Editor: Mr. Kende, would you tell our readers something about your professional experience?
Kende: I've been practicing law for almost 30 years. Following law school, I worked for the Legal Aid Society for three years. After joining a law firm and engaging in general commercial practice, I went to Hill Betts & Nash. There, I focused on maritime work, including a very large oil spill litigation for the French government lasting 14 years. That case, the Amoco Cadiz , was the largest pollution case prior to the Exxon Valdez and resulted in a very large award to the French government against Amoco. It also received considerable publicity in France and elsewhere, which enabled me to make a number of contacts in the French insurance community. While traditional maritime work has been level for some time, there has been opportunity in the insurance and reinsurance arenas. Much of what I do today is on behalf of French insurers, reinsurers and the U.S. operations of such enterprises.
Editor: What are the biggest international risks facing companies these days?
Kende: For American companies operating abroad, and particularly in Western Europe, there is a distinct trend towards Americanization of many European legal systems - meaning these systems are becoming more litigious. Ten years ago, for example, class actions were relatively unknown in Europe. However, they are very popular today, with several countries either adopting some kind of class action legislation or considering it seriously. In fact, in the latter category, France has a study group looking into the advisability of adopting a class action statute.
Another area of concern is that U.S. plaintiffs' firms are approaching European enterprises, with large equity positions in the U.S., for business in the class action arena. Milberg Weiss - no longer a major contender, to be sure - started this trend a few years ago, and Cohen Hausfeld and a number of other firms have followed suit.
Editor: Along the same lines, what are some of the developing areas of law with international implications?
Kende: I think Sarbanes-Oxley has had a significant influence on regulators in Western Europe and the companies they regulate. In addition to observing how U.S. companies have geared up to comply with Sarbanes, and, of course, how European companies with U.S. operations have responded to the statute, foreign regulators have been promoting increased oversight of stock trading, and enhanced standards for distribution of consumer products and consumer rights in their own countries. These developments are having an effect on the emerging use of the class action vehicle in many of these jurisdictions.
Just as developments in Western Europe seem to be reflecting the higher standards that have been enacted in the U.S., events elsewhere - primarily in China - are causing major problems for U.S. companies. A lack of regulatory oversight in some of the emerging markets - the production and export of lead paint items and toys, for example - has resulted in major problems for American importers and distributors. Given all the press reports surrounding these problems, I think there is a good chance they will be addressed. But, in the meantime, U.S. companies need to monitor their dealings in these markets with great care.
Editor: How about the implications of U.S. e-discovery rules for foreign litigation? What can companies do to avoid problems in this area?
Kende: There have been recent, major changes in the U.S. Federal Rules of Civil Procedure (FRCP) regarding retention and production of electronic data. In light of the fact that email is the primary means of communication in the business world today, a whole subculture of expertise has developed to deal with electronic discovery. This is a central issue for any major company, domestic or foreign, involved in U.S. litigation. Even though discovery is generally not utilized in Western European countries - except for the UK, which, of course, is a common law jurisdiction - many Europeans are assessing the U.S. system and seeing the advantages, particularly for the plaintiff, of access to emails. What is underway in the U.S. is beginning to have an impact elsewhere.
For example, with respect to a French company doing business in the U.S. and being sued in a U.S. court, it is absolutely essential that the company have a familiarity with our system, recordkeeping procedures, the conservation of emails and the like. This is a situation where having the right counsel - knowledgeable about FRCP amendments and their implications - is often the difference between weathering the storm and disaster.
Editor: How do you go about advising your European clients on the best way to structure some sort of defensive wall in anticipation of U.S. litigation?
Kende: Most sophisticated international companies, particularly those in the insurance and reinsurance sector, are familiar with U.S. litigation. We make presentations on a regular basis on developing issues such as e-discovery, jury issues, use of experts, and other relevant topics, and have ongoing communication with the company's human resources, IT, and claims professionals, and so on, in addition to members of the legal department. We work with these different groups to establish structures to avoid the problems that can arise if, for example, emails are destroyed or cannot be located. A coordinated effort is key in constructing this defensive wall.
