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					Prague Conference 2005                                                                                                              Friday September 30
A Euromoney Publication
                                                                                                                                                                              Highlights

Audience left stunned by                                                                                                                                                      Investigations
                                                                                                                                                                              Robert Joffe
                                                                                                                                                                              of Cravath in
                                                                                                                                                                                                              4




plane crash simulation
                                                                                                                                                                              the US gives
                                                                                                                                                                              advice to
                                                                                                                                                                              companies
                                                                                                                                                                              facing an
                                                                                                                                                                              investigation
          elegates sat in stunned silence after watch-        The simulation programme consists of time-            shortages, this was a unique case in that the defence

D         ing an air crash simulation tape at a session
          yesterday morning. George Tompkins, an
aviation partner at Schnader Harrison Segal &
                                                          sequenced air traffic control tapes from all aviation
                                                          facilities in the US, combined with radar tracking of
                                                          all aircraft in US airspace, which is updated every 15
                                                                                                                    hinged on the sequence of events leading up to the
                                                                                                                    captain’s decision, rather than assessing the appropri-
                                                                                                                    ateness of the decision itself.Tompkins said that the
                                                                                                                                                                              Mediation
                                                                                                                                                                              The first session of the new
                                                                                                                                                                                                              4

Lewis in New York, presented the new simulation           to 30 seconds. It is a reconstruction, in real time, of   use of the simulation in future will be limited to
                                                                                                                                                                              Mediation Committee draws a
programme to his audience, noting at the end that         what air traffic controllers in US airspace would         similar cases, but will be “outstandingly useful” in
                                                                                                                                                                              crowd
they looked “a bit shell-shocked”.                        have seen that day.Tompkins commissioned the              cases with an air traffic control element, such as
   Tompkins commissioned the simulation pro-              simulation from Canadian company Accident                 mid-air collisions and landing accidents.
gramme for a case about a plane crash in New York         Investigation Research, with the backing of the               Discussion in the second half of the session
in 1990.The crash happened after an Avicana air-          Canadian government, which was using the Avianca          focussed on the admissibility of these types of pro-
craft ran out of fuel after flying in a holding pattern   crash as a test case for the new programme.               grammes in court, especially programmes that use
for several hours and missing its first attempt at            The simulation shows that the captain was lulled      animation.Tompkins said that he had no problem
landing at New York’s John F Kennedy airport in           into a false sense of security after receiving insuffi-   admitting the tape as evidence in the US courts
                                                                                                                                                                              New offices                     5
adverse weather conditions. Avianca is Colombia’s         cient service and support from the air traffic con-       because he was using the government’s own infor-
national airline.                                         trollers, at one point even being put into an illegal     mation, so the defendants could not question the
   The Federal Aviation Authority (FAA) investiga-        holding pattern.                                          data’s authenticity.
tion placed responsibility on the captain, saying that        In the event, the new simulation wasn’t needed –          Also, because the programme uses factual data in
he failed to adequately notify air traffic control of     other evidence of negligence by the air traffic con-      real time it is a reconstruction rather than anima-
the seriousness of his fuel shortage.The FAA often        trollers was so strong the case was settled after only    tion, he said. Animation is seldom admissible as evi-
blames the captain as “the last guy to make a deci-       three days.The US government agreed out of court          dence because it can be manipulated to prove a            Country-by-country analysis of
sion”,Tompkins told IBA Daily News. “But the real         to share liability for the crash with the airline, con-   point. “The tape shows what the air traffic con-          the hot spots for new office
question is how the captain got into that situation,”     tributing $82 million towards damages.                    trollers were looking at – what actually happened, ”      openings
he said.                                                      While crashes are commonly caused by fuel             said Topmkins.
                                                                                                                                                                              Today’s schedule            11


Space tourism raises legal conundrum                                                                                                                                          All the day’s sessions: what’s on
                                                                                                                                                                              where and when



             hen Gregory Olsen, the world’s third                                                                   problem, with some commentators predicting that

