GC at Sony Mobile Communications said: "Any well-run company will have huge respect for their general legal counsel. Whether or not they should be on the board, however, is debatable, due to the conflict issues to which it gives rise."

International disputes

Being able to think and act globally is becoming an essential function of in-house counsel as companies continue to face more multinational disputes. Forty-six percent of respondents reported an increase in cross-border litigation cases, particularly in the US and developing markets in Asia and the Middle East.

Jurisdictions that respondents felt were most difficult to litigate in include Italy (at 36%) followed by France, India, Middle East and China. Philip Scourfield, associate GC at British American Tobacco, is familiar with the Italian court system. He said: "Local [Italian] law firms have a different approach to billings. They usually agree very modest fees for cases which tend to go on for much longer. It's an utterly different business model to the one that is adopted in New York and London, where it's a cash machine and you need to charge hourly rates."

The undeniable force that is China was recognised by 27% of respondents as one of the top five most challenging environments to litigate in. Pearl, who is accustomed to litigating in China for Sony Ericsson, commented: "People who are fearful of doing business in China are going to have concerns. Generally, Chinese courts are sympathetic to people who have made investments in China and they are becoming more sophisticated. They are recognising that they have to accept the third party intellectual property rights. We've had a good time in China. It is of course nowhere near as predictable as London, but it's streets ahead of where it was 10 years ago."

Knowledge of the relevant legal system, language barriers, cost controls and conflicting legal systems were the most popular challenges identified in managing multinational disputes.

Innovation

The emphasis on being more cost-effective and innovative will always be at the forefront of any business discussion. While 80% of respondents felt that their law firms lacked innovation and flexibility in their approach to costs and case management, there does appear to be a growing acceptance of alternative approaches such as outsourcing and offshoring.

Sherrington argued that the will to be innovative is there on the part of City firms. He said: "We know we have to be cost-efficient and look for ways to cut costs, but you can't cut corners; this is particularly critical for PLCs and listed companies which have reputations to protect. I'd be quite interested to know what else we could do to ensure take-up by clients, because there is a whole range of innovative ideas that we have canvassed over the years; I don't think we're not aware of them and I don't think we're not willing to consider them."

British American Tobacco was one of the earliest corporates to embrace LPO. It is a model that Scourfield champions, given the realities of legal practice as we know it today. "Litigation lends itself very nicely to outsourcing as so many elements of a law firm's practice do not actually involve providing legal advice.

"There is a challenge for law firms in that they must figure out what business they truly are in. So many of them want and aspire to be providers of the highest level of advice where they bring in the top lawyers from the top organisations and remunerate accordingly. But the reality is that not every legal problem needs that level of attention and skill."