Cross-border disputes account for almost a third of multinational corporations’ legal spend, a new survey has revealed.
The poll of 146 senior lawyers and executives across 18 industries, carried out by international firm Hogan Lovells, found almost half of respondents had seen cross-border disputes become more frequent in the past two years.
Companies reported they most often had to manage the disputes in China, England, France and Germany, with the most challenging markets in the US, China, Brazil and India.
The biggest issue in these jurisdictions was finding quality local counsel, as well as managing differences in legal systems and overcoming different time zones, languages and cultures.
Just over half of those surveyed said they expected an increase in cross-border disputes in the next two years, with 45% saying boardroom scrutiny is increasing as directors worry about the effect on their company’s reputation and the exposure to risk.
‘[There is] great concern about risks posed by international business disputes,’ said Hogan Lovells partner Michael Davison. ‘The world is becoming increasingly more litigious.’
Respondents said 90% of disputes involved two or three foreign countries, although some cases involved as many as 50 jurisdictions.
Many organisations are already developing new methods to control costs and reduce the time and energy sucked up by disputes.
Some companies have drawn up arbitration procedures into contracts, brought in specialist lawyers with technical experience and sought to resolve disputes more quickly, even if that means agreeing to settle.
Hogan Lovells partner Megan Dixon added: ‘I expect to see either constant or even higher number of cross-border disputes due simply to the shrinking global market phenomenon.
‘But what I hope will happen concurrent with that trend is a decrease in the number of disputes caused by failure to anticipate or address easily-resolved issues in advance.’