FTSE and the firms
The most prolific litigants in the FTSE 100 and the firms they choose to act for them
What type of litigation are FTSE 100 companies bringing to UK courts? Which are the winning law firms by instructions and why? Alongside exclusive data from The Lawyer Market Intelligence tool, this report gathers key information from The Lawyer’s FTSE 100 report, the Litigation Top 50 and insight into the work that gained three key firms the top accolades at The Lawyer Awards 2015.
This is the first in a series of in-depth research into a variety of sectors, providing insight and information into firm-client relationships and the trends shaping major businesses.
Litigation v arbitration
The reputational risk that goes hand-in-hand with high-profile disputes and the uncertainty around costs are just two reasons why FTSE 100 companies want to stay out of court. Arbitration is now the favoured course of redress when negotiations fail, with court outings the reserve of the few.
According to data collected for The Lawyer Market Intelligence tool, less than half – 46 to be exact – of FTSE 100 companies spent time in court in England and Wales between January 2012 and July 2015. Those 46 companies were involved in 178 court cases against commercial parties. A total of 53 firms were instructed along with 112 QCs from around 60 sets, and 116 juniors.
Those cases range from outings in the High Court to the First Tier Tax Tribunal to the Competition Appeal Tribunal, the Court of Appeal (CoA) and the Supreme Court. There were 38 outings to the Court of Appeal by this group.
The most frequent party in the CoA was BT Group – not surprising given it was the most prolific litigator with 23 cases. In total it appeared in the CoA five times.
In the 13 cases in which BT Group instructed representative counsel, it used external firms in just four reported cases. Reed Smith represented the telecoms giant twice on the same case and Bird & Bird twice on separate cases. In the other seven disputes BT went direct to the bar via its in-house ABS vehicle, BT Legal.
Other frequent visitors to the CoA include Sky (four in the CoA from a total 16); HSBC (three in CoA of a total eight cases); and ITV (three visits to CoA from a total six disputes).
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Top instructed firm
The fact that less than half the FTSE 100 litigated in court over the three year period shows just how seriously such cases are taken in-house. For those picking up the most instructions it is a reflection of quality within the legal team.
Herbert Smith Freehills is the most instructed firm in this sector, picking up 11 instructions in total. Sky Plc is most likely to turn to the firm for disputes having instructed HSF four times.
There were concerns for the relationship back in 2013 following the exit of disputes star Ted Greeno, who quit for Quinn Emanuel Urquhart & Sullivan. Greeno had been a key relationship partner for Sky. However, the broadcaster continues to instruct HSF on disputes in several areas, including competition law as well as for corporate work. The relationship is as strong as ever.
In addition HSF has picked up two instructions from Vodafone and one apiece from Standard Life, Associated British Foods, BAE Systems and Pearson. The firm’s disputes practice generates a large chunk of revenue. At the 2014/15 year-end the practice contributed 35 per cent of firmwide revenue – £285.25m of a total £815m.
Second in line
Herbies’ long-time rival for litigation work in the City is Hogan Lovells, which heads the rest of pack behind HSF with seven instructions from FTSE 100 companies. That includes two cases from Prudential, as well as fielding teams for -Royal Bank of Scotland (RBS); Barclays; ITV; Royal Dutch Shell and Travis Perkins.
The firm has a string of FTSE 100 clients, including Aberdeen Asset Management, British American Tobacco and HSBC, but it isn’t always on the go-to list for litigation in the public domain. That said, the disputes team contributed 36 per cent of the firm’s total revenue at the 2014/15 year-end – £388.4m from a total of £1.079bn.
A number of firms have picked up five instructions from the FTSE 100 over the three year -period. They include Addleshaw Goddard; Berwin Leighton Paisner (BLP); Clyde & Co; DLA Piper; and Norton Rose Fulbright.
