Litigation & ADR annual report
Litigation is no longer the ‘ ugly duckling ’
Dispute resolution teams are now major generators of revenue for law firms in Portugal , but before the crisis , litigators were often overshadowed by M & A and real estate lawyers
Prior to the global economic crisis , litigation was sometimes seen by law firms as the “ ugly duckling ” in that it was less profitable than M & A and real estate work ; but following the downturn , that changed , according to Rui Tabarra e Castro , associate at FCB Sociedade de Advogados .
A significant proportion of the revenue of law firms in Portugal is now generated by litigation , says Tabarra e Castro . “ The downturn happened and suddenly it was M & A and real estate that had less work , whereas the litigation teams were able to keep some firms going ,” he adds .
Growing dispute resolution team Now , with clients such as the Portuguese bank Novo Banco facing a high volume of credit recovery lawsuits [ pertaining to the collapse of Banco Espírito Santo ], Tabarra e Castro says that his firm ’ s dispute resolution team has significantly increased in size . “ Back in 2006 , if you had asked trainee lawyers if they wanted to work in M & A , real estate or litigation , they would have chosen the first two sectors ,” he says . “ Now , they can see we have a lot of work in litigation and that the proceedings demand a lot of multidisciplinary skills – this has changed things .”
However , in a practice area traditionally associated with lower fees , with many of these lawsuits taking two to four years to play out , litigation lawyers now face the ongoing challenge of clients wanting to reduce fees .
Lower rates “ Clients understand that they have to hire specialised lawyers as it is very complex work ,” Tabarra e Castro says . “ At the same time , they want to know how much they are going to spend at the outset and ask for lower rates and fee proposals – this means we ’ re always having to convince them that paying for a good lawyer is important in order to have a good case .”
Rui Tabarra e Castro
Frustration with litigation and ADR leading clients to use ‘ unregulated methods ’ for resolving disputes
Due to the fact that it can take many years for a dispute to be settled via litigation , some parties are seeking to resolve conflicts through arbitration and other , more informal , unregulated channels , says Paulo de Moura Marques , Partner at AAMM & Associados in Lisbon .
“ Over the last few months , we have seen a considerable amount of clients choosing to solve many issues through arbitration , especially in public law ,” De Moura Marques says . “ Arbitration is preferred because , not only is it private , but also because of its focus on the matter that is being dealt with at the time , often without putting other parts of the contractual relationship at risk .” However , while arbitration should be an expeditious way of solving a dispute , it is not always the case , according to De Moura Marques . “ A court case can take anything from two to five years , while an arbitration can take as much as two to three years to be decided , and that is too long , particularly in the case of arbitration , says De Moura Marques . “ We can ’ t say it ’ s fair justice if it ’ s not quick justice ,” he adds . “ And we ’ re not taking the necessary measures to provide some kind of quick response .” As a result , De Moura Marques says businesses are getting frustrated and are “ being invited to resort to unregulated methods for resolving disputes ”.
Across Europe it is now commonplace for commercial organisations – particularly those that normally handle insolvency and recover credit – to offer services similar to mediation and conciliation , services that should be referred to someone with proper training , according to De Moura Marques . “ These companies do not even have qualified barristers or lawyers and this is putting people at risk of misrepresentation , conflicts of interest and most importantly , it means there will be no court ruling to impose a decision [ if needed ].”
Paulo de Moura Marques
www . iberianlawyer . com January / February 2017 • IBERIAN LAWYER • 45