European Law Firms Love Inversions

We have all heard about the crisis on the US southern border. We hear a bit less about the crisis on the US European border. This crisis is not about foreigners trying to get into the US. It is about US firms fleeing high US corporate tax rates. They are doing it via “inversions”, taking advantage of laws that enable them to move earnings overseas. And while the IRS and the Obama Administration in general may not like it, European law firms love it. Reuters reports that European firms are marketing themselves as inversion specialists. And there is competition between European countries to get more US companies to do inversions in their jurisdictions. So where is this headed? Good question.

Thinking about Litigation Alpha

First, you might ask, “what is Litigation Alpha?” Good question. I just found out the other day. It is a web platform that offers US court activity tracking services on a fee basis.  So you can monitor cases pending involving a given party or lawyer. Gaston Kroub wrote about it for “Above the Law” and his firm sponsored it.

My reaction: clients will need a lot more tracking than they used to and this type of service will grow.  Why is it needed? There are a bunch of reasons. But if this is needed, who will provide it? My guess is that law firms won’t take this on. They are too busy practicing law. We will need a new type of market player.

The Hague Arbitration Award Against Russia

A big news item today – the Permanent Court of Arbitration located in The Hague, has just awarded $50 billion to former shareholders of Yokus for their claims against the Russian government for expropriation. The award is roughly half of the original demand. Russian foreign minister Lavrov says Russia will appeal.  But there is a time bomb here  – interest on the judgment begins to accrue early next year. Indeed, it is not clear what appeal rights Russia has — if any. One source on court procedure sets forth

Awards are final and binding, and there is no right of appeal.

This generally means that mistakes of fact and law are not subject to further review. Well, that would make winning an appeal challenging.  A source said there may be some limited “technical grounds” for appeal to Dutch courts. These technical grounds are usually about jurisdiction, arbitrator misconduct —  these types of things and they rarely succeed. That doesn’t sound very promising for Russia, but we can expect Russia to make the arguments to the dutch courts at least to buy some time.

Looking down the road, it will be more interesting to see what Russia may do to make enforcement difficult. Equally interesting, assuming that Russia will not just pay up or settle, what steps will be taken to execute on the award. $50 billion represents a big collection case. And I imagine that more than one global collection firm would love a piece of this action.

According to Bloomberg,  Shearman & Sterling’s Emmanuel Gaillard is among the lawyers representing the shareholder group.  Shearman’s Yas Banefatemi is also a member of the team. Claudia Annacker, a partner with U.S. law firm Cleary Gottlieb Steen & Hamilton was among those who represented the Russian government.

This comment from the Bloomberg article  offered a few tidbits on the enforcement adventure that may be about to unfold

Russia will probably refuse to pay the damages, and seizing state assets abroad will be a difficult task, according to (former Yukos legal counselor Dmitry Golobov).

“Russia has the money to hire the best international lawyers, who won’t give up without a fight,” said Golobov by e-mail before the ruling was announced. “So the Yukos affair could easily go on for another 10 years.”

BTW, how many global collection specialists does your firm work with? Do you have a sense of how this market works? I will be following up on that here. Stay tuned. This matter may prove rather illuminating on how well private litigants are able to use the New York Convention to pursue assets located in diverse jurisdictions in enforcement proceedings against powerful defendants.

More on all of the above as news breaks. You can track this story in the “Russian arbitration award” category.

Do You Need a Smart Watch?

I practiced law for some years and did not own a tablet or a smart phone. I was intrigued when someone plopped a Mac on my desk and said, figure out how to use it. It’s main function? To help us get rid of our “word processing center”. Remember those?

Well, times have changed. After desktops came mobile phones. So now my clients could call me from their cars. Great idea, until we realized that just about anyone and his uncle could listen in. And when the chat got intense, it was fender bender time.

But there were things coming down the road that tech could offer major help for. Calendering, time management and knowledge management in general. And I think we are still developing good  tech systems for these tasks. So does a smart watch fit into this? At least one lawyer thinks so. I have my doubts.

How Great are your Courts?

Court performance is one of those naughty topics in law. Lawyers frequently lament to their clients that they cannot guarantee just results from the courts in their jurisdictions.  I did it myself when I was an active litigator. At the same time, very rarely do lawyers take responsibility for improving court performance (I can think of one exception off the top of my head – the performance of the Delaware chancery court for corporate clients). Indeed, lawyers are usually content to accept that attempting such improvement would violate “judicial independence” Convenient for lawyers. Perhaps less so for clients.

So does protecting judicial independence trump monitoring and improving judicial performance? For example, should courts publicize waiting times, settlement rates, reversal rates, consistency, and such? Or should such data not even be collected, lest the public start thinking about whether they are satisfied with the performance of their legal systems? And what about reporting on the courts to the public? Who does that anyway?

And is law about heroic individual, brilliant judges who make history deciding great cases, or is law about delivering a basic service to the people who need it on a day by day basis? These thoughts troubled me as I read a post about a new book called “The Mother Court“.