UNO September 2018

“Strategizing” corporate disputes

In this age of hyper-connectivity, a corporation cannot face litigation without a solid strategy. There is no room for improvisation. This requires planning and laying down the foundation for the dispute strategy: the dispute must be “strategized.”

In this age of hyper-connectivity, a corporation cannot face litigation without a solid strategy. There is no room for improvisation

Corporate disputes require skills that were not common until recently. A multinational, multilatina or local enterprise requires planning, anticipation, financing and/or mitigation of the effects of its disputes. Not all disputes can be settled out of court, so companies should try to apply good prevention practices to reduce and improve their litigations. And there will certainly be better litigations, obviously without guaranteeing a successful outcome. The best litigations will be those that have been “strategized.”

So, corporations need to face disputes with sound tools, adequate information and budgeted economic resources. We set out below some ideas or suggestions for “strategizing” a corporate dispute in this hyperconnected era.

Define the goals
What does the corporation hope to obtain with this litigation? Litigation is not a goal in and of itself. Litigation serves a corporation’s goal, such as obtaining compensation for damages, defending a market, ending a legal relationship, eliminating a contingency, etc. It is important to understand and define the aim of the litigation and stick to that goal.

Identify stakeholders, then map them and assign levels of importance
The stakeholders of a dispute must be identified—that is, those with an important role in it dispute. Different methodologies consider the following steps:

  • Identify parties. The parties must be listed, including both natural and legal persons.
  • Define profiles. It is important to know who your allies and enemies are, as well as their backgrounds, experience levels, etc.
  • Assign levels of importance. In a stakeholders’ map, each player has a level of influence (high, medium or low), affected by their role, position (neutral, for or against) or situation.

It is important to start from a humble, critical and realistic point of view. A leader must approach the problem objectively, without prejudice or passion

Identify and assess weaknesses or risks
A corporate dispute may be longstanding and have numerous contracts, sophisticated contractual clauses, etc. Therefore, it is important to start from a humble, critical and realistic point of view. A leader must approach the problem objectively, without prejudice or passion that could cloud their judgment and with the ability to make decisions as to what is best for the corporation.

Review and analysis of both weaknesses and present or future risks involves two exercises:

  • Due diligence (the past). The company and its legal, technical and/or financial advisers must study the dispute’s evolution in terms of relationships, events and/or contracts to try to identify events that might weaken the corporation’s position in the litigation. Those events must then be assessed and prioritized within an integral strategy.
  • Identification of future risks. Going into a dispute—as either plaintiff or defendant—is an important decision. Proceedings can often have unforeseen consequences (e.g., a hefty counterclaim or reputational damage). A reasonable and sensible strategy must consider and assess future risks.

Past and future risks must be factored into the strategy’s equation and considered in the final decision.

Identify and assess strengths
Just as with weaknesses, strengths must be assessed. These strengths could also be classified as past or future. What is most important is to understand them, establish their importance and be able to use them to support the litigation.

Protect information and files
Information is the basis of any dispute, and it must be protected, taking into account the jurisdiction in which it is situated. We suggest considering an information protocol, including backing up the information (preferably via digital means) and establishing, in concert with legal advisers, rules of privilege for the information. Internal training is usually highly recommended.

Handle communications
A complex dispute requires adequate handling for both internal and external communications to (i) avoid improvising messages, (ii) administer communications according to the goal and (iii) adjust communications according to opportunity and audience.

It is crucial to have an agile, flexible communicator available. With that communicator’s support, the leader must name and train spokespeople; build internal and external messages; and develop positioning statements, talking points and Q&As, all with the aim of administering communications for internal or external audiences.

Strategizing:” Implementing the strategy
The activities explained above are focused on preparing the strategy. They are the strategy’s foundation and, at the same time, the minimum requirements for achieving a holistic plan.

Once it has been “strategized”—i.e., the strategy’s foundation has been defined—the corporation will be in a position to apply the strategy to the dispute. It should be based on the corporation’s goal, consider the stakeholders and their evolution, take strengths and weaknesses into account at all times, look after and use available information and administer communications. This will enable it to better face the dispute and increase the probability of mitigating its effects, or even achieving a successful outcome, be this an end to the litigation or a satisfactory settlement.

Javier Robalino
Managing partner of FERRERE Abogados Ecuador
Robalino is a managing partner of FERRERE Abogados in Ecuador and member of the firm’s global executive committee (2015). He also co-chairs the arbitration practice and acts as managing partner for Ecuador. He represents many multinationals in various local and international commercial and investment disputes. He has participated in numerous cases under the laws of ICSID, UNCITRAL, CIAC, ICC and CAM-Santiago, among others. Robalino also participates in international public law cases under the WTO, the Andean Community of Nations (CAN) and the American Convention on Human Rights frameworks, among others. He obtained a master’s from the Duke University Faculty of Law (2006, cum laude) and a Ph.D. (SJD) from the Catholic University of Quito (1990-1995). [Ecuador]

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