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David Allen - Head of Litigation

What is litigation?

One of the few certain things in life is that people are always going to have disputes. The litigation group at Mayer Brown is made up of our insurance, commercial disputes, restructuring, bankruptcy and insolvency and construction practices and exists to resolve disputes between our clients and other parties. Litigation is the biggest practice area in the firm, constituting about a third of the global business. We predominantly represent financial institutions, corporates and insurers in complex, high value claims.

We’re seeing a lot of cases which have directly resulted from the credit crunch, many of them to do with structured products and derivatives. Before the financial crash, these were changing hands without much attention paid to the contracts, as parties rushed to the next deal. Lots of these transactions are being unpicked now, and many mis-selling claims are being brought against financial institutions and others.

How do you work with clients to resolve disputes?

It’s rarely in the client’s interest to go through the whole court process to a hearing, so it’s our job to get the dispute resolved as quickly and cost-effectively as possible. That said some cases do go to trial and it is vitally important that the legal team is fully prepared, if necessary, to fight the case all the way. One of the main ways we resolve disputes is through mediation, a method of alternative dispute resolution that has become more widespread in the UK over the past few years and is at least considered in virtually every case we do now. In straightforward terms, it’s an attempt to settle the dispute through the intervention of a neutral third party.

For example, if our client is a bank which is being sued for alleged mis-selling of a financial product, we’ll interact with the claimant’s lawyers and between us agree on a mediator. In some cases, the decision on who mediates will be made by an independent body. How the mediation is conducted is very much up to the mediator and the parties – there’s no hard and fast rule. Typically, mediation lasts for a day or two, but if it’s a big dispute, it could last for a week. The mediator will try to bring about a negotiated settlement. Even if a settlement isn’t reached, very often going through that process is a valuable way of focusing the minds of both parties and making them aware of all the details.

Arbitration is another important process for resolving disputes, particularly international ones and is more formal than mediation, since both parties have to agree to accept the verdict of the arbitrators. If you have a UK company in a dispute with an Indian company, neither party is likely to be happy for the dispute to go to court in the other’s jurisdiction. They will often instead agree to have an international arbitration, and the arbitrators can sit wherever they like. There are many rules around how the arbitrators are selected to ensure impartiality. Often, institutions will choose to go through an arbitration process because the details of the hearing can remain confidential, while in a court of law, they’re in the public domain.

What have been the recent developments in this area of law?

When I joined the firm in 1985, the vast majority of the work we did was domestic. But now, the scope and nature of the work has become more international. Jurisdiction issues are a relatively modern phenomenon, but have become a huge issue. For example, in a current case, we’re acting for an investment bank and we wanted the case to be heard in the English courts, while our opponents wanted it to be heard in Germany. We made a successful application in that case to the English court which determined that it had jurisdiction over the case and that it should proceed in England. Nowadays, it’s commonplace to have to advise on jurisdiction before dealing with the case itself and sometimes these applications can go on for months.

Devi Shah - Partner: Restructuring, Bankruptcy and Insolvency (RBI)

What does RBI do?

The RBI group is a cross-practice team of lawyers who have both transactional and contentious skills. We specialise in all matters relating to insolvency and the restructuring of debt, mainly of companies, but we also work with some individuals. We typically work with three communities: debtors, creditors and insolvency practitioners. Recently, there’s been a move in the industry toward more out-of-court restructuring, which is essentially changing your liabilities or your assets so that you have a healthier balance sheet to avoid formal insolvency proceedings in the courts.

How might Mayer Brown’s RBI group engage with clients?

One of my clients is a charity and recently it couldn’t afford to meet its pension scheme payments. The charity’s trustees were concerned both that the charity would become insolvent and about their own liability. We looked at what assets the charity had and how they could be sold off or, in the case of offices, closed in order to improve its balance sheet. We also helped them renegotiate their pension scheme payments. Eventually, we were able to reassure the charity that while things were bad, that didn’t mean they would have to close the organisation. The charity found a merger partner, which put it on a stronger financial footing. The whole process took about 18 months.

Acting for creditors, we oversee debt-equity restructurings, which are where our client forgoes some of the debt they’re owed and converts it into equity – shares in the debtor company. The shareholders in the debtor company agree to have their shares diluted, which means they have less control over their company, but they get some of the debt off their books. In more extreme circumstances, there may be no option but to put the debtor into an insolvency process. At this stage, we evaluate how we can maximise the value recovered for the creditors. Recently, a common solution has been to use pre-pack administrations, a process which has been in the news through the travails of Jane Norman, Habitat and some other high street stores. We appoint insolvency practitioners, who will immediately sell the business to a buyer they’ve already lined up. The shops stay open, the staff move across and while historic debts owed to the creditors won’t be paid off in full, they will hopefully be able to contract with the new owners further down the line.