When companies do not have familiarity with regulations/laws, specific to the U.S. and different from their own systems, we must undertake an extensive educational effort. The Swiss, for instance, are subject to statutes prohibiting disclosure of financial information, and they are extremely averse to providing such information of any kind. France has a criminal law prohibiting voluntary production of scientific or technical information unless through an international convention. In fact, there was a famous case involving an international uranium pricing cartel where many countries, including the UK, passed specific blocking statutes to prevent information disclosure in connection with U.S. litigation. These are issues that must be handled carefully if the company becomes involved in disputes in the U.S.
Editor: In advising the company's general counsel and legal department (ultimately in charge of all litigation), what defensive strategies do you bring to the table?
Kende: Specific strategies are going to be fact dependent. Nevertheless, I believe in being organized ahead of time and taking a proactive position wherever possible. We have been engaged in a considerable number of Hurricane Katrina cases - including major losses involving several foreign entities - and they have required coordination and organization at a very early point. When you are talking about hundreds of millions of dollars in losses, it's essential to: organize market meetings early on, with all appropriate corporate constituencies, to assess exposure and the strengths and weaknesses of the issues; address the areas that can be settled early and identify those that cannot; and have a structured joint defense agreement in place. Taking these overall steps is essential to the potential success of your specific strategies.
Editor: What factors should corporate counsel consider in selecting outside counsel for international matters?
Kende: There are two schools of thought on this: hire the big firm with extensive resources, or hire the individual with recognized expertise. My practice is a very personal one, and I have developed very strong relationships over the course of my career. This personal touch is particularly important because so many of my clients are foreign entities, and their understanding of our system is limited. Most civil law jurisdictions do not utilize juries. Live testimony is not a part of the landscape, and the concept of cross-examination is very unfamiliar and, indeed, frightening to many foreign companies experiencing it for the first time. Communication, and a sensitivity to and knowledge of cultural differences, is therefore essential to international practice. For example, it is necessary to explain, with some clarity, what I mean when I recommend making a summary judgment motion. But, there is more to it than that. The recommendation must include an attempt to decipher at least some of the mysteries of our system for these clients.
I hasten to add that qualities such as bench strength, access to a variety of different disciplines, technical support and so on are important. In addition, I am mindful that lack of responsiveness is one of the principal complaints corporate counsel has with respect to outside counsel. And, I do not believe that 20-page opinion letters are a reflection of responsiveness. Accordingly, I come down on the proposition that, all things being equal, corporate counsel is best served by someone who is known to possess the requisite expertise and a reputation for being responsive.
Editor: What are some of the common pitfalls associated with litigation spanning several countries?
Kende: The principal pitfall is lack of coordination. Unless there is someone charged with oversight responsibility, where cases are proceeding along parallel tracks in different jurisdictions, there is a risk that people may inadvertently duplicate each others' efforts, take inconsistent positions, and even work at cross purposes. Recently, we were engaged in a major environmental matter which included litigation in the UK, and several arbitrations and litigations in the U.S. For a successful outcome, it was essential to convey the same story in each of these forums, and that was the task of a single coordinator. I do not think it matters whether such a person is in-house counsel or someone from the outside firm retained by the client. But, I do believe that simultaneous multijurisdictional litigation is something that can only be undertaken successfully, if someone has been assigned an oversight role and possesses the authority necessary to make decisions stick.
Editor: What is your ultimate advice to companies facing exposure in the international arena?
Kende: For a company moving into the international arena and conscious of the risks involved, my ultimate advice is to be proactive. A company should establish a network of counsel in which it has confidence and trusts to respond quickly and effectively on short notice. Such a network should be in place before a crisis arises. Trying to create a system and address a crisis simultaneously is not usually a way to achieve resolution. It's also critical to have some sort of institutional familiarity with and understand the different jurisdictions in which the company operates.
Finally, having in place a contingency plan for a major legal emergency - including a process to retain and produce documents, and bring the fully-informed counsel, appropriate corporate departments and key individuals into the fray at the first sign of trouble - is crucial. It makes the difference between addressing a crisis with confidence or with dismay.
Published October 1, 2007.