Addleshaws has acted for RBS once, Barclays twice and for Standard Life twice. For Barclays it was instructed on the same case twice against Unicredit in both the Queen’s Bench Division of the High Court and CoA. Likewise, it acted on the same case twice for Standard Life against ACE Europe at the High Court and appellate court.
BLP also picked up five instructions, acting for ITV and National Grid twice on the same case at different court levels. Taylor Wimpey also instructed the firm.
Clydes biggest client in court was Glencore for which it was instructed twice on separate matters. Other clients include: RBS, RSA and BP.
For DLA Piper there were five separate instructions, although two were for Compass Group. The other instructions came from major financial institutions: RBS; HSBC and Lloyds Banking Group.
Norton Rose Fulbright has a similar-looking client list, picking up instructions from RBS, HSBC and Lloyds Banking Group, much like DLA Piper. Its other major client was Standard Chartered, which instructed the firm twice.
London remains the favoured destination for litigation for FTSE 100 companies.
Nokia head of litigation Richard Vary chaired The Lawyer’s Managing Risk and Mitigating Litigation event last year. This is what he had to say about changes occurring to the English court system.
We have heard some very interesting ideas and themes today. One word I have heard used repeatedly is “risk”. Another I have heard is “budget restraints”. But a third was “change”. Richard Ferris, our opening speaker, introduced us to King Louis the 14th, and how he understood both the risks inherent in change, and the need for his system to change.
The greatest change I see happening in the litigation world is that we find ourselves in competition.
I don’t mean our companies: those have been in competition for some time. I don’t mean our law firms, although clearly they are in competition for our business. That competition has led to a continuous refinement of practices and business models, and in our roundtable on fee agreements we discussed how we can leverage that competition between firms to secure fee agreements that suit us better. Our firms know that they have to be efficient. They have to offer what the clients want. They have to offer value for money, or our business will go to one of their competitors.
The change I am talking about is the increasing competition between forums: our national courts and arbitration institutes. Richard Ferris also talked about the rise of Singapore, the Singapore International Arbitration Centre and the Singapore Commercial Court. Robert McLeod talked about options for bringing antitrust claims, and the choice between the UK, Germany and the Netherlands. Bill Ward QC discussed the alternative of mediation.
“As an in-house litigator I regard forum shopping as my job”
The traditional model for courts in Europe has been one of monopoly. Litigants had no or limited choice: the Brussels Regulation was set up carefully to ensure that in most situations, for most sets of facts, there is only one venue to where they can go. The aim was to eliminate duplication of proceedings and reduce forum shopping. I’m not sure what you think of forum shopping: one doesn’t often hear it said in a positive light. That is unfortunate, because as an in-house litigator I regard forum shopping as my job.
So traditionally our courts have not had to compete for business. They did not see themselves as offering a service to a customer: they were above that. They did not set out to attract customers. If they were quick and efficient, if court fees were low, that was a good thing but it didn’t much matter if they were not. It was accepted that cases may take a year or two years to reach trial. It was accepted that litigation was expensive, maddeningly inefficient, and slow.
Lord Esher, the English patents judge, was not exaggerating when he said that it would be better for a man that he have his patent infringed, or have anything happen to him in this world short of losing his entire family to influenza, than to litigate a patent in the English courts. It is not the fault of the law, Lord Esher observed. It is the fault of the procedure that we adopt.
Where change has come in our courts system, it has come because of public outcry and because the courts themselves were embarrassed about the injustice that arose from inefficiency and -delay. But those changes, when they come, were sporadic. In England, the reforms led by Lord Woolf were intended to simplify litigation and speed cases. The objectives were admirable and an entire new set of civil procedure rules were written, supposedly unifying procedures across all courts in the country.
But in the last 15 years, we in the UK have undone all the good that Lord Woolf set out to do. Each court has evolved its own specialist rules and procedures: chancery rules are different to the Commercial Court and different from the IP Enterprise Court. Procedures for personal injury claims arising from a road traffic accident are different to procedures for any other type of injury.