W            space tourist, goes into space on
             Saturday he will do so without
recourse to a completed legal framework that cov-
                                                                                                                    space tourism will be worth $700 million within
                                                                                                                    15 years. Up to 15,000 passengers a year could be
                                                                                                                    visiting space by 2020, they say. In July, UK entre-
ers private space flights, delegates were told yes-                                                                 preneur Richard Branson signed an agreement               Contents
terday.                                                                                                             with US company Scaled Composites to build
   Olsen has paid the Russian government $20                                                                        commercial spacecraft for tourists.                       Resolution on the rule
million to reserve a seat on the Soyuz space craft,                                                                     “There is no possibility to change or amend           of law passed                   2
scheduled to dock with the International Space                                                                      the treaty,” said Kai-Uwe Shrogl, head of corpo-
                                                                                                                                                                              New Mediation Committee
Station (ISS) on October 1, and his trip raises                                                                     rate development at the German Aerospace
some perplexing legal questions.                                                                                    Centre. “Instead we are looking at creating codes         proves popular                  4
   The Outer-Space Treaty of 1967, signed by                                                                        of conduct to close some of the loopholes.”               Health regulations will force
almost 100 nations, outlines the legal framework                                                                        The UN Committee for Peaceful Uses of
governing space missions. But it does not include                                                                   Outer-Space has set up a working group to pro-            compromise of rights            4
provisions for liability if something goes wrong                                                                    pose ways in which national space agencies might          Corporate investigations        4
aboard a private mission.                                                                                           use legislation to rein in private companies.
                                                                                                                                                                              The hottest locations for
   If that were to happen, Olsen would only have                                                                        In 1999, satellite company Sea Launch (a consor-
recourse to a private contract with the Russian                                                                     tium of companies from the US, Russia, Ukraine,           new office openings             5
Space Agency. The Agency has taken out an insur-                                                                    and Norway) set up a launch pad in the Pacific
                                                                                                                                                                              Speakers demand
ance policy of almost $5 million in case the mis-                                                                   Ocean. Registered in a non-treaty nation, it is able
sion should run into difficulty of any kind.                                                                        to evade treaty rules. Companies operating manned         judicial diversity              8
   The treaty deals with space exploration at an                                                                    tourist flights would be able to do the same              New ethics code                 9
international level and makes no provisions for a                                                                       The session featured Sigmund Jäehn, the first
government’s conduct with paying individuals or                                                                     East-German cosmonaut and now a trainer for               Today’s schedule            11
space missions organized by private entrepreneurs.                                                                                                                            Court of Human Rights
   The lack of regulation could become a bigger           Sigmund Jäehn (centre), who joined yesterday’s session               Continued on page 2, column 1
                                                                                                                                                                              struggles with caseload     11

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  international financial law review
     Space law (continued from page 1)                                 IBA Council


                                                                       Rule of law resolution approved
                                                                       with near unanimous majority
                                                                               he IBA Council yesterday approved a resolution on                                            the resolution. He hopes that by doing so he will attract