How do trainees fit in?

We’re a small team, so our trainees are a real asset. Our trainees can be either transactional or contentious. Each will sit with a partner or senior associate. In the transactional seat, the trainees review, manage and prepare the team’s corporate and financial documentation, and create structure charts. On the contentious side, they’ll attend witness interviews, prepare witness statements, and help draft documents and file them at court. Of course, there’s a lot of research involved for both kinds of trainees too!

Having been a trainee with Mayer Brown myself, and also having seen some outstanding trainees come through RBI, I think the best ones demonstrate great initiative. A lot of the time, the information and lateral thinking that can sway cases isn’t available online or in textbooks. It requires real resourcefulness to find it.

Do you have any advice for someone interested in this area of law?

Read around the subject, and why not set yourself a task of writing an article? There are lots of journals that carry insolvency articles and many of them are by students. Committing to a piece of research and writing an article is a great way to test your interest.

Piers Elliott - Associate: Commercial Financial Disputes

What has been your career path to date?

I graduated in law from Birmingham University in 2004, after which I did my LPC at Nottingham Law School. I did a vacation scheme with Mayer Brown, was offered a training contract, and started in March 2007. I did seats in commercial dispute resolution, intellectual property, corporate and a secondment at Moody’s, the rating agency. When I qualified in 2009, I chose to join the litigation department. I became a lawyer because I liked the idea of court work and my interest in this area increased as a result of my six months in commercial dispute resolution. Despite enjoying my seat in our corporate department, I always saw myself as a contentious lawyer rather than a transactional lawyer. I personally found it very exciting being involved in cases that ended up in court before a judge. Being a litigator was always my number one choice.

What do trainees in litigation do?

What might seem like the unglamorous parts of a trainee’s job are often the most important. When we go to court, they’ll prepare bundles of documents which go before the judge and are crucial in guiding the judge through the intricacies of the case. I remember sitting in the Court of Appeal as a trainee and watching the judge leaf through the bundle which I had put together with my heart in my mouth. I felt incredibly sorry for a trainee on the other side after the judge openly criticised their bundles. These bundles are crucial, no case can be heard without them and getting one wrong and annoying the judge is never good – especially when your client is sat with you in court.

We often ask our trainees to research a particular point of law or a factual aspect of a case. It can be very helpful if they come across either a legal precedent from a new case which helps us frame certain legal aspects of the case, or a point which the other side has represented as being factual but which turns out to be untrue. If a trainee pulls out the "smoking gun" which wins the case – which in these disputes can often come down to one very important representation – then that’s fantastic.

We get trainees involved in client meetings, like witness interviews, in which they’ll be scribbling furiously. We use the notes from these interviews to build the case and to draft witness statements, so they’re hugely important. At the moment, we’re working on a multi-million pound banking dispute, which is factually highly complex. A bank has sold a product to a client, who is now saying that it wasn’t what they thought they were buying. The client owes the bank money, but is refusing to pay. One of our trainees had the task of reviewing a lot of the client’s emails and then attended a meeting with one of our witnesses. Because he had an intimate knowledge of the background to the case, he was able to chip in with questions, explain certain factual points and engage with the witness. It wasn’t just a watching brief.

The way for a trainee to stand out is to get down and dirty with the case so they understand the very core of it. The ones that really stand out are those that have been given something to research and come back saying: "I’ve looked into "X" and have this answer. But have you thought about "Y" and "Z", which may also be relevant to this point?"

Why would you encourage someone to work in litigation?

I love the competitive nature and tactical side to litigation. I see it as a mixture between a game of chess and poker. You’re always trying to work out what you can glean from the other side’s behaviour and whether they’re bluffing while looking six months into the future, planning your next move. It’s incredibly exciting. When you’ve been working on a case for as long as two to three years and it finally comes to court, you certainly get butterflies.

But my favourite thing about my job is being at the cutting edge of the law. I was involved in one of the final cases to be heard in the House of Lords, which completely changed the law on contractual interpretation in construction cases. To think that your work contributes to a rewriting of the law of the land – and is being taught at universities up and down the country – is fantastic.   

By

Finbarr Bermingham
Former Assistant Editor

Published

Issue 50

p28

29 February 2012

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