All were made with good intentions and efficiency in mind but the result is that our court rules alone, when printed out, are thicker than the entire legal code of Finland. Our UK counsel familiar with one set of rules (e.g. the Commercial Court) fall foul of another set when they move to a different court, or even a different type of case within the same court. They are penalised for their transgressions.
The Jackson reforms have raised the stakes even higher. Now our unfortunate UK counsel face an unsympathetic judiciary when they make a mistake – as all litigators know too well with the Mitchell v News Group Newspapers case. But why do we remember it? Not because it resolved the underlying question of whether a cabinet minister used the word “plebs”: few can actually remember the result. We probably don’t even remember the outcome of the criminal trial against the -policeman at the Old Bailey, or the IPCC investigation. What we do remember, the one thing that sticks in our mind from the whole sorry affair, is that Andrew Mitchell’s legal team missed a deadline.
It seems today that litigation in English courts has become less about resolving the underlying dispute, and more a series of procedural fights where each side tries to catch out the other party in some transgression of the rules. Our law firms spend more time, effort and money in inter partes correspondence than they do on the actual case. Every day in the County Court we see cases where the costs don’t just exceed the damages, they exceed the damages by an order of magnitude. Clearly, in the UK at least, change has not come fast enough.
The German model
But this is not universally the case. The German courts have long competed for business. If a patent is infringed by a product on the market in Germany, then for the most part the patentee is free to choose where to sue, the four choices being Hamburg, Munich, Mannheim or Dusseldorf. Consequently those four courts have competed to attract patentees. Dusseldorf is the undisputed king: capable of dealing with the most technically complex cases. Mannheim attracts cases by being quick to trial. Hamburg advertises itself as the place to go for interim injunctions. Munich introduced an early hearing at which the judge gives the parties an indication of the likely outcome. Dusseldorf reacted by opening another patent chamber to speed cases up.
Can we expect similar results from the competition we are seeing from international arbitration and will see from the Singapore Commercial Court? Some results of that will be positive. Courts who are forced to compete will offer what customers want in order to attract business. Mann-heim has hit on one key attribute: speed to trial. The result is that the Mannheim patent court today hears over 300 patent cases each year, more than one per working day. Hi-tech, world leading companies that have no obvious connection to Germany – Apple, Samsung, Microsoft, Motorola, Huawei, ZTE, and of course Nokia – all litigate their patent disputes in Germany.
Even the English Patents court has reacted to the German competition. We now have a welcome proposal that a claimant who requests trial inside a year will have his trial listed accordingly. Deputy High Court judges have been drafted in, and two major global smartphone disputes are now being heard in London. That is good news.
Mannheim and Dusseldorf are also characterised by a lack of procedural gamesmanship. The trial date is set early on, and there is little you can do to delay it. If you make an interim application, it will be heard at the trial (if it is still relevant by that stage). If you cannot make the trial date for some conflicting commitment, you may find that the court instead sets an earlier trial date, which is a terrifyingly effective way of weeding out delay tactics. Inter partes correspondence is mercifully rare. Costs awards are set as a fraction of the value in dispute, preventing them being used as a weapon with which to beat your opponent.
I hope that we might be seeing some similar benefits moving to the UK. We have proposals for cut down procedures for commercial cases in the English courts, and as Sara Hall mentioned, the financial list. But we have made the same mistake again: instead of harmonising and simplifying our existing procedures we have layered another different, alternative, inconsistent set of rules on top of the existing rules. The white book has got thicker still. And the penalties for mistakes remain.
Ones to avoid
Not all results of competition are positive. One way for a court to attract cases is to be pro plaintiff. We see how that works in the US, where certain venues have a reputation for favouring certain parties: in my world of patents it is the good ol’ Eastern District of Texas that upholds patents. If you are Apple, you want to find yourself before the juries of ND California (and Apple has even changed itself from being a Delaware listed company, which will help with that).