                                                                       T       the rule of law that will be the first step in
                                                                               Association president Francis Neate’s campaign to
                                                                       raise awareness of the issue worldwide.
                                                                                                                                                                            media attention and mobilize local bar associations to
                                                                                                                                                                            action, creating pressure in those countries that have not
                                                                                                                                                                            upheld the rule of law to do so.
                                                                           The Council, which represents all of the member organ-                                               The next step in his campaign, which depends on how
                                                                       izations of the IBA, approved the resolution overwhelming-                                           much funding the IBA is able to attract, would see the
                                                                       ly, with a small number of member organizations, the Israeli                                         launch of a series of regional seminars to create a forum to
                                                                       bar association among them, declining to support the reso-                                           discuss the importance of the issue. Neate has already spo-
                                                                       lution. The IBA will now press release a statement to the                                            ken to some possible speakers and hopes to hold the first
                                                                       international media, and Neate encouraged local bar associ-                                          seminar in connection with the American Bar Association
                                                                       ations also to alert their local media to the resolution.                                            before next year’s IBA annual conference in Chicago. He
                                                                           “If there is one thing to come out of this conference I                                          estimates that the total cost of the campaign will be about
                                                                       would like it to be a sense of how important and how valu-                                           £250,000.
                                                                       able the rule of law is,” said Neate.                                                                    The IBA hopes to raise the funding by approaching
                                                                           The resolution begins by saying: “The International Bar                                          multinational corporates and local bar associations and ask-
                                                                       Association, the global voice of the legal profession,                                               ing them to support the campaign. One possible difficulty
                                                                       deplores the increasing erosion around the world of the                                              that Neate accepts is that the campaign might be seen as
                                                                       rule of law.” It goes on to identify the rule of law as the                                          anti-American because of the US administration’s contro-
                                                                       cornerstone of a civilized society and to set down the basic                                         versial stance over issues such as the detention of terrorist
                                                                       principles on which the judicial system should be based                                              suspects at Guantanamo Bay.
                                                                       (see below for the full text of the resolution).                                                         But he is keen to emphasize the opposite. “We are
     Sigmund Jäehn                                                         Neate, who announced his intention to launch a cam-                                              incredibly lucky to live in the countries we live in,” he said.
                                                                       paign on the issue during his speech at the conference                                               “I admire the US judicial system. The disappointing thing
    space tourists. Despite training Denis Tito and Mark               opening ceremony on Monday morning, says he will begin                                               over the last few years is that [US politicians] have failed to
    Shuttleworth, the first two space tourists, he expressed           by writing letters to heads of state asking them to support                                          live up their own standards.”
    doubts about how accessible this leisure activity would be in
    the future: “It remains a business for rich people,” said Jäehn.   IBA Rule of Law Resolution
    “It will get cheaper, but not that cheap.”
       The Russian Space Agency charges $100 million for a             The International Bar Association (IBA), the global voice of the                                     independent legal profession; strict protection of confidential com-
    two-week trip to the moon. Branson’s cheaper alternative           legal profession, deplores the increasing erosion around the world                                   munications between lawyer and client; equality of all before the
    costs just $190,000 but does not go as far out into space.         of the rule of law. The IBA welcomes recent decisions of courts in                                   law; these are all fundamental principles of the rule of law.
    The treaty defines outer-space as 100 kilometres above the         some countries that reiterate the principles underlying the rule of                                  Accordingly, arbitrary arrests; secret trials; indefinite detention with-
    Earth’s surface, and Branson’s craft will go to 103 kilome-        law. These decisions reflect the fundamental role of an independ-                                    out trial; cruel or degrading treatment or punishment; intimidation or
    tres for no more than 30 minutes before returning.                 ent judiciary and legal profession in upholding these principles.                                    corruption in the electoral process; are all unacceptable.
       A 2002 survey found that 63% of people said seeing              The IBA also welcomes and supports the efforts of its member bar
    Earth was the most attractive aspect of space tourism.             associations to draw attention to and seek adherence to these                                           The rule of law is the foundation of a civilized society. It estab-
    Jäehn, who went into space in 1978, said: “For the first           principles.                                                                                          lishes a transparent process accessible and equal to all. It ensures
    time in your life you can see the Earth as just a planet,                                                                                                               adherence to principles that both liberate and protect. The IBA
    hanging in space.You know how high you are and that the               An independent, impartial judiciary; the presumption of inno-                                     calls upon all countries to respect these fundamental principles. It
    Earth is round but to see it, you can’t describe the feel-         cence; the right to a fair and public trial without undue delay; a                                   also calls upon its members to speak out in support of the rule of
    ing.”                                                              rational and proportionate approach to punishment, a strong and                                      law within their respective communities.

     Around the conference

                                                                                                                                                                                                                      (Far left) Representatives from the
                                                                                                                                                                                                                      Learning Centre of Prague receive
                                                                                                                                                                                                                      the children’s books collected as
                                                                                                                                                                                                                      part of the LexisNexis Book
                                                                                                                                                                                                                      Donation Programme. Conference
                                                                                                                                                                                                                      delegates have donated the books
                                                                                                                                                                                                                      to help Czech children learn
                                                                                                                                                                                                                      English.

