In House Counsel Archives - The National Law Forum

Diving Into SECURE 2.0: Changes for Small Employer Retirement Plans

International arbitration provides a binding, neutral, and consensual process for resolving contractual disputes between parties, often resulting in resolutions that are quicker, cheaper, more private, and more controllable than litigation in a court of law. Accordingly, arbitration for the resolution of international disputes between contracting parties from different legal jurisdictions has emerged as a fundamental method for resolving complex disputes in an ever-increasingly interconnected world. Multinational companies should make sure they stay up to date on the fundamentals of international arbitration, and it all starts with ensuring any arbitration clause included in an international agreement is drafted in a way that is enforceable and provides contracting parties a clear path toward the resolution of their dispute.

Why Should You Care about What Your Arbitration Clause Says?

An arbitration clause is the starting point for determining the parties’ intent in resolving their dispute outside a court of law. It is an independent agreement within the broader contract, likely enforceable even if the remainder of the contract is procured by fraud, and sits at the apex of what a court or arbitrator will look for to determine the parties’ intent with respect to how a dispute between contracting parties should be resolved.

A clear arbitration clause results in a meaningful, enforceable outcome, minimizes the intervention of U.S. or foreign judiciaries in what should be a private dispute resolution process, grants the third-party administrator and/or the arbitrator the powers necessary to resolve the dispute, and is conducted in accordance with procedures that help guarantee a fair, efficient proceeding.

In contrast, if an arbitration clause is ambiguous, there may be a finding that there is no dispute resolution agreement to enforce. This can result in challenges to the arbitration clause’s enforceability and potential litigation in unfavorable and less-than-ideal judicial systems. Of course, such ambiguity and challenges will create higher costs, longer windows of time to resolve disputes, greater risks that your claims in the dispute will be vulnerable to collateral attacks, and other unintended and unexpected consequences.

What Are the Hallmarks of a Clear Arbitration Clause?

For purposes of clarity, you should ensure your contract’s arbitration clause identifies:

Applicable Law. Which country’s (or state’s) law applies?
Forum and Rules. There are any number of arbitral forums, each with its own nuances in terms of procedure. Knowing the business and potential disputes that could arise will assist in selecting a good fit in terms of applicable rules.
Seat of Arbitration. The seat of the arbitration is more than just the place where the final hearing will take place. It provides a significant backbone to the proceeding and is as important as the selection of the forum and applicable rules.
Number of Arbitrators. The more arbitrators, the larger the cost, but a three-member tribunal has its place in certain disputes.
Language. Selecting the language (or languages) of the arbitration can greatly affect the cost of the proceeding.

Why Does Selecting the Seat of Arbitration Matter?

More than just the physical place where the arbitration will take place, the seat of arbitration is a legal construct that determines the lex arbitri — the procedural law of the arbitration.

Where the contract between the parties or the rules selected by the parties do not provide for certain procedures, the procedural laws of the seat of arbitration will be applied. Among the important aspects of a proceeding that the seat of the arbitration determines is:

Which courts will have supervisory jurisdiction over the arbitration;
Definitions and form of an agreement to arbitrate;
The arbitrability of the dispute;
The constitution of the arbitral tribunal and any grounds for challenge;
The equality of treatment of the parties;
The freedom to agree on detailed rules of procedure;
Interim measures of protection and court assistance;
Default proceedings;
The validity of the arbitration award; and
The finality of the arbitration award, including which courts will hear challenges to the award.

If not clearly identified by the parties, the seat of arbitration — and the procedural laws of that seat — will be selected by the arbitral tribunal.

What Do the Rules You Picked Say About Interim Measures?

A major consideration in selecting the applicable arbitral rules is the availability of interim measures. These are measures of relief, which can include injunctive relief, obtained prior to the commencement of, or during, an arbitral proceeding.