Others have their favourites: if you are a man caught having an affair you may want to file for divorce in Mississippi before your wife files in Illinois. Regrettably these courts attract cases not because they are efficient, but because they are perceived to offer one side an advantage. I think we would all rather that our courts remained balanced, and I hope that this will not follow from increased competition.
How could we encourage our courts to change to meet these new challenges? Sara Hall mentioned privilege and the very real risk of losing privilege in documents, particularly for in-house lawyers. Paul Wortley gave the worrying example of an expert being cross-examined on his instructions and waiving privilege in those communications.
We are in the business of reducing risk, of increasing business certainty, and thereby facilitating commerce. Paul’s example worked out well for him, and gave him a great advantage. But it worked out very badly for the other side. All of us in the room have been reminded that privilege is not waterproof. I at least leave today very much more careful about what I will share with my counsel and experts. And I am more likely to pick courts or forums where I am confident privilege will be respected and upheld.
Customer service ethic
Courts tend to be administered by government departments: local, regional or national. Government departments are not very good at operating in a competitive environment. They have never needed to. Political parties know all about competition, but they compete for voters, not customers. That competition happens at newspaper headline level: healthcare, taxation, immigration. If the justice system makes it to the agenda, it is the criminal justice system. The process of resolution of commercial disputes is not headline grabbing stuff.
And so we see courts operated in the ways one might expect of a monopoly service provider. They are relocated from the prestigious, expensive town centre buildings to cheaper out-of-town locations. Administrative functions are cut as tight as can allow. In our county courts, the judges need to provide their own tea and coffee: the court will not provide it.
Staff in the Canterbury trial centre tell me they are issued with a single Bic biro and are not issued another until the ink in it is exhausted. If I worked in that atmosphere I would be demoralised and work to rule. It would not occur to me to deliver any sort of customer service.
If you doubt the effects of competition, consider for a moment the grumpy irritable and shouty judges we often come across. Are they more like South West Trains staff? Or more like British Airways cabin crew? The latter could not be more helpful or courteous. Airlines know they must compete for your business, and they behave accordingly.
If our courts now have to compete, they need to change this approach. They will need to locate their court buildings in the town centres, near the law firms and the hotels and restaurants, and near the airport. Dusseldorf has realised this: its purpose-built new court building is located in the town centre, near the railway station, quickly accessible from international airports.
In Munich, where the Federal Patent Court holds a monopoly on revoking German patents, it is located well out of town, in an abandoned military hospital on the opposite side to the airport. It can get away with this because it doesn’t need to compete for business.
We also need to offer purpose-built court rooms. We have long known how to build rooms to encourage debate and discussion – think about Parliament, or lecture theatres. Think about conference venues. Older court rooms followed this trend with tiered seating, and the judges and witnesses raised above the floor. Everyone could see, and hear, everyone.
There has been an odd trend in recent years towards flat court rooms or a more informal meeting room style. There is a perceptions that we can ‘make do’ with simplicity, that our court buildings are a temporary inconvenience and should have the minimum adaptions necessary so that they can be converted back to their ultimate use as offices.
The UK’s Rolls Building, famously described by Danny Alexander QC as having all the atmosphere of a Travel Lodge, is an example. Some concessions have been made by building a small platform at the front where the judge sits. But it is not enough: only those in the first two rows have much hope of seeing the judge. Few at the back can hear the advocates. The witness is at floor level: the only people in the room who can see the witness are the judge and the front row. No one has microphones.
The London Arbitration Centre on Fleet Street is similar: I spent a week there in October trying to hear Thomas Raphael QC and catching only the first word of each sentence. It was like listening to the Fast Show’s Rowley Birkin QC.
Those who think this is adequate forget the purpose of a hearing. They forget who the hearing is for. The customers, the people who are having the dispute, and the people who choose which court in which to have it resolved, are the ones sitting at the back. In a modern flat court room they can neither see nor hear. Lacking that ability to participate, the decision, when it comes, does not match their view of what happened. They do not respect it. They are more inclined to write it off as ill-founded. They make up their mind not to use that court again.
