As lockdowns are being lifted around the world, with clear indications that they are most unlikely to be imposed again, lawyers are facing unprecedented challenges, especially in the area of commercial litigation.
On one hand, you have millions of high-value contracts that have been breached over the last 3 months. On the other hand, not everyone wants to go to court and fight it out – most people are in a reconciliatory mood!
Everyone wants to get on with business and leave this behind.
However, a chunk of those contracts will still end up in disputes because counterparties will not be able to agree on how to move forward.
Courts will be clogged as millions of disputes are likely to come up anyway, and this situation may finally seal the deal in favour of alternative dispute resolutions.
On top of that, the economy is shrinking in an unprecedented way. Many businesses will go bankrupt. What is the point of driving businesses to bankruptcy given that you are most unlikely to receive your dues? This is keeping many debtors away from litigation.
Banks and NBFCs, for example, are restructuring loans rapidly.
So what will be lawyers doing?
How should lawyers prepare themselves for what is coming?
Is there an opportunity ahead?
In short, we believe that there is a tremendous opportunity ahead for commercial litigators.
Now let us share the long answer.
Let’s start with what we know for certain at this point.
Amid many uncertainties, few things are certain:
- Delays in litigation
- Enforcement challenges after getting an award or decree
- Clients on both sides may face immediate money issues, will not have time and money to spend on litigation battles.
- Willingness to find a settlement or reasonable middle ground is very high
- They will prefer to renegotiate, move forward and maintain the relationship in many cases
- They want a faster resolution to unlock capital and resources
- Clients will prefer a more collaborative and less adversarial approach from lawyers.
A plethora of opportunities ahead
Renegotiation of COVID hit contracts
- Creative problem-solving approach
- Less adversarial and more collaborative negotiation
- Clients with large in-house teams will absorb this work,
- Clients with smaller legal teams will have to outsource to law firms
- Notice and reply to notices
- Clients will prefer one-stop-shop in case of negotiation failure
- Mediation is mandatory for commercial disputes
- There would be a great demand for legal representation in mediation procedures as well as for mediators
- Clients will need a strategy to find a reasonable settlement during mediation
- Conciliation is preferred to mediation as the outcome is directly enforceable as an arbitral award.
- If there is a breach of mediation settlement, you have to proceed as though it is a breach of contract
- Arbitration is likely to be last resort for parties
- Apart from domestic arbitration, there would be plenty of international commercial arbitration as well
- There would be a lot of work related to the enforcement of arbitration awards from domestic and foreign clients
- A lot of work will go to cheap online arbitration options – and we are likely to see judiciary acquiescing with that.
Special mention: Loan restructuring
- Payment schedules will be pushed forward
- Each project or business has to be considered in light of their financial situation and prevailing business conditions.
- At the moment, it is hard to predict what exactly would happen to most businesses as the economy is slowly opening up.
- Not only banks will restructure and legally review loans right now, but they may have to do so many times over in the months and years to come.
Recovery for banks and financial institutions
- SARFAESI related work will definitely increase as banks and financial institutions will try to seize the assets before those disappear
- DRT and criminal proceedings for resisting recovery
- Sale of pledged shares and securities
What are the contracts that would most likely lead to large scale commercial disputes?
- Finance agreements (all manufacturing and asset-heavy industries are heavily financed)
- Services Contracts
- Delivery of goods contracts
- Works contracts (service and goods – such as construction contract)
- JV, shareholder disputes
What industries will have a lot of commercial litigation, renegotiation, mediation and arbitration?
Manufacturing – FMCG, Electronics, Automobile, Food & Beverages Industry, industrial tools and heavy machinery
Service Sector – IT, E-Commerce & Education, Import-Export, Banking & Finance, Real Estate, Construction, Transport, Logistics
What should you be learning at this point that would help you to grow fast?
And it is always a great idea for you to schedule a call with us to discuss what are the areas that you should focus on in order to take your career to the next level.
However, let me get to specifics on what we believe will be more relevant immediately in the months to come.
Renegotiation of contracts – basics on breach of contract, frustration, force majeure, anticipatory breach of contract, role of good faith, mitigation, effect of negligence, remoteness of damage, computation of damages, valuation of assets. Check out this course for the necessary training.
Adversarial negotiation vs. Collaborative re-negotiation.
To understand the inhouse counsel perspective, try out this course: https://lawsikho.com/course/diploma-entrepreneurship-administration-business-laws
Arbitration and enforcement of arbitral awards. Here is a training course for that.
Mediation & Conciliation. We recommend a course on legal communication, listening and writing which will come very handy here.
Restructuring work for bank loans.
SARFAESI, DRT for recovery.
Litigation involving NBFCs and fintech companies.
All of that is covered in this one course.
IBC and NCLT Litigation. Here is what you need to learn for that.
MSMED Council recovery process.
Tax litigation is likely to go up, and definitely a course on corporate tax is worth exploring.
If you are still unsure as to what to do next, talk to our career counsellors by giving us a call on 011 4084 5203.
(Alternatively, you can also comment to this article, with your phone number, stating “I need help with my career.” We will get in touch with you.)
Looking forward to hearing from you.
To your success.
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