One of the most interesting forms of interim measures is an award of security. An interim award of security in arbitration is a payment of an amount of monies (usually tied to damages) pre-hearing for the conservation of, and enforcement of, a judgment so as to not render a judgment in the future a Pyrrhic victory. These securities prevent the dissipation of assets before it is too late to reach those assets. As such, it is an extremely powerful tool, and determining whether the rules you select, and/or the seat of the arbitration, allows for such an interim award should be a key consideration in drafting your arbitration clause.

What Are the Abilities and Liabilities of Third Parties?

Depending on the circumstances, jurisdiction chosen, governing law, and seat of the arbitration, a third party (a non-signatory to the agreement) can compel arbitration and be compelled to arbitration, the latter being the rarer occurrence. Knowing if there is potential exposure to such parties, which can include directors, officers, employees, beneficiaries, and others, should be assessed prior to entering into an arbitration agreement.

On What Basis Are Arbitral Awards Enforceable?

Arbitral awards, because of the adherence by more than 160 countries to the 1958 New York Convention on the Recognition and Enforcement of Arbitral Awards (“New York Convention”), are the most enforceable award anywhere in the world. Under the New York Convention:

A written agreement to arbitrate, including as contained in a contractual arbitration clause, is generally enforceable.
Subject to very narrow exceptions, an arbitral award may be recognized and enforced as a final judgment in each contracting country.

In contrast, no treaty requires that the judgments of a country’s court system be recognized; these enforcement decisions are made on an ad hoc basis according to principles of comity and public policy. The Hague Judgments Convention on the Recognition and Enforcement of Foreign Judgments, a treaty similar to the New York Convention, may become the relevant applicable framework in the future but is still in its infancy.

How Can Legal Counsel Help My Multinational Company Address International Arbitration Issues?

The best way to ensure a reliable and enforceable arbitration agreement is a careful examination of the structure and purpose of the contract as well as the company’s unique business profile based on how and where it does business.

Adequate legal counsel should provide clients with practical guidance in drafting and enforcing international arbitration agreements. Services provided should include:

Counseling: Counseling companies to understand how international arbitration clauses apply to their multinational operations, how they may benefit from such clauses, and/or how such clauses may not be in their best interest.
Drafting: Working with clients to ensure enforceable and clearly understood arbitration clauses are prepared for the specific contractual relationship, considering the myriad factors that go into preparing such a clause.
Risk Assessments: Working with companies to conduct risk assessments in the event of contract disputes with arbitration clauses.
Arbitration: Arbitrating before tribunals to secure interim securities and/or enforceable arbitral awards in the event of a contract dispute anywhere in the world.

For more Litigation News, click here to visit the National Law Review.

When Corporate Legal Teams Break

Forward-thinking organizations that refocus their legal teams on the removal of systemic friction and value creation can better detect and forecast risk; however, organizations that have not modernized their legal teams often miss subtleties masking surprisingly deep areas of risk. Recent history shows nothing is too big to fail, but earlier risk detection may have helped avoid some of the most catastrophic losses.

The most recent and notable industry-wide example, of course, was the financial services industry, which triggered the Great Recession from 2007 to 2009.

In the world’s most infamous accounting scandal, Enron imploded in 2001, wiping out $74bn of shareholder funds and the pensions and jobs of thousands of employees. Enron’s auditor also collapsed. The organizations were interconnected and dependent systems. One fell, the other followed. Undetected risk festered and worsened, and the interconnectedness of these organizations and systems created a complex network that made detecting risk more difficult.

As modern society demands more capable systems, they become more interconnected and complex by necessity. As Meltdown: Why Our Systems Fail and What We Can Do About It posits, this staggering complexity means that tiny mistakes or simple accidents can lead to devastating catastrophes that often go undetected. The reasons for failure can stem from very different problems, but the underlying causes are similar.