If our UK courts are to compete, we must also fight against the classic government department behaviour of losing money by saving money. Businesses know that they need to invest to attract custom. Cheapest in the short term may prove expensive in the long term. Airlines upgrade their fleets, cover their seats in leather and dress their staff smartly even though these things are expensive, because they know that in the long run they bring in more revenue. Government departments would make the opposite decisions, and demonstrate how much they have “saved”. They may not notice that cases are going offshore.
All companies have secrets. We call it “know how” or trade secrets. It is a key part of our competitive advantage. It accounts for a large part of our balance sheet.
Those secrets might be technical: the design of a chip or source code. They may be commercial: the prices that other customers pay, or the pricing model adopted.
Some courts are very reluctant to protect that confidentiality. They may take the view that justice must be open: it is difficult for the public to understand a decision if it turns on facts which are kept secret. They may take the view that each party has the right to know the case being put against it. Some courts are becoming increasingly likely to throw open confidentiality. There have been some startling releases of technically secret information in the US courts.
This poses a serious risk. There may be no point in going to court to enforce rights against one person if in doing so there is the risk that your confidential information will become known to that person, or become public. The cost of that, the loss of competitive advantage that it brings may outweigh the wrong that you have already suffered.
Other courts are extremely good. They will -restrict information to attorneys on each side. They will clear the room when it is discussed. They will refer to it only in a confidential annex to the judgment.
If our courts want to compete, and win business, they need not only to protect confidential information, but to do so reliably and consistently. Otherwise claimants will try to avoid them in favour of courts where they have certainty that their confidential information will be respected.
Advance notice of decisions
Our “How to deal with the press” panel was one I wish I had been able to attend, because so often the litigation is won or lost not in the courts but in the press. What do I mean by that? Ask yourself who your company’s CEO and board reacts to. Do they pay attention to the opinions of their brilliantly educated, carefully selected and well informed lawyers? Or do they pay attention to the share price that morning. Obviously, it’s the latter.
But who determines the share price? A bunch of 25-year-old testosterone-pumped traders on Wall Street. They are reacting to what they read on Bloomberg, and they have to be fast. Bloom-berg has to be quick, because otherwise Reuters will beat it to the punch. So Bloomberg sends the news out as soon as it hears.
For listed parties, when we get a judgment in a case, we need to send the news agencies the decision with a comment as soon as it is published. That minute. Not later that day. So we need to create pre-prepared press releases for each likely outcome. And when a decision is handed down we need to know the contents, quite literally, immediately. Often this means sending someone to the court, and having them pick up the decision, and inform us from the court, before they leave the building. Because the other side will do so too, and will release their pre-prepared statement. If we don’t release ours, Bloomberg will publish the news with the other side’s spin on it and say “no one from Nokia was available to comment”. We can send out a corrective press release but it won’t be picked up. Wall Street has moved on.
In case you think I am exaggerating, this is precisely what happened to Nokia in 2011. A company called IPCom was asserting a patent against Nokia. A court handed down a decision finding the patent had been infringed by older Nokia handsets. But, rather critically, it also ruled that no current Nokia handsets were infringing the patent, so in reality we had won and there was no impact on Nokia.
Unfortunately we were slow getting the decision: I don’t know why, but maybe the associate who had gone to court to pick up the decision stopped for a coffee on his way back before phoning it in. IPCom’s triumphant press release got out first, saying that Nokia was found to infringe a patent. The press speculated that Nokia products would be excluded from the market. Our later press release was not picked up. Nokia’s stock price dropped 3.3 per cent. That was an expensive cup of coffee.
