The world is flat, or so we hear. For many risk managers, the globe is an expanded stage on which to tame a wide spectrum of perils and challenges. One of these is litigation and the need to manage it internationally. Liability lawsuits cut across global boundaries. Regardless of whether or not the risk manager’s company has insurance, managing litigation on global footing can be a daunting task.
Risk managers who establish litigation management systems to address lawsuits in other countries face multiple challenges, including:
- Cost - Rates that firms would never consider paying in the U.S. are standard in other countries. Since clients often must make counsel retention decisions fast and the risk manager’s buying leverage is modest, there may be less chance to negotiate favorable hourly rates.
- Investigation - Witnesses and documents are not readily available. Locating witnesses and key documents may be more time-intensive.
- Communication - Bridging cultural barriers within the company and with outside claim vendors and law firms can be tough. Language barriers are just one complicating factor. Others include work habits and procedures of courts in other countries.
- Culture and training - Another hurdle is identifying and training non-U.S. resources and vendors to assist in claim and lawsuit defense.
Certain bedrock principles apply regardless of whether you manage claims and litigation within the United States or in other countries. Those overseeing litigation must understand the company’s business. The risk manager must see that—when it comes to claims-handling and litigation defense—the company has the right people in the right roles. That includes establishing and nurturing positive relationships with key constituents. The latter include counterparts within the organization but also encompass key external constituencies such as law firms and claim administrators.
Because of the cost of managing litigation in far-flung locales, the risk manager must develop and institute core case-management and cost-control processes. Further, risk managers must articulate to key vendors the company’s risk, claims, and litigation management philosophy.
Talent Recruitment
It is challenging to recruit capable defense lawyers. First, distance is a barrier. When selecting counsel in the U.S., clients can more readily meet with and interview candidate firms. In fact, the client may find that—at the pre-retention stage— attorneys are willing to travel to client and position themselves for assignments. Such is rarely the case with firms in other countries. Even interviewing prospective counsel by phone can be problematic, because of language barriers.
In the U.S., if one law firm quotes what is seen as a high hourly rate, then prospective buyers have multiple options to “shop around” and get a better deal. This is tougher to do in foreign jurisdictions, where the competing firms may have no knowledge of the risk manager or his/her company. Buyers do not have the same bargaining leverage as they wield in assigning “local” cases.
Adding to these challenges is the fact that the decision to engage counsel is often made under time pressure. Risk managers scrambling for suitable foreign counsel may not have the luxury for a thorough, measured search or to negotiate the best deal. They are often under the gun to assign a case and protect the docket.
In managing litigation internationally, the risk manager must acknowledge myriad challenges. One is to know where the location and identities of the company’s defense lawyers. Again, language and cultural barriers abound. In-house counsel will be more familiar with the corporate culture than outside counsel. The risk manager must also factor in dissimilar legal training and background between attorneys practicing internationally and those practicing within the United States.
Additionally—particularly in product liability and operational matters—risk managers must make sure that international counsel are thoroughly knowledgeable about the company’s products and services. These may not necessarily be identical in global markets. Different versions may be available in different countries. For example, a car manufactured by Company X in Brazil may not be the same car that the company manufactures in, say, Germany.
Further, the risk manager must understand differences in laws and the relationship between judicial processes and governments in international settings. Many throughout the world still view the United States litigation system as extreme and distanced from government regulation. In other countries, however, the government acts not only as a regulator but often as a potential business partner or investor.
Whether one manages litigation within the United States or internationally, it helps not only to know yourself but also know your opponent. In the context of international litigation, a risk manager should try to determine whether he or she is facing an organized plaintiff’s bar and if the cases are being funded by contingent fees or alternative funding sources.
Establish Rapport Now
Building relationships with key partners ahead of time greatly enhances the ability to manage litigation internationally. Identifying and building relationships with key partners includes local company management, significant suppliers, key business partners, and governmental/regulatory constituencies. Perhaps most importantly, the risk manager should develop and coordinate legal resources before lawsuits arise. This coordination net includes local or regional in-house counsel, local or regional outside counsel, and foresight with regard to global coordination of strategies, core processes, and so on.
As in the case of litigation management within the U.S., the same truism applies to international litigation management: “Dig your well before you are thirsty!” The time to search for qualified and reasonably priced legal counsel is not when you are under the gun, with a time-sensitive assignment. The time to search and select is before reaching this state. Bargaining power crests when you can take your time. If you are in a time-bind, then law firms abroad can more easily adopt a “take it or leave it” stance when it comes to hourly rates, billings, retainers and which parts of your litigation guidelines they will accept and which they will not. While many firms are reluctant to pay up-front retainers to U.S. counsel on legal matters, law firms in international venues may demand such payments as a condition of accepting an assignment.
Therefore, be sure to establish and grow relationships in advance of a need or crisis arising. This might mean “face time.” It might mean regular conference calls to discuss legal developments in different parts of the world, legal developments that bear upon your company’s operations. Look for international legal counsel with deep expertise in the areas where you anticipate your company needs representation or advice. This could be in the realm of intellectual property, product liability, or labor relations.
Visitors to Disney theme parks can take a boat cruise called, “It’s a Small World.” Passengers along the ride see over 300 costumed animatronic dolls, singing a message of global peace. Risk managers facing international litigation can embark on a bumpy or a calm course, depending on whether they take proactive steps to facilitate the journey. Implement these preceding tips, and the ride may not be enjoyable but will certainly be smoother.
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