It’s a given. In-house lawyers and risk officers want to avoid time in court at almost any cost, but in order to achieve that, they need to deal with dispute resolution as effectively as possible.
But how – and when – should in-house teams be involved in contract drafting, negotiations and arbitration?
Jenner & Block London partner Charlie Lightfoot and New York partner Brian Fischer hosted a roundtable at The Lawyer’s Managing Risk and Litigation conference last week.
“Making sure you have a clear route to enforcement is the main deterrent for disputes,” Lightfoot explained. “This is an exercise in negotiation. You can put in place parameters [ahead of signing a contract] to identify which areas are likely to be more problematic.”
Chance to shine
This is an occasion where the in-house litigation capability can truly shine. “Many of these contracts have been negotiated without litigators who have been through the battles and know where the bodies are buried,” Fischer commented.
Litigators can weigh whether their company is the likely party to have to pursue payment, and introduce measures such as damages caps within contracts and avoid potential disputes being “a thundercloud hanging over the business for a very long time”.
“Look at who is sitting across the table, where they are based and their assets. Make sure you have a counterparty of substance” Charlie Lightfoot
“Look at who is sitting across the table, where they are based and their assets,” Lightfoot explained. “Make sure you have a counterparty of substance. Make sure that if it’s not an entity that is here today and tomorrow, that there are some guarantees as insurance.”
Arbitration
Arbitration and the inclusion of mediation within contracts may be a valuable tool for getting a glimpse at the other sides’ playbook, but it can also be used as a delay tactic from the other side.
“Where it is mandatory it doesn’t work,” Lightfoot said. “It can be a chance for delay, and the person who drafted it [into the contract] may have done it in their own interests. However, when both parts are there voluntarily, it works.”
Fischer agrees. “You learn how they are presenting too. You learn about the stubbornness and tendencies of the other side and whether there is going to be a settlement.”
Following the Brexit vote, many of the processes taken for granted in disputes may drastically change. Some lawyers have been putting Brexit clauses in contracts to ensure that disputes would be held in English courts but should it leave the Lugano convention it would go to arbitration.
“The trick isn’t whether it will be enforced in English law, but whether it will be enforced in the jurisdiction,” Lightfoot said. So far, it’s wait and see.
Click to find out more about the event
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