                                                                                                                                                                                                                      (Near left) Francis Neate congrat-
                                                                                                                                                                                                                      ulates the five young laywers who
                                                                                                                                                                                                                      became Fellows of the IBA after
                                                                                                                                                                                                                      completing five modules in the
                                                                                                                                                                                                                      IBA’s Distance Learning
                                                                                                                                                                                                                      Programme.

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     IBA Daily News - Friday, September 30 2005
    Health                                                                                                                                           Mediation


    Fighting disease will mean                                                                                                                       First session
    curtailing rights, say experts                                                                                                                   for Mediation
               overnments will be forced to interfere with basic free-            “The threat comes from disease and this is where resources         Committee
    G          doms in order to prevent and control dangerous dis-
               eases, a session at the conference heard this week.
        At the Medicine and the Law Committee session Anthrax,
                                                                              should be directed,” said Byrne.“We saw in the aftermath of
                                                                              hurricane Katrina that there has been disproportionate attention
                                                                              on security to the detriment of health preparedness. Greater
    Sars and bioweaponary: is globalization bad for your health? speakers     investment in public health is essential and will pay dividends in
    warned that freedom of movement and personal liberty must be              the long run.”
    curtailed if authorities are to respond effectively to disease out-           Panellists used the session to emphasize the need for a coordi-
    breaks.“People must accept some interference in their lives               nated international approach to health concerns, with speakers
    when public health is at stake,” said Zsuzsanna Jakab, director of        viewing globalization both as a threat and an opportunity.
    the European Centre for Disease Control and Prevention.                   Modern, interconnected economies and transport systems allow
        Session leader Demetris Vryonides was keen to stress the              the spread of disease across borders more rapidly then ever. But,
    value of lawyers’ help with the fight against disease.“Political          at the same time, communication technologies mean states have
    leadership has to deliver the right policy, but lawyers must              better tools for fighting disease.“This is an exciting and challeng-
    involve themselves in the process to guard against clumsy and             ing time for everyone involved in public health,” said Byrne.
    unhelpful regulation,” said Vryonides.“Smart regulation is a vital        “Recent outbreaks of avian influenza and Sars show diseases
    social policy tool. Lawyers must find ways to better protect soci-        spread more quickly then ever. But so does information.”
    eties.”                                                                       Byrne concluded his speech to delegates by pointing out that
        Continuing on the role of lawyers in public health, panellist         the more the world economic order converges the greater the                       packed room ushered in the inaugural session of the
    David Byrne, a former EU commissioner and special envoy to
    the World Health Organization, said lawyers have proved helpful
    in the past. Citing the example of increasingly strict regulation of
                                                                              need for a world legal order and consensus on how to deal with
                                                                              issues of public health.“Sars served as a short sharp shock to the
                                                                              public health community and resulted in the revision of the
                                                                                                                                                     A          IBA Mediation Committee with applause on
                                                                                                                                                                Wednesday, as speakers from five different jurisdictions
                                                                                                                                                     shared their experiences of mediation.
    tobacco products in Europe, Byrne stressed the effectiveness of           international health regulations,” said Byrne.The regulations,             John Townsend, chair of the newly formed committee, said:
    the law in addressing health concerns, saying:“Public health              adopted by the World Health Assembly in June of this year, pro-        “We’ve had a tremendous response since the group split off
    practitioners are often surprised at the power of the law to bring        vide a framework for detecting, identifying and dealing with           from the arbitration and litigation committee this year.”
    about change.”                                                            potential public health risks.                                             The committee has more than 1,100 members and delegates
        Byrne, who is now a senior counsel at Wilmer Cutler                       The example of the process of negotiating the regulations          had to bring extra chairs to join the session in club D, which
    Pickering Hale and Dorr in Brussels, also warned that state reac-         was offered to delegates as a model of how nation states should        attracted barristers, mediators, in-house counsel and private
    tions to bioterrorism have been inappropriate and disproportion-          handle health concerns.“It is about building consensus,” said          practice lawyers.
    ate. Resources have been allocated to security measures that              Byrne.“States are beginning to accept that an element of pooled            Thierry Garby, partner at Garby Vialars Dupas, led the first
    properly belong to public health.                                         sovereignty is beneficial to all. Give a little, get a lot.”           part of the session, which featured speakers from the USA,
                                                                                                                                                     France,Argentina, the Czech Republic and the UK.They dis-
                                                                                                                                                     cussed different codes of mediation practice with delegates.
    Corporate investigations                                                                                                                             Then Petria McDonnell, vice-chair of the Mediation
                                                                                                                                                     Committee, chaired a session on the draft EU Directive on

