Businesses seek out specialist legal advisors to tackle a rise in international disputes, PwC survey shows.

17 Apr, 2013

The number of businesses hiring in-house specialist lawyers is set to rise according to a new PwC survey out today, after a third reported an increase in the number of international disputes.

The survey, Corporate Choices in International Arbitration (IA), showed 35% of the polled counsels had reported a rise in the number of international disputes. When asked what method they would choose to resolve their disputes, twice as many opted for international arbitration than other forms such as litigation.

Currently companies tend to seek this specialist expertise from external law firms but under the current constraints of the economic climate and the rising cost of proceedings, many more are likely to start recruiting in-house, the report says. Whilst 90% of respondents had a dedicated legal department, the survey revealed only half (49%) had a dedicated in-house disputes team.
In partnership with Queen Mary, University of London, researchers analysed IA trends in more than 100 multinational businesses, focusing on the financial services, energy and construction sectors.

Overall 73% said IA was well suited to resolving transnational disputes, with preferences strongest in the construction and energy sectors. When asked to rank various dispute methods in order of preference, 68% of construction respondents said arbitration was their preferred method compared to 56% for energy, whilst in financial services, 82% ranked court litigation as their number one method.

Despite this, over two thirds (69%) of in-house counsel in financial services companies felt IA was becoming more suited to resolving their disputes.

PwC partner and head of International Arbitration, Gerry Lagerberg, said: “One of the key findings of the research is this trend in specialist counsel being brought in-house. In part, this is down to a cost-control measure but it will also serve as a real vote of confidence in IA as these firms recognise the value in having arbitration specialists embedded more within their multinational businesses.
“It was interesting to see that the majority of businesses use specialist arbitration counsel they have worked with before and they are blending external expertise with in-house capability. The role that third-party funding plays will be another area to watch in the future as smaller firms may well need to secure financial back-up before commencing proceedings or at the enforcement stage.”  

Of those that said arbitration was not their preferred method for settling disputes, 22% said this was down to it being less cost effective than other methods – such as litigation, according to the report.

Many businesses opt for arbitration for international disputes due to its speedier process and private nature.  There is usually no appeal process and the final decision is binding, unlike litigation.

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