Preparing for Effective Conflict Resolution

FTI Consulting recently sponsored El Confidencial’s inaugural Business Law Awards.¹ It was an opportunity to celebrate the contributions and high quality of the legal sector in Spain. Representing the firm, we not only attended the event but had the pleasure of presenting the award for the best law firm in the Procedure & Arbitration category. This area of law (which involves both general counsels and law firms) is critical to helping companies resolve conflicts, especially as we are experiencing a highly litigious climate in Spain.² Effective preparation in this area may determine the success (or failure) of business management strategies in 2023.

The litigious period that we are experiencing is expected to continue and become even more intense in the coming months and years. In all likelihood, the current economic and political environment will fuel an increase in disputes. Financial injection programmes³ will need to be analyzed and evaluated. In tandem, inflation and the general rise in the cost of goods and services will exacerbate the need to review the balance of consideration between parties. It is therefore unsurprising that litigation is a growing concern among company executives. In a recent FTI Consulting report,⁴ only 23% of General Counsels participating in the survey said that they feel “very prepared” for an increased volume of disputes and investigations. To reach a higher level of preparedness, in-house attorneys must work with law firms and litigation support services so that legal disputes can be anticipated, controlled, and, ideally, resolved before they reach the courts.

With an eye on the sectors where these disputes are likely to arise, we would like to share some thoughts on the considerations that both in-house attorneys and law firms should take into account:

Digital assets: Within the digital universe, companies are likely to be highly concerned with cybersecurity and data protection due to the litigation risks they carry. The ability to respond to evolving challenges such as blockchain, crypto, and new technologies (chats, audio, video, or social networks) must also grow.
Infrastructure: The increase in the price of raw materials, as the result of Covid-19 and the ongoing geopolitical and economic environment in general, is translating into delays and cost overruns in the execution of projects or imbalances in supply contracts. This will undoubtedly result in disputes and arbitrations. For companies with a variety of stakeholders, it is vital to understand how both global and local issues may affect their ongoing processes. To propose solutions that will have real impact lawyers must expand their economic-financial knowledge and sectoral expertise.
Energy (and especially everything related to renewable energy): This sector will continue to be one of the main sources of disputes in international arbitrations. For example, we can see what happened in the recent litigation between the Spanish government and several investment funds.⁵ International arbitration has long been the preferred method of resolving such cross-border disputes, as the parties value the flexibility of the courts which enables them to make decisions relatively quickly.

How can companies and their advisors prepare to successfully face such a dynamic future? The first step is to remove expectations of certainties and realize that we are in a world that is drastically changing, for better and worse. And companies need to strongly consider implementing more innovative processes to enhance security and boost their flexibility.

Footnotes:

1: https://www.elconfidencial.com/juridico/2023-04-19/gala-premios-abogacia-de-los-negocios-el-confidencial-asesoria-juridica-bra_3612400/

2: https://www.elconfidencial.com/mercados/2022-10-22/hacienda-aeat-litigios-grandes-patrimonios-empresas_3509878/

3: https://planderecuperacion.gob.es/preguntas/que-inyeccion-de-recursos-de-la-union-europea-va-a-recibir-la-economia-espanola

4: https://www.ftitechnology.com/l/gc-report-2023

5: https://www.elconfidencial.com/economia/2023-04-04/juez-bloquea-cuentas-instituto-cervantes-reino-unido-recorte-espana-renovables_3605253/