Maja Schwoerer: Susanne, economically difficult times are often followed by an increase in disputes between companies. Given this overall economic context, what types of disputes do you expect for clients in the DACH region in the coming months and years?
Susanne Schwalb: In recent years, the COVID pandemic and then Russia's invasion of Ukraine have played a major role. The consequences, such as the energy crisis and inflation, will certainly be with us for a while and will continue to cause disputes. In addition, there are many other fields, such as the regulation of new technologies, data protection, climate change, and last but not least, the area of class actions. In all these areas, we expect to see increasing disputes in the near future.
Especially in connection with the pandemic and Russia's war of aggression, many disputes from supply relationships were expected, due to supply chain disruptions or enormous price increases. However, my perception is that the pandemic itself has not resulted in as many disputes as originally expected. Among other things, this may be because it was a fairly clear case of force majeure, for which no one was responsible, and many companies were very careful not to jeopardize supply relationships and aimed at finding an amicable solution.
In the wake of Russia’s war of aggression and its consequences, the situation here seems to be somewhat different. However, this may also be because many companies are already at the limit of their resilience and that the impairments here are also more regionally limited, so that it is more about issues such as substitute procurement, etc. In many cases, the scope of sanctions is also more open to interpretation than was the case with the states' COVID measures. And yet, in many cases, we still see reluctance on the part of companies, also because the disputes often carry political risks and generally high risks. This means that in many cases advice is taken, prospects of success and enforcement are assessed, but also the risks of countermeasures, especially when it comes to contracts with Russian business partners. The same applies to possible investment protection lawsuits against the Russian state. Here, too, the risks are rightly carefully weighed. And yet, I expect that there will still be a series of disputes in connection with sanctions-related and invasion-related disruptions.
MS: Interesting, thank you very much for that, and what role do you think litigation funding will play in this evolving European dispute resolution landscape?
SS: Litigation funding is still not as strongly represented in continental Europe as it is in the Anglo-Saxon world, for example. In Germany, for example, litigation funders have been around for a very long time, but they have traditionally been focused more on the insolvency context, and it was also usually smaller amounts in dispute. Larger companies, which typically have larger disputes, often do not yet have litigation funders on their radar.
It is precisely these risks that have just been described that are one of the reasons why many people are currently reluctant to initiate contentious proceedings. Against this background, I believe that litigation funding still has significant potential as part of modern risk management. Other services such as asset tracing or asset recovery, i.e., a kind of due diligence on the chances of success of the enforcement of a title obtained in contentious proceedings, or support in the enforcement of such a title, up to the monetization of a title, i.e., the sale of an entitlement claim to a litigation funder seem to me to become more interesting for companies in uncertain times.
MS: Thank you very much. Moving on to another topic, in your experience, what are the biggest barriers to diversity in international arbitration and why are so few cases led by female or ethnically diverse lawyers?
SS: Well, the first thing I would like to say is that even in the years of my own work in international arbitration, I have already noticed significant progress in this area. When I started, there were only a few female names that stood out, but after that, it felt like there were very few women for quite a while that I at least perceived as leaders. In the meantime, this has changed completely. There are quite a few female role models in arbitration, and, above all, I see in my generation and also in the next generation how many great women come after that.
Of course, we are not yet where we want to be, there is still this discrepancy between the proportion of female associates who start in the field and the proportion of female partners who then lead the major arbitration proceedings as lead counsel. I, too, have already conducted several arbitration hearings, in which I was fortunately not the only woman in the room, but I was the only partner. On the other side there were only male partners. Why this is the case is a question asked by the large law firms, not only but also in the field of arbitration.
I am head of the national women's network at CMS Germany, which increases the exchange between female partners and lawyers both in 1-to-1 discussions and in large groups, and which is very well received. Of course, I witness a lot through that. And I have to say, we must above all create flexibility so that everyone can find his or her own model and can follow through with it. Flexibility and individuality simply must not stand in the way of a partnership perspective.
