The International Who’s Who of Commercial Litigators has brought together Alan Salpeter of Kaye Scholer, Des Williams of Werksmans Attorneys and Elizabeth Barrett of Slaughter and May to discuss the rise in popularity of alternative dispute resolution, levels of litigation, areas of activity and the impact of technological advancements on court processes.
Kaye Scholer LLP
Litigation Versus ADR
Many lawyers we spoke to commented that clients are increasingly opting for alternative dispute resolution methods over litigation. What is your experience with clients? Are as many cases reaching court as last year or are cases settling earlier?
Alan Salpeter: Over the past five years, clients have become more and more sensitised to the overall cost of resolving disputes, which has several components. One is the cost of outside counsel; another is the cost of experts; another is the cost of the time of the client’s executives and its law department; and then, finally, there is the out-of-pocket costs of e-discovery (which is huge), depositions, travel and the like. What has happened is that clients are seeking the most cost-efficient way of resolving the disputes. Sometimes this drives the client towards alternative dispute resolution, such as arbitration or binding mediation. Sometimes it drives the client towards litigation without extended discovery. We have experienced all of these scenarios. Fewer cases are going to trial, but there are still disputes that are being fought hard – either in the courts or in ADR. Because clients are so sensitive to costs, they are deciding more and more to use fixed fees, capped fees and other alternative fee arrangements. It is the overall costs to the client that is driving the decision – not whether to litigate, arbitrate or mediate.
Des Williams: Alan Saltpeter’s comments are, in many respects, also apposite in South Africa. Clients are sensitive to litigation costs and will generally explore all alternative avenues before resorting to litigation. There is a high level of dissatisfaction arising from inefficiency and delays in litigation, and this has led to increased demand for alternative dispute resolution services (particularly arbitration). The popularity of arbitration has been seen, in some quarters, as an indication of a lack of confidence in the courts and as an impediment to the transformation of the judiciary. However, there is now a broader acceptance of arbitration and it is widely expected that long-awaited reforms of existing South African arbitration law will soon be implemented. It is expected that these reforms will further stimulate the growth of domestic and international arbitration in South Africa, and will facilitate the development of South Africa as a regional arbitration centre. Our experience is that fewer cases are reaching court. This is largely because more concerted attempts are being made by litigants to settle matters at an earlier stage.
Elizabeth Barrett: Statistics issued by the Ministry of Justice and by mediation providers suggest that in the UK the number of civil trials has fallen in the last five years and the number of mediations has increased. However, as these statistics include claims of all values, it is difficult to say whether smaller or larger cases are driving this trend. We have not seen a marked focus over the past year for or against ADR – our clients look to us to identify practical and cost-effective ways of resolving their disputes, and for decades ADR has been an item on that menu. Respect for the English courts remains high and skilled practitioners can obtain speedy and effective litigation solutions from the courts including by use of game changing interlocutory applications. As in the US, however, there are concerns about the cost and management time taken by the disclosure process – with electronic disclosure a particular burden. This has resulted in recent changes to our civil procedure rules on disclosure with options available to the courts and parties to limit disclosure.
Levels of Litigation
As economies around the world start to recover, do you expect to see your levels of activity affected? Are there still crisis-related cases?
Alan Salpeter: There are still some crisis-related cases, but they mostly pit large financial institutions against other large financial institutions. Many large, conventional law firms are conflicted out of these cases. Many establishment law firms will not sue large financial institutions, banks, brokers and accounting firms. Beyond that, as economies start to recover around the world, the willingness to litigate and spend money on resolving disputes will also recover somewhat.
Des Williams: We are not seeing many crisis-related cases. However, we do expect to see levels of activity increase in the areas referred to below.
Elizabeth Barrett: The global economic crisis has, in particular, contributed to an increase in cases in the insolvency, financial, fraud and professional negligence arenas. The reaction to the crisis has included changes in regulatory rules and focus; stricter regulation and a trend towards personal accountability for directors seem set to stay. Commentators are predicting a growth in crisis related cases this year as limitation periods expire – whether or not that happens, we expect ongoing high levels of activity in the disputes arena.
Areas of Activity
Which industries have seen high levels of disputes in the last 12 months? Are you seeing more regulatory proceedings?
Alan Salpeter: While we don’t have all the data in front of us, it appears that product liability cases are still running at high levels. Pharmaceutical companies and technology companies are being sued. Companies that make chemicals and oil-based products are being sued. And there is still a high level of IP litigation. There is an abundance of employment-related litigation and disputes over non-competition and non-solicitation agreements. Obviously, the SEC has become very active in the past year suing major financial institutions (and individuals) for fraud arising out of the financial crisis. Consumer class actions are still being filed at a healthy pace. Bottom line: creative plaintiffs’ lawyers always find new theories and cases to file.
Des Williams: We are seeing an increasing level of activity in a number of areas. There have recently been significant developments in South Africa in relation to class actions, and we are seeing significant class action litigation in the gold mining industry. We also expect to see increased class action activity in other areas, particularly where claims arise from findings of collusion and price fixing made by the Competition Commission. We are also seeing high levels of litigation in relation to a broad range of mining rights issues, and we expect that this will continue. We have also seen more regulatory proceedings, including significant litigation in which decisions made by regulatory authorities are being challenged. We also expect increasing activity in relation to large infrastructural, mining and energy project disputes.
Elizabeth Barrett: London, and in particular the Commercial Court and the London Court of International Arbitration, continues to be viewed as one of the most favoured destinations for resolving complex high-value international disputes. Here too, class action claims in the financial services and competition arenas are on the increase. On the regulatory front, our global investigations group remains extremely busy.
How has technology affected court proceedings in your jurisdiction? Has it sped up court processes? And if so, are there plans for further use of technology?
Alan Salpeter: Technology has definitely affected court proceedings in the US District Court for the Northern District of Illinois. Our federal district court and appellate court are extremely efficient at delivering decisions and schedules electronically. It has made the entire litigation process much more cost-efficient. There is very little “hurry up and wait” with respect to our federal court proceedings. Many of our judges allow participation by phone, and many of them only schedule court appearances when it is absolutely necessary to hear from the parties. Our courts in the Northern District of Illinois realise that time is money – especially for clients.
Des Williams: South African courts have not kept pace with technological developments in other countries. There are plans for the effective use of technology to speed up court processes but, at this stage, minimal progress has been made.
Elizabeth Barrett: Technology has greatly assisted the efficiency and management of court proceedings in the UK. For a number of years it has been possible to issue and to continue certain proceedings electronically in many of our Courts, including the Commercial, Bankruptcy and Companies Courts. This Electronic Working Scheme operates 24 hours a day including at weekends and public holidays (subject to occasional downtime for system maintenance or failure). Electronic document management systems and review platforms are widely used in large-scale litigation and disclosure is typically produced in electronic format. Real time electronic hearing transcripts have been used for many years and increasingly trial bundles are now produced electronically.