What could a court do about this? If it is looking to attract litigants who are stock exchange listed, it could give them advance notice of the decision, as the UK does. It could allow the parties to prepare press releases. But we could go further: we could even allow Bloomberg and Reuters (or of course Mlex) to be briefed and set a time and a date on which each of those could release the news. That way both sides have the opportunity to tell the reporters what the result is, and the traders will receive a balanced view. There is no race to be the one giving the news, and no risk to investors having hundreds of millions wiped off their investments because of the other side’s spin.
Richard Ferris’ opening words were about “change”, and our world is changing. The market for dispute resolution is opening up. The competition we mentioned today was coming from Singapore, but I have no doubt that other tribunals will arise. In Europe, in my field of patent litigation, we have the great development of the Unified Patent Court, in which local courts are deliberately set in competition with each other, with the plaintiff given a wide choice. Like King Louis we will need to change: both our national legal professions and our courts now faced with competition need to adapt to a competitive world. We need to act more like the British Airways and less like South West Trains. And we need to do it before our competitors.
The first country to realise that this is a race will have a huge advantage. It will take the necessary steps and attract cases. Its legal profession will prosper. Large international companies will pour hundreds of millions of euros each year into the local economy. The others will miss out.
So, ladies and gentlemen, the race is on. Let’s see who wins.
This is an extract of Nokia head of litigation Richard Vary’s speech at The Lawyer’s Managing Risk and Mitigating Litigation event, which took place in London on 1 December 2015.
Firms give their perspective on the changing litigation scene in insight taken from The Lawyer’s Litigation Top 50 report
What trends do you expect to see in location and dispute types over the next one to two years?
Allen & Overy: We are seeing especially high levels of activity in IP, arbitration, cross-border investigations and white-collar crime. We are busy with IP cases related to hi-tech and life sciences patent disputes; in the international arbitration arena, with treaty claims and with cases related to the energy sector; and cross-border investigations ranging from regulatory in the financial services space to white-collar crime, bribery and corruption and tax investigations in a variety of sectors.
Baker & McKenzie: Regulatory disputes will continue to be a major concern for multinational companies due to increased co-operation between regulators, and the continued worsening of tensions in the Middle East will mean ongoing concerns regarding compliance with trade sanctions. International arbitration will continue to rise as a side-effect of increasing numbers of cross-border energy and infrastructure projects, where arbitration is the most commonly chosen dispute resolution option.
Cleary Gottlieb: In enforcement and investigations, we expect regulators and law enforcers to continue to be very active in multiple industries. It is noticeable, and will be more so we expect, how authorities in various jurisdictions around the world that did not used to be aggressive or assertive are becoming increasingly more so.
In antitrust/EU competition, the new class action regime in the UK will have a significant effect on UK and US antitrust litigation strategies. In international arbitration, we expect to see an increase in the number of treaty claims asserted against states, notwithstanding recent public debate concerning the potential impact of states agreeing to investor-state dispute settlement (ISDS) mechanisms contained in bi- and multi-lateral investment treaties.
Kirkland & Ellis: We have seen a definite increase in activity in shareholder disputes. Clients view litigation strategy as part of the wider discussion on maximising their investments. We are also seeing an increase in investment treaty disputes. However, corporate contract disputes are still the largest part of our case portfolio.
Mayer Brown: We expect to see more cartel follow-on damages claims, regulatory investigations, data privacy related litigation and civil claims which will follow those investigations in the US, Europe, Asia and Brazil. More litigation funders are joining the London market and we expect to see more funded claims of the class/shareholder action type.
Skadden: The global status and popularity of both general commercial and investment treaty arbitration has continued to grow and we anticipate this trend of expansion to continue over the next few years. In the EU, we are also likely to see an increase in collective actions regimes for business and consumers.
Where are you seeing the most appetite from clients to resolve their disputes?
Clyde & Co: The traditional centres are clearly very busy, in particular both London and Paris. Other centres that are growing significantly are Hong Kong, Singapore, mainland China and Dubai. We are particularly busy on construction disputes in Hong Kong, Australia, UAE, Saudi, Qatar, Singapore, UK, Francophone Africa and Canada. We are seeing a lot of commercial deals being done between parties to settle legal proceedings before they start.