In accounting scandals with nefarious actors, huge debts are obscured and once revealed, lead to corporate failure. In legal departments with good actors – led by a noble General Counsel (GC) who serves as the defender of the enterprise – business risks are obscured and once revealed, can lead to devastating consequences: bet-the-company litigation, core intellectual property battles, merger & acquisition failure, and crippling regulatory fines, to name a few.

Embracing digital helps identify and expose risk, but organizations set the stage for failure when legal, or other critical functions, don’t keep up, fail to embrace the digital evolution, become disconnected, and lack or lose visibility. Those organizations make decisions without a clear view of the legal implications, and they might not even know it because, for now, they operate with blind trust of the Office of the GC.

Corporations in all industries are “going digital” to remain competitive amidst technological disruption. This focus on digital starts with core products and service offerings, and then is pushed throughout the business to align company to product. The result? Faster moving businesses with a wave of demand pummelling the legal department…if not yet, then soon as digital initiatives across the business mature.

Most corporate legal departments simply do not have the systems required to keep up — providing consistent regulatory counsel, detecting and preventing impending litigation, or simply knowing who is doing what in the legal organization is already a challenge Risk is obscured. A “break” like we’ve never experienced is primed.

If we examine the ecosystem, the warning signs are there.

Catching up to other corporate functions

As demands on legal teams continue to grow and CFOs ask GCs to do more with less, quality suffers amid rising law firm rates and unchecked complexity. Corners get cut. Risks emerge while their likelihood to go undetected rises. Of course, when adding headcount is not an option, revamping processes and technology is often the answer.

In finance, accounting, information technology, and human resource departments, among others, advances in technology have enabled self-service, helped control costs, made it easier to compare costs, and increased quality choices. These corporate functions have embraced systems-level restructuring with artificial intelligence (AI), data analytics, cloud computing and “Big Data” to modernize working practices and improve performance.

In their often siloed and conservative world, most GCs and corporate legal departments, on the other hand, make crucial decisions guided as much by gut instinct as by data and industry benchmarks. For decades, they have resisted change or lacked sufficient resources to enable change in technology, working practices, and corporate culture. Now, with the real-time requirement for speed, scale, and transparency — that era is over.

To retain and increase influence, improve their performance and trim costs as recessionary fears grow, GCs would be wise to more fully modernize their legal departments quickly through an open, digitally-savvy, and collaborative working culture.

Collaborate and listen

Building a data-driven, digital, secure and scalable legal system is an ethical and commercial imperative for GCs. Technology is part of the solution but not the place to start.

To more proactively expose, manage and mitigate risk, executives and their boards need GCs to emphasize the imperative for a more analytical, data-based and efficient approach to corporate legal practice with concrete examples to punctuate the “Why.”

You could start with three actions.

Educate yourself and your colleagues about trends in legal digitization, performance improvement and new working practices. A comprehensive source of information is the Digital Legal Exchange , a global institute of leading thinkers from academia, business, government, technology and law.
Become Modern. Be the change. Lead the change. Make tough decisions about your top leaders and whether they are capable of a data and digital-first mindset and way of working. Change leadership is the prime point of failure for legal modernization efforts.
Be ambitious in the scope of your reforms. Small, pilot projects (ie, e-signature or automated NDAs) won’t make much of an impact and won’t convince your board of the need for bold legal change.

Modernizing the legal system and companies’ legal departments can improve affordability and performance for clients, lawyers, company boards, and shareholders.

Absent modern means of detection, legal risk can proliferate unknown and unseen only to all too often reveal triggers of impending corporate failure when it’s already too late.

Article By Anusia Gillespie of UnitedLex

For more corporate law legal news, click here to visit the National Law Review.

Global Dispute Resolution: The Future of Virtual Legal Proceedings Is Shaped by Soaring Travel Costs

While we may have passed through the worst of the global pandemic, it has unquestionably left a deep and lasting impact on our personal and professional lives. Restrictions that left everyone housebound for months on end resulted in adaptations to daily behaviors and how we do business—some of which are here to stay.

