On 22 May 2018, senior in-house counsel and private practitioners alike gathered in the Law Society’s Common Room to attend the In-house Counsel Litigation Conference, sponsored by Stewarts.
The first panel session was chaired by Anthony Peto QC of Blackstone Chambers and comprised: Martin Davies, Partner at Latham & Watkins, Octavia Knox Cartwright, EME Head of Litigation at Barclays PLC, Matthew Newman, Assistant General Counsel at Royal Mail and Damian Taylor, Partner at Slaughter and May.
The panel focused on managing complex disputes and addressed key challenges facing corporates. In doing so, it offered warnings, cautionary tales and pragmatic solutions when faced with a potential dispute.
The panel opened by remarking that one person’s challenge is often another person’s opportunity and, in particular, the evolving regulatory environment will inevitably lead to an increase in litigation.
The “perfect storm”
One panellist commented that there are a number of factors which lead to the conclusion that an increase in litigation is building, notably:
- Increased regulation. The most apt example given affecting both individuals and businesses is the European Union’s new General Data Protection Regulation (“GDPR”). For corporates working hard to bring their privacy policies in line with this new regulation, the GDPR carries with it risk of both regulatory and civil action. In light of the recent focus on social media giants such as Facebook, corporates must proactively manage the risks associated with the vast amounts of personal data they hold.
- Stronger consumer law and awareness of it. The EU’s New Deal for Consumers promises to promote stronger and clearer rights for consumers across the EU with particular emphasis on transparency, dual quality and substantial fines if corporates do not adhere to the new rules. These rules have been curated into user-friendly ‘factsheets’ on the European Commission’s website and with an increasingly switched-on consumer, litigation opportunities are expected to rise. The WM Morrison Supermarkets plc class action serves as a warning to all data-controllers that there can be vicarious liability for a data breach involving a rogue employee.
- Increased availability of funding. The panel noted that this is a vast and complicated topic. Put simply, the availability of external funding has meant that those who previously faced hurdles in bringing a claim can now secure funding to bring their claim. In the RBS rights litigation, four out of five of the claimant groups were funded.
A common theme that emerged during this panel session was the existence of technology in the legal sector and how the legal profession is currently utilising it.
There are many risks online and this is indicative of a broader global change. It is, therefore, imperative for companies to closely monitor their relationships with cyber suppliers and the nature of those contracts, and understand the extent of their liability. Under the GDPR companies must think both as data controllers and data processors and must choose wisely when outsourcing to processors.
The panel remarked that many of the technological issues can be dealt with under existing laws but as the advancement in technology outstrips developments in the law, lawyers need to work hard to close the knowledge gap. Lawyers, assisted by experts, need to arrive at a universal language that is easily understood by the public, their clients and indeed, the judiciary, who are also learning as technology advances.
Smart contracts – the future?
Another panellist talked of smart contracts and intrigued the audience with their views on the use of technology in the legal industry. Essentially, smart contracts are self-executing contracts, which often negate the need for the drafter or the negotiator (ie the lawyer). Just like cryptocurrencies, they have their problems, but it is thought that they will become more mainstream in years to come, particularly in transactional businesses.
With their in-house hat on, one general counsel welcomed automation, particularly when applied to more menial tasks such as bundling and pagination. However, they thought lawyers could do more and owed it to their clients to be pro-active when considering the use of technology. They emphasised that automation is not something to be feared amongst lawyers, reminding the audience that humans train the systems and lawyers should embrace the opportunity to upskill.
In times of crisis, it is more important than ever to coordinate the right team – one that is well-equipped to help. Another panellist led the discussion and, in particular, focused on how to cope in the first 24 hours. They recommended when faced with a crisis to “think senior and small”. Ultimately, you need decision-makers to enable you to triage the issues.
Another panellist added that the English court offers a wide range of injunctive relief, which should not be overlooked. They advised having a kind of emergency ‘999’ chat with a specialist who will be able to advise of the options, should a company need this kind of relief.
The panel reminded the audience that corporates are not just facing ‘traditional’ frauds, such as money going missing. Other examples include: financial institutions exposed to dawn raids by regulators, internal governance and matters relating to whistleblowing, bribery and accounts manipulation. All of these can result in a crisis. They cautioned that if there is an internal suspicion it may not be wise to confront a person immediately: think twice and act on a ‘need-to-know’ basis.
Lawyers must also be aware that in-house counsel have to protect the business, but also consider protecting the brand and the goodwill of the company. One speaker stressed the need to consider whether to consult PR or communication specialists, either internally or externally, as well as instructing external lawyers to manage what is a particularly sensitive and specialist area of law.
Before the board
One participant shared their experience of working with a selection of advisors. They emphasised the importance of communication and regular internal reporting, particularly during a long-running dispute. To lawyers, it is understood that disputes can develop over several years but lawyers must be ready to explain why this is the case to CEOs and other members of the senior management team, particularly within corporates that have a political agenda.
They remarked that there are many stakeholders that need to be kept appraised and, when considering which lawyers to instruct, it is prudent to ask oneself how comfortable one is with placing a particular QC or legal team in front of the board of directors. After all, the court room is a very different environment from the boardroom.
Interested in attending next year?
In-house Counsel Litigation Conference 2018