By and large, our insurance and commercial clients want to resolve their disputes either in the courts of the English-speaking countries and a handful of Northern European nations, and if those forums are not available (and occasionally even if they are) they want to arbitrate under ICC, LCIA or like rules.
New York is not quite the centre it once was. Clients are not trying to avoid it, but there is a theme, especially in the energy and aviation space, of trying to keep disputes out of the US if there is a chance of a significant award of damages against them by a civil jury.
Africa generally is tough, particularly if you are in local courts. However, there is no doubt that Africa will be a growth area, and Nigeria is likely to become an international arbitration hub.
Allen & Overy: We are still seeing clients wanting to litigate in the US, UK, continental Europe and Hong Kong.
Baker & McKenzie: Litigation in Hong Kong and China is increasing, particularly among Asian companies. England remains popular due to the perceived impartiality and commerciality of its judiciary.
Kirkland & Ellis: English or US courts are still our clients’ preferred choices. For example, we still see English courts as the preferred forum for loan documents. From an arbitration perspective, Asian clients now favour seats in Singapore and Hong Kong over seats in Europe. However, London and Paris are still favourites for clients from other jurisdictions.
Mayer Brown: Banking clients are often keen to resolve disputes in London due to the reputation of the commercial court and to try and overcome any perceived ‘home turf’ advantage by opponents in European countries who believe they would get a more sympathetic hearing in their own jurisdiction.
The amendments to the EU judgments position is designed to give greater efficacy to exclusive jurisdictions clauses, so the process for hearing disputes in the courts contractually agreed upon by the parties should be easier. Therefore, London is still very popular and also New York for both litigation and arbitration.
Are you detecting any change in sentiment towards litigating in London?
Covington & Burling: Yes, England continues to be regarded as a pre-eminent forum for the resolution of disputes. The problem is that the combination of additional cost generated by unwieldy CPR protocol compliance and Jackson costs budgeting and a speedy timetable to trial, make England look and feel incredibly expensive when compared to other jurisdictions.
The perception is somewhat skewed because although the cost may be high, it covers the same work over different lengths of time (e.g. what might take five years in the US would take two years in England). But England is in danger of losing its appeal as a major and leading venue for international disputes. London will continue to be great for investment banks, large corporations, investment houses and oligarchs, whom we tend to act for. Other smaller businesses, including domestic and European businesses, are having to find other ways to resolve their disputes.
Quinn Emanuel Urquhart & Sullivan: From our perspective London’s role as an international disputes centre continues to grow and we believe that will accelerate as more and more developing countries make positive economic strides.
Are the recent proposals to raise the cost of issuing proceedings in England and Wales likely to affect client choice of -jurisdiction in the long term?
Baker & McKenzie: Given the increasing competition among global disputes centres, we consider that further cost increases of this nature risk significantly damaging the London litigation market. They are also likely to be counter-productive in terms of overall revenue for the government.
The proposal for uncapped court issue fees is particularly dangerous. This risk must be considered alongside other trends. The £300m investment in the Rolls Building gave London the world’s largest commercial court building. However, recent reductions in judicial pay and pension entitlements will inevitably reduce the quality of the English judiciary over the medium to long term. Other lack of investment has led, for example, to unacceptable delays in the Court of Appeal, with listings being pushed out to two years or more.
The Lawyer Awards: litigation trendsetters
At The Lawyer Awards, three teams of litigators stood out from the crowd for working on…
Taylor and Sons, Clyde & Co
Clyde & Co secured a headline-hitting ‘David vs Goliath’ win for its business owner client Philip Sebry in January, when the High Court ruled Companies House was liable for a typo that forced Sebry’s business into administration.
In a story so unbelievable you could not make it up, Companies House mistakenly registered a winding up order on Sebry’s business Taylor and Sons, instead of the similarly named Taylor and Son Limited.