    Outside counsel best placed                                                                                                                      Alternative Dispute Resolution.
                                                                                                                                                         Some of the initial debate centred on whether mediators
                                                                                                                                                     should expect a cut of the settlement if the mediation process
    to handle tricky investigations                                                                                                                  succeeds.
                                                                                                                                                         In the US, a mediator’s fee is often linked to success, leading
                                                                                                                                                     one in-house counsel to comment:“Let me express revulsion
                                                                              through experience, are more likely to have established a rap-         about this success fee.You will not be my mediator if you ask
                                                                              port with the regulator.”                                              for this.Why should I pay something like twice the London
                                                                                  Because companies are increasingly multinational, investiga-       rate?”
                                                                              tions now often involve multiple regulators, said speakers.The             On the benefits of mediation over other approaches to set-
                                                                              company’s dealings with these bodies must be coordinated and           tling disputes, Eric van Ginkel, of Hughes Hubbard & Reed in
                                                                              outside counsel are ideally placed to handle the situation.            the US, said mediators in California have been successful in
                                                                              “Somebody needs to synchronize dealing with the different              more than 21,000 cases since the 1970s, estimating that this fig-
                                                                              regulators,” said Robert Joffe, partner at Cravath Swaine &            ure represented a success rate of 60%. Roberto Fortunati, of
                                                                              Moore.“Each regulator has to be handled sensitively.”                  Fortunati & Lucero Abogados in Argentina, calculated that
                                                                                  The panel presented delegates with a hypothetical case study       around 70% of commercial mediations succeed in his jurisdic-
                                                                              of an investigation conducted at a German company listed in            tion.
                                                                              Frankfurt and New York.The panel’s advice extended to inter-               Attendees at the session also discussed levels of training in
                                                                              nal matters as well as dealings with regulatory bodies. Particular     different jurisdictions.A 2004 survey of European jurisdictions
                                                                              reference was made to the Sarbanes-Oxley regime and the                found that average training for mediators ranged from three
                                                                              expectations of the US Securities & Exchange Commission.               days in Finland to 200 hours in Austria and Germany.
                                                                                  But the panel stressed that different regulators have different        Speaker Jon Lang from England said that courts were con-
                                                                              expectations and operate under different codes of law. Practical       sidering imposing a minimum training requirement on modera-
                                                                              advice was delivered on the handling of interviews, the control        tors.“In theory anyone can hang up a shingle outside their
                                                                              and preservation of documents, and the importance of an                office claiming to be a moderator,” said Lang.
     Robert Joffe                                                             appropriate initial reaction.“These things will be seen through a          Delegates from Germany, Ireland, Belgium and Switzerland
                                                                              prism of 20-20 vision in hindsight,” said Jospin.“Action must          also shared views and experiences of mediated cases from their
               peakers advised companies that face a regulatory inves-        not be delayed.”                                                       jurisdictions.