Progress in the Form of Virtual Proceedings

During the pandemic, keeping businesses afloat was challenging across the board in all industries. Videoconferencing was often the only option to connect with colleagues or to participate in a meeting of any kind, and the use of platforms like Zoom skyrocketed. Like most other businesses and professional organizations, legal forums around the world were closed for a time. When they began to reopen, they discovered a new (virtual) operational environment that arose out of necessity.

International arbitration centers and courts across the globe followed suit, reopening with a mandate to conduct business remotely. While they had already developed protocols for using technology to increase accessibility and efficiency before 2020, the use of videoconferencing in international arbitration centers and courtrooms took off rapidly and pervasively once the pandemic hit. The ramped-up schedule of online proceedings continues in international arbitration centers and courts now that they are increasingly comfortable with the virtual format, and protocols have been developed and vetted.

Many believe that these recent technological developments were long overdue. The pandemic essentially propelled the justice system to modernize its administrative and operational policies. Remote Courts Worldwide (a website created during the pandemic to encourage the global community of justice workers to exchange ideas related to remote alternatives to traditional court proceedings) documents that virtual hearings, arbitrations, and court proceedings are embraced by stakeholders in many countries.¹ The consensus is that smart, efficient, industry-disrupting change has brought the international justice system into the twenty-first century. Virtual proceedings are a welcome change for many reasons, not the least of which is the prohibitively high cost of in-person attendance.

International Travel Costs & Virtual Legal Proceedings

The cost of air travel has increased markedly in 2022. Demand issues, inflation, and high fuel costs have driven up per-person airfares. According to the 2022 Global Business Travel Association’s Business Travel Index Outlook – Annual Global Report and Forecast, total international business travel spending is downby 50% from pre-pandemic levels, but individual airfares are on track to rise nearly 50% this year over 2021 and are predicted to continue to rise in 2023.²

An intercontinental long-haul business class ticket from the United States will usually average between $3,000 and $5,000 roundtrip onboard major national carriers. Fares are often the highest on flights longer than twelve hours (i.e., to the Middle East, Australia, or Southeast Asia) and may range from $5,000 to $12,000.³

COMPARING COSTS FOR IN-PERSON ATTENDANCE

The following is an example of a business travel cost profile for an international arbitration hearing taking place in London and involving three US attorneys, two Paris attorneys, two local witnesses, and three litigation support personnel. The average business trip to London is 5.8 days⁴, during which these travelers will require accommodations for five nights, food for six days, and ground transportation for six days.

INTERNATIONAL BUSINESS TRAVEL EXPENSES & TRAVEL TIME TO LONDON FOR ONE LEGAL PROCEEDING

Person Traveling	Number	Originating City	Airfare	Travel Time	Hotel	Food	Ground	Total
US Lawyers	3	Chicago	$3,079	$5,850	$2,200	$750	$400	$36,837
Paris Lawyers	2	Paris	$325	$1,950	$2,200	$750	$400	$11,250
Witnesses	2	London	$0	$0	$1,500	$350	$250	$4,200
Trial Consultant	1	New York	$2,325	$2,400	$2,200	$750	$400	$8,075
Trial Presenter	1	Los Angeles	$3,944	$3,300	$2,200	$750	$400	$10,594
Graphic Designer	1	Dallas	$3,079	$3,000	$2,200	$750	$400	$9,429
Total In-Person Attendance								$80,385

Notes: Airfares based on Delta business class in November 2022. Travel time based on Chicago to London 9hr. x 2(RT) @$325/hr.; Paris to London 3hr. x 2(RT) @$325/hr.; NY to London 8hr. x 2(RT) @$150/hr.; LA to London 11hr. x 2(RT) @$150/hr.; Dallas to London 10hr. x 2(RT) @$150/hr.