And, as you rightly say, diversity isn't just about gender. It is also about ethnic diversity and other groups that also deserve recognition and support. Here, too, I have the feeling that we are already quite a bit further ahead than we were a few years ago. But still, for example, in the selection of arbitrators, this motto “known and proven” can be observed again and again. This means that you prefer to choose an arbitrator with whom you supposedly can't go wrong and therefore don't have to be accused of having taken a risk afterwards.
MS: What can clients and law firms do to improve the status quo?
SS: Well, clients definitely have a lot of influence. If they want a team of lawyers to have equal representation or a woman to lead the team, the law firms will probably go to great lengths to meet this requirement. For example, a team with enough women is already the clearly communicated expectation in some pitches. On the other hand, you have to keep in mind that of course this cannot be the only goal. In the end, the client wants to have the best team and also the best lead counsel. And the selection should be made according to relevant expertise and also according to professional criteria.
Still, certain expectations can help women to be considered in the first place, to establish themselves and to simply be able to show their expertise. Because even if you shouldn’t generalize here, I often observe that women tend to have less confidence in themselves than men at the same age, even though they are just as good. And of course, we want to promote and advance women who are just as good. And that is exactly the starting point for us and certainly also for other large law firms. Our female lawyers often have great grades and other really impressive qualifications. And yet they don't appear with the same self-confidence. And maybe sometimes they need a little extra push to establish themselves. And in my opinion, this is also because there are still too few female role models, that there are too little examples, and that how far a woman can go isn’t self-evident. While this is certainly not always a conscious consideration, it also influences subconsciously. And that's why I believe that law firms would do well to promote good women, especially at the beginning of their careers. And then, at some point, the next steps will come all by themselves.
At the same time, and this is important to me, I would also like to emphasize that we should not demotivate young men. So, I think it's a challenge that really shouldn't be underestimated, that we don't lose them in the face of the supposedly rampant advancement of women by giving them the feeling that they no longer have any opportunities. In an economically minded environment, this is nonsense, but I believe that we must also take the corresponding concerns seriously and counter them.
And in other respects, too, law firms should pay attention to diversity just as much as their clients and promote it. So, for example, we have a Diversity and Inclusion Charter in which we have all committed to global goals. On a national level, these are then also filled with life, for example through regular D&I gatherings, the Women@CMS network, the Pride@CMS network. I believe that such networks are extremely important to promote diversity and inclusion at this point.
MS: As a bit of context, at Burford, we have the Equity Project, which is our award-winning initiative for greater diversity in commercial litigation and arbitration. Burford has already set aside more than $100 million in capital to exclusively fund litigation led by female and/or ethnically diverse attorneys. And with that, of course, we aim to support these lawyers in building their portfolios and ultimately in their advancement in their respective law firms. We are now very grateful that you have recently become an Equity Project Champion, and as a question to you, what do you see as possible solutions to address this problem and improve this topic?
SS: Well, I'm definitely very happy to be able to take on this role in Germany and to be part of this project.
Because for me, the project actually fits exactly with what I said. It's not about setting lower standards for women or ethnically diverse counsel, it's about making it easier for them to get started. Because we all know that we or our clients like to commission someone with the relevant experience. But you can only get that from the right commissions. In other words, the classic chicken-egg-problem. And that's why I think it's really great when Burford set up its own fund for disputes by diversely managed teams and promotes awareness and the process of reflection among the legal teams, as well as among the clients, of how their own representatives should be positioned.
I am firmly convinced that diverse teams are better ones, because we combine more perspectives and different approaches. Women as well as ethnically diverse counsel simply need to be given the opportunity to build up a first track record. And in addition to the Equity Project, I also see networks that promote exchange among women or the affected groups of people as helpful here. On the one hand, it is about strengthening the self-confidence just mentioned, but on the other hand, it is also about contacts with clients and other players in the market. We, for example, hold regular events with the Alice Network, which stands for diversity and inclusion of people of all sexual orientations, and especially on the topic of leadership qualities, we enable participation in the Women into Leadership initiative. In my view, all these initiatives together help to bring more diversity into everyday working life and thus also to achieve the goal of equal opportunities, which is what we all want to achieve.