"We create an ecosystem where the interests of the client are above personal ambitions, names and brands"DMYTRO GOVORUN, PARTNER OF TCM GROUP UKRAINE, SHARES THE SECRET OF SUCCESSFUL NEGOTIATIONS
— What are the most efficient types of alternative dispute resolution? Which of them do you use most in your work?
— Experts determine a variety of options for the settlement of commercial disputes. But, based on my own experience, I would say that extrajudicial dispute resolution provides very good results.
We specialize in negotiations. We communicate with all parties: the potential defendant, client, third parties on whom the outcome of negotiations may depend, i.e., banks, insurance companies, regulatory bodies, international organizations, local communities, etc. Often such negotiations can be bilateral (team of lawyers and potential defendant) and trilateral.
— Why do lawyers practice (or recommend to clients) the method of extrajudicial dispute resolution if legal representation is more profitable for the company and for lawyers?
— I beg to differ. Your statement is true assuming that representation is paid according to hours worked and we know the marginality of the lawyer's hour. If lawyers work at fixed rates (this is quite often precisely what clients want), then legal representation is not always profitable.
There are legal proceedings that can last for years. Hearings are adjourned and postponed, the judiciary changes... Ukraine is in the process of reforming various institutions, in connection with which courts themselves are often formed and then dissolved. In such circumstances, the already insignificant profitability is easily nullified. And that’s without mentioning the other risks of court proceedings, that’s a different story...
— Legal representation is not your specialty, is that so?
— Partly yes. If the terms and conditions of a project so require, the client's position is strong and he/she agrees to the estimated costs and the cost of the lawyer's work, then the team will represent their interests in court. At the very beginning of our activities, we decided on the following principle of work in the Ukrainian office of TCM Group International: no win no fee. This principle is fair in relation to a client, especially if it relates to the process of negotiations and the resolution of complex commercial disputes. Yes, there is the risk if taking action and failing. Every negotiating lawyer feels responsibility for the result. And, by the way, the lawyer's remuneration also depends on the success of the work performed.
— In which categories of cases do clients usually choose an alternative method of settlement?
— All projects have one thing in common — the failure of one of the parties to comply with the terms and conditions of the agreement. For what reasons? That’s another question. The agreement was drawn up poorly, the commitments turned out to be impossible to fulfill, the quality of the goods/services was inadequate, the services performed were over and above the agreements and were not paid for, or there is ordinary fraud involved... The last case is the most complicated. It requires additional legal actions, sometimes the involvement of detectives.
— Are there any areas/issues where an extrajudicial resolution of a dispute is excluded?
— The advantage of alternative dispute resolution is the absence of restrictions in the types of commercial activities and geographical restrictions, since business gravitates toward globalization. Our company’s portfolio contains agrarian industry projects connected with undelivered (or delivered, but of inadequate quality) products; projects for chartering vessels; projects for the absence of calculations under supply agreements. These are classic cases. Due to the development of technologies, it is increasingly necessary to resolve disputes related to the provision of IT services to foreign customers.
— What are the features of cross-border debt restructuring? Which country’s law shall such projects be subject to?
— The law of the country will matter when it becomes necessary to begin judicial proceedings or apply to arbitration. If we are talking about cross-border settlement of disputes, we advise clients to state the law of their country in agreements. In the event of questionable matters, it is easier to litigate at home. An in-house lawyer will cope perfectly with this task.
International dispute resolution projects have their own features. Everything matters: language barriers, business principles, features of the body of laws... The smallest detail can change the course of negotiations. When working on such projects, we create teams of lawyers from different offices of the group to take into account all the nuances. An integrated approach allows us to obtain the necessary qualification to achieve results.
— What dispute resolution clauses do you recommend to include in agreements?
— Often, this part of the agreements is unified — a dispute resolution clause provides for an extrajudicial way or the involvement of a third party, for example, a certified mediator. The next one is the arbitration clause. There is no magic here. In simply terms, logical and understandable clauses are the keys to success.
The question is the following: is it necessary to carefully study the structure of the agreement, definitions, terms and conditions of delivery, acceptance and payment? If you’re working with a counterparty for the first time, it will never hurt to carry out due diligence. Of course, it is an extra cost. But with a large number of projects, this is more an investment in proper execution of the agreement.
— What challenges does a lawyer face during an extrajudicial resolution of conflicts?
— Any negotiations are a series of difficulties and tests. Unlike written communication, here a lawyer has little time to think what question to ask or what to answer. Negotiations are a symbiosis of emotions, character, qualification and professional knowledge. Absolutely all the smallest details need to be kept in mind. I have already mentioned linguistic and cross-cultural features. In the course of negotiations, the lawyer needs to resort to new techniques every time, to carry out extensive preparatory work, and in the case of three-party negotiations — to instruct the client prior to negotiations. Ongoing training is one of the principles of our company. Only the tireless improvement of skills and knowledge helps us to achieve the best results in negotiations.
— Do you conduct negotiations independently or enlist other lawyers?
— Our task is to protect a client’s interests as efficiently as possible. We create teams that can solve tasks that are set. If we understand that the project requires experience and qualifications of our colleagues with another specialty, we invite them to cooperate. In some way, we create an ecosystem where the interests of the client are above personal ambitions, names and brands. The team of professionals of their craft and their ability to achieve the best results under given conditions do matter. Therefore, we are always happy to cooperate and are open to working with our colleagues on the market.
— Do you actually mean market colleagues and not competitors?
— That's right. We compete at the stage of a sale. But when the interests of the client are at stake, there is no place for competition, regardless of whether the project is supervised by us or by our colleagues. Everyone does his part of the job and provides results.
I remember one of the projects for investment support of a foreign client. We worked on resolving his issues abroad, but when it became necessary to support the purchase of an integral property complex in Ukraine as an investment object, a team was created of several partners from different companies. The goal was to provide appropriate competence in the matters of audit, real estate appraisal, and restraints on alienation. This is the narrow area of specialization that enabled us to get the expert evaluation that was so necessary for completion of the project. Such experience in working with non-core areas only confirms the hypothesis that joint efforts can yield much more than traditional competition on the legal services market.