As demonstrated in the chart above, the cost of travel time can be as much or more than the cost of flights to attend an international arbitration or other legal hearing. Spending many hours traveling to and returning from the various steps of an international proceeding is not only an expense for a client, but productivity is also lost for the legal professionals involved.

If time is money, there could not be a more direct equivalency than the legal industry’s billable hour, and often lawyers apply the same hourly rate for travel hours as for work hours. When complex matters demand a legal team, these costs are multiplied. Then there is the issue of witnesses who would need to travel and perhaps wait around to testify, not to mention the time commitment and expenses related to other on-site billers and support staff. Add in the unpredictability of airline delays, and costs will continue to mount.

VIRTUAL HEARINGS SAVE MONEY (AND THEY’RE HERE TO STAY)

With the cost of international air travel rising sharply, remote hearings are a practical alternative to in-person proceedings. International travel is expensive, and the virtual option means that it is no longer necessary to count travel as a “cost of doing business” when pursuing an international dispute. The widespread use of technology in global dispute resolution proceedings gives attorneys and their clients the option to participate remotely, which is a compelling cost saver for all parties.

Industry news reports tell the story:

Technology has become ubiquitous in international arbitration.⁵ Japan expedites court proceedings with Microsoft Teams.⁶ Beijing’s “Internet Court” enables people to file lawsuits online.⁷ In India, 19.2 million cases have been heard virtually in the High Court and district courts.⁸

Such reports are convincing evidence of the commitment to the continuation of virtual proceedings in legal forums around the globe. Remote and hybrid proceedings in the international legal setting appear to have a very secure future.

Put Your Best Foot Forward in Virtual Legal Proceedings

Technology in the courtroom is not particularly a new concept, and international arbitration centers were working in the direction of modernizing when they had to fast-track guidelines to convert to primarily virtual hearings.⁹ The wholesale adoption of online proceedings may have caught some firms unprepared from a technical production standpoint.

References:

See www.remotecourts.org.
See gbta.org.
Keyes, Scott. The Complete Guide to Business Class Flights. Scott’s Cheap Flights. April 28, 2022.
Johnson, Georgia-Rose. Business Travel Statistics. Finder.com. February 18, 2021.
Vishnyakov, Mikhail. CIArb Guidelines on the Use of Technology, The Law Society Gazette. March 18, 2021.
Yates-Roberts, Elly. Japan expedites court proceedings with Microsoft Teams. Technology Record. February 4, 2020.
China: Beijing’s ‘Internet Court’ enables people to file lawsuits online. Remote Courts Worldwide. September 20, 2022.
Harris, Joanne. Access to justice: India leads post-Covid shift in courts’ use of technology. International Bar Association. October 12, 2022.
Caroni, Barnardo. Fast Track Arbitration and Virtual Protocols in the COVID-19 ERA: Some Suggestions from Asia. October 20, 2022.

Article By IMS Consulting & Expert Services

For more business of law legal news, click here to visit the National Law Review.

3 Benefits of Cloud-Based Law Firms

Any law firm that’s evaluating practice management software has seen “cloud-based” options. Cloud technology has been around for a while, but some law firms are hesitant to switch to the cloud due to security concerns, lack of control, or downtime. The cloud has numerous benefits for a law firm, however. Instead of relying on filing cabinets and in-office servers, law firms can embrace the cloud and maximize their time and profits.

Why Should My Firm Use Cloud-Based Software?

Traditionally, law firms have relied on in-office software that is installed on a local computer or server within the office space. These servers are only accessible from computers in the same space but limit any remote access or capability. This setup quickly became an issue for law firms looking to sustain business continuity during the pandemic.

A cloud-based solution isn’t installed locally on the office server but is fully hosted on the internet. It uses a remote server maintained by the software provider, and access occurs through the internet. More recently, cloud-based legal practice management software has become the gold standard for law firms to manage and operate their business from anywhere. LPMs have slowly started to replace traditional servers and become the backbone for law firms to handle client management, calendaring, tasks, billing, and document storage.