Although the error was quickly corrected, it triggered a wave of events causing suppliers to pull contracts and creditors scrambling to extract their money from the business. Sebry, who was on holiday at the time, returned home to find his century-old family business essentially bankrupt and its 250 employees left without jobs.
Taking on the case, a Clydes team headed by Neil Jamieson made the unprecedented argument that Companies House owed a duty of care to registered companies regarding recording of their solvency status.
It meant assembling a team prepared to take on a difficult case against a government department with vast resources and supporting an understandably wary client against a defendant who repeatedly told him his case was hopeless. The firm chose to work for reduced fees while also working under a conditional fee arrangement in order to make the case happen.
Clydes eventually secured around £9m in damages for Sebry, and succeeded in setting a precedent to help prevent small business owners seeing their livelihoods crushed by similar errors in the future.
“We worked for less than our normal rates because it was a very interesting case and we wanted to help Mr Sebry get justice,” Jamieson told The Lawyer shortly after the conclusion of the case.
Jamieson instructed 7KBW’s Clive Freedman QC and Selborne Chambers’ Neil Mendoza. They were up against One Crown Office Row barristers Paul Rees QC and Neil Sheldon were instructed by the Treasury Solicitor for Companies House and the Registrar of Companies.
It was thought at the time Companies House would appeal the judgment against them but an application never came.
“Once we met Mr Sebry and heard his story and saw how harshly he had been treated, it would not have felt right not to try to help him fight the case,” said Jamieson.
“He wanted his story to be told and to see justice done because his business was destroyed by events over which he had no control.
“There’s no legal aid to help a case of this kind, so I put together a team who were prepared to take on a difficult case, find a way of funding the claim against a huge government department with unlimited resources to fight back, and to keep the client in a position where he felt able to continue when he was faced by a defendant who told him his case was hopeless.
“It was very difficult for us to keep moving on – we were the small guy against the big guy. The admiration I have for Mr Sebry to see the case through was as remarkable as anything I’ve seen in my 30-year career.”
Jamieson said the “most eye-opening aspect” of the case was that Companies House said the claim “couldn’t be true, because it wasn’t possible for the winding up order to have caused the demise of the business because it was corrected almost immediately.”
“What we found,” Jamieson continued, “was that once a winding up order is registered, within minutes it’s flashing around the world through the credit referencing agencies and there is no way of putting the genie back in the bottle.
“Sebry was left trying to fight a fire that he couldn’t possibly contain,” he said, adding the result is that Companies House is now faced with a duty to impose the winding up order on the right company, “which seems like it should have been obvious before this happened”.
Gul v Vimto, White & Case
When a drinks licensing deal involving Vimto broke down in Pakistan, White & Case had to assemble a small team quickly and approach litigation funders to get the outcome it needed for its bottlemaker client, Gul, which had suffered £8m in lost revenue. Under the licence agreement, the English courts had jurisdiction, but Gul – a relatively small family-run company – had never engaged in litigation outside of Pakistan and was quickly out of its depth and fearful of the costs involved.
Following a case that showed how a team typically associated with big-ticket litigation could use budgeting and financial discipline, White & Case eventually secured damages and indemnity costs for its client. The team’s work exemplified the successful use of litigation funding to achieve success for all parties.
Freshfields Bruckhaus Deringer demonstrated that a small team managed well can lead to great success for even its most esteemed clients when it defended Sotheby’s against a professional negligence claim brought by a disgruntled art seller.
The seller claimed his £11m Caravaggio painting was incorrectly catalogued by the auction house as a copy and sold for £42,000. The Freshfields team, led by Paul Lomas, brought in renowned art historians, vast electronic trial bundles and even a live demonstration by an artist using white spirit to ‘look behind’ a painting in court to argue its client had acted in good faith and was not negligent.
The judgment, which dismissed all claims against Sotheby’s following a four-week trial, clarified the law on the duties of auction houses setting an important precedent for future cases.