Firm Outlines Top Issues in Litigation, Regulation, and Business Law Facing Businesses Operating Globally
LAWFUEL – The Legal Newswire – January 7, 2008 (New York, NY) – The International Practice Group of Proskauer Rose LLP, an international law firm with more than 750 lawyers worldwide, has released its “2008 Trends and Developments in International Legal Practice”. The Report forecasts and analyzes the most significant legal issues currently facing businesses operating globally, focuses on the practical implications of these trends, and discusses best practices for dealing with them over the coming year. The Trends Report follows the highly successful launch of “Proskauer on International Litigation and Arbitration: Managing, Resolving, and Avoiding Cross-Border Business and Regulatory Disputes,” the firm’s e-Guide on international litigation, proceedings, and practice.
“The accelerating pace and increasing complexity in each of the three major areas of our focus – international litigation and its alternatives, regulatory and investigative proceedings, and transactional and corporate practice – demand constant vigilance by clients and other companies in the international sphere”, said Louis M. Solomon, Co-Chair of Proskauer’s Litigation Department and Editor-in-Chief of the Proskauer e-Guide. “We track these trends and developments and will continue to offer our observations to our clients and interested practitioners so that businesses can prepare themselves and adapt.”
How to deal with these and other important trends will be addressed in forthcoming updates to the Proskauer e-Guide, as well as by Proskauer’s International Practice Group at its Major Trends Conference 2008, being held in Paris in Spring 2008.
Among the most significant trends identified by Proskauer’s International Practice Group are:
• Increased litigation of international controversies in the United States. In the last five years, there has been an increase in attempts by parties operating in international commerce to gain access to US courts to resolve disputes. Despite some noteworthy developments to the contrary, the IPG forecasts that this trend will continue, particularly in relation to forum-related issues such as personal and subject matter jurisdiction, venue, and choice of law. The Trends Report concludes that it is imperative that companies operating internationally consider the complex challenges and opportunities of simultaneously managing litigation in the US and elsewhere, including issues of privilege, evidence-gathering and taking, going to trial in the US, and how to structure legal relations and deals and to manage disputes with a keen eye to enforcing, or successfully resisting enforcement of, awards and judgments.
• Increased use of alternative dispute resolution techniques other than in-court litigation and international arbitration. With in-court litigation and arbitrations being seen as too costly and protracted, many clients are increasingly turning to other systems of dispute resolution. The Trends Report sees this on a large scale for disputes affecting large numbers of businesses or individuals. The rapid expansion of mediation techniques, staged claims procedures, and “rent-a-judge” programs will continue apace in 2008.
• Increased risk faced by international companies of simultaneous, coordinated regulatory or enforcement proceedings in multiple countries. The Antitrust Division of the US Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC) continue to be very active in investigating and prosecuting alleged international antitrust and securities violations. The advent of multiple proceedings increases the risks to companies operating in international and global markets – a phenomenon equally prevalent for US-based clients and for clients in Europe and Asia. As of November 2007, for example, the DOJ reported that there were 56 sitting grand juries investigating suspected international cartel activity, which accounted for over 40 percent of the DOJ’s ongoing grand jury investigations. Meanwhile, US regulators are increasingly working cooperatively with securities and antitrust authorities in numerous other jurisdictions and regulators outside the US are taking a more active role in investigating and punishing various types of anticompetitive behavior. The result is that international entities are facing more parallel investigations, cooperative investigations, and, in many cases, joint investigations by the DOJ or SEC and regulators in other jurisdictions, while US entities will likely have more than just the DOJ or SEC to contend with. The Trends Report predicts that these efforts will intensify in the coming year, as will the consequential phenomenon of follow-on private or class action litigation in the US and elsewhere and associated internal investigations based on the same allegations as the regulators are investigating.
• The continued (albeit lamented) “Americanization” of non-US legal systems. This trend will continue in 2008. Noteworthy examples include:
o The advent of collective litigation (class actions) in Europe. Europe’s legal framework is beginning to adopt the US approach to litigation of individual claims in a collective or class-based system. Even as the European Union considers measures to facilitate such lawsuits, the threat of international litigation grows. The risk of these types of actions is most pronounced in the areas of product liability, competition, intellectual property, and shareholder rights/corporate governance.
o Proposed reforms to civil law on remedies available to civil litigants. The reform of contract law in Europe is likely to continue. One particular area of focus is in France, where a preliminary draft of reforms to civil remedies is being considered, among them the introduction of punitive damages. Should this become law, many other civil law jurisdictions, both in the EU and worldwide, will likely see fundamental changes in the manner in which lawsuits are brought, defended, and resolved.
• The ramifications of the subprime mortgage crisis and accompanying credit crunch in the context of the drafting, enforcement, and resolution of disputes over MAC clauses. The Trends Report forecasts that the trickle of litigation stemming from the write-downs that big banks have taken on their portfolios, the cross-border cash infusions that have resulted, and the impact in the mergers and acquisitions sphere, where financing has dried up, will soon be a torrent. Affected companies must brace themselves for the ensuing litigation and regulatory proceedings. Relatedly, in addition to the drying up of financing for acquisitions as a result of the fallout from the credit crunch, some buyers have asserted material adverse change (MAC), with some then renegotiating deal terms such as purchase price and alternative investment transactions, and other deals going into litigation. This trend is extraordinary and unresolved – MAC is typically a pro-seller standard, but there is relatively little case law regarding it, leading to uncertainty as to the outcome of related litigation. As the Trends Report observes, many private equity acquisitions effectively capped damages at two to three percent of purchase price through a reverse breakup fee, adding to buyer leverage in negotiation. There is likely to be increased in or out-of-court dispute resolution activity in this area in the coming year.
About Proskauer Rose
Proskauer Rose, founded in 1875, is an international law firm providing a wide variety of legal services to clients throughout the United States and around the world from offices in Boca Raton, Boston, London, Los Angeles, New Orleans, New York, Newark, Paris, São Paulo, and Washington, D.C. The firm has wide experience in all areas of practice important to businesses and individuals including corporate finance, mergers and acquisitions, general commercial litigation, corporate governance matters, conducting internal corporate investigations, white collar criminal defense, private equity and fund formation, patent and intellectual property litigation and prosecution, labor and employment law, real estate transactions, bankruptcy and reorganizations, trusts and estates, and taxation. Its clients span industries including chemicals, entertainment, financial services, health care, information technology, insurance, internet, lodging and gaming, manufacturing, media and communications, pharmaceuticals, real estate investment, sports, and transportation. The firm can be found online at http://www.proskauer.com.