Even post-pandemic, law firms are still learning to embrace legal technology and leverage the advantages of shifting their practice to the cloud. When done correctly and with the right resources, cloud-based law firms can improve aspects of their business from accessibility, security, client support, and even hiring and retention.

If you’re still on the fence about moving your firm to the cloud, here are 5 benefits that may change your mind:

1. Improved Security

Legal technology has come a long way in recent years with a strong emphasis on compliance and security. Law firms may be concerned about security, but some are realizing the cloud is more secure and cost-efficient than an on-premise solution. This is mostly because on-premise solutions typically require specialized support staff to perform lucrative updates to the system. These updates can cause severe downtime and even cost money calling in support.

With a cloud-based legal practice management software like PracticePanther, the all-in-one platform automatically updates and comes with the security and support your firm needs. The platform comes equipped with ABA and IOLTA compliant features and 256-bit military-grade encryption to ensure confidential information is safeguarded. It also offers two-factor authentication and customized security settings, which allow law firms to limit access to certain aspects of the software for some staff members.

2. Supports Remote and Hybrid Work

Though many law firms are still working out the kinks — remote and hybrid working environments are a mainstay in the legal industry. Many lawyers are enjoying the productivity benefits and work-life balance of remote or hybrid schedules, allowing them to put in the hours they need for casework while also balancing their responsibilities at home.

On-premise legal software limits lawyers with remote work in many ways. Cloud-based legal software enables law firms to work securely within a centralized platform from anywhere. This allows staff to continue their responsibilities without risking accessibility or tasks falling through the cracks when staff are in different locations. For example, PracticePanther can create workflows with triggered tasks for staff to complete a new client onboarding, send documents for electronic signature, and even process payments. This process can be done from anywhere and lives in one system where the appropriate staff can easily access the case or client matter.

3. Streamlined Billing and Online Payments

Clients’ expectations have shifted and they want more convenient processes, especially with legal billing and how they conduct business with law firms. These clients are already using online services for virtually everything, from grocery shopping to accessing medical bills, and they want the same digital experience from their lawyers.

Cloud-based software makes this simple, especially when billing and online payments are built natively. This means firms can track time, create invoices, and send them for payment with easy-to-use payment links embedded. Platforms like PracticePanther also include exclusive reporting functions so firms can gain better insight into where and how their cash flow is generated to make more informed business decisions.

Outlook on Cloud-Based Firms

Cloud-based software offers law firms a unique opportunity to manage their practice and staff while growing their business from virtually anywhere. This structure has proved sustainable for many law firms and will continue to be the standard in the legal industry for firms that want to remain competitive and most importantly, profitable.

Article By Nina Lee of PracticePanther

For more legal marketing and technology news, click here to visit the National Law Review.

Next week! Join NAWL at their General Counsel Institute – November 5-6 in NYC

The last several years have brought significant changes to the General Counsel position and for many, a rise of greater prominence within their companies. Large-scale forces are transforming the economics of corporations as they face challenges related to accelerating competition, cost controls, technology development, reporting transparency, and Wall Street’s focus on short-term profit maximization.

As a result, the General Counsel increasingly has a broader scope beyond being strictly a legal advisor to also being a C-suite executive, senior counselor to the Board, the CEO, and the CFO, and the ultimate guardian of the company’s integrity. The General Counsel and her in-house lawyers are expected to understand the full spectrum of their company’s business and provide expert legal advice, business strategy input, and ethical guidance.

At GCI 11, you will explore ways to create and promote your legal department as a key business partner, develop and employ critical business relationships, and strategically advance your expertise and skills to bolster your prominence within the company. Through powerful personal stories, substantive legal workshops, and GCI’s unique open exchange of ideas, you will soar to new heights as you develop practical solutions to stay relevant in today’s evolving corporate legal and business environments.

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