    S          tigation to call immediately for outside advisers, in a
               session on Wednesday. During the session, titled
    Investigations and enforcement proceedings: what to do when the securi-
                                                                                  Companies face a difficult decision when deciding whether
                                                                              to launch an internal investigation. For a large company operat-
                                                                              ing in multiple jurisdictions an investigation will prove costly
                                                                                                                                                         Meanwhile, the draft EU Directive on Alternative Dispute
                                                                                                                                                     Resolution might eventually put an end to differences in civil
                                                                                                                                                     and commercial mediation practices among member states.
    ties regulator comes calling, the panel said outside counsel bring        and potentially disruptive. Demands may be made on senior                  The directive aims to provide a minimal code of conduct for
    experience, perspective and independence to an investigation              management’s time and auditors will have to be involved.               all mediators throughout the EU, making any mediated settle-
    that general counsel cannot.                                                  A formal investigation may also require the suspension of          ment valid in all EU jurisdictions. Bankruptcy and family law
         Members of the panel also pointed out that regulatory bod-           vital personnel and perhaps unearth unforeseen and unrelated           disputes will be excluded because most jurisdictions already
    ies are more comfortable dealing with outside counsel.“General            problems. But failing to address issues and adopting a head-in-        have well-developed mediation protocols for such cases.
    counsel may have been involved in transactions that triggered             the-sand approach could be more costly.“Burying a problem                  The European Parliament adopted the draft directive in
    the need for an investigation,” said Walter Jospin of Paul                and hoping it will go away could prove to be disastrous,” said         October 2004. No speaker wished to estimate when a final ver-
    Hastings Janofsky & Walker.“In addition, outside counsel,                 Jospin.“It could raise the spectre of a cover up.”                     sion would be passed.

4   www.iflr.com
    IBA Daily News - Friday, September 30 2005
Strategy


Shanghai and Munich top
list of new office openings
A survey of law firm office openings over the past two years shows how the                                                          ation of the Dubai International Finance Exchange (DIFX),
opportunistic, the pioneering and the conservative among law firms are trying                                                       which this month begins trading securities using the US dol-
to grow. James Rice reports                                                                                                         lar. DIFX will not feature the stock purchase or IPO listing
                                                                                                                                    restrictions that investors face on the local exchange in
              hen Allen & Overy decided last year that it         increase by 9.3% in 2005. Investment in the city’s infrastruc-    Dubai. Partly because of this, the Dubai financial market has

W             wanted to hand over its office in Albania, it
              could have expected a long wait for takers. Not
so: Austrian firm Wolf Theiss snapped up the chance, and has
                                                                  ture has been considerable, including a new international air-
                                                                  port and port developments, making it more accessible both
                                                                  for trade and for business.
                                                                                                                                    more than tripled its value in the past 12 months. Simmons
                                                                                                                                    & Simmons moved to the city in July, and Linklaters, DLA,
                                                                                                                                    Akin Gump, Freshfields Bruckhaus Deringer and Ashurst are
since acquired offices in Bucharest and Sarajevo. It seems few        With service industries (such as finance, insurance and       all considering a move. Firms are attracted by the depth of
places are now off-limits for firms looking to grow.              real estate) now accounting for more than half of Shanghai’s      capital in the region as well as the growth in real estate and
    A survey of office openings reveals that, over the past two   gross output, the city looks set to become a global financial     international energy projects. Projects such as the Burj
years, as many as 74 new offices were opened in 32 coun-          centre.The Shanghai Stock Exchange, established in 1990, is       Dubai, which will be the world’s tallest building when it is
tries, from China to the Cayman Islands.There is little overall   now mainland China’s most important in terms of shares list-      completed in 2009, and OGD-2, a $1 billion onshore natural
consistency: while Slaughter and May has closed two inter-        ed and total market value, and has over 37 million investor       gas programme, have accelerated the emirate’s economy. But
national offices in this period and opened none, Orrick           accounts. As a result, firms opening in Shanghai are expect-      firms will need a full team on the ground to advise on such
Herrington & Sutcliffe has branched into six new cities in        ing to work on finance deals rather than corporate M&A            large transactions.
Europe and Asia. But the disparities say much about the con-      work. US west-coast firm Latham & Watkins, for example,               Meanwhile,Taiwan’s economy continues to strengthen
trasting strategies of firms’ managing partners.                  opened a Shanghai office this year with an eye to advising in     thanks to a thriving technology market. US firm Pillsbury
                                                                  particular on debt and equity-linked offerings by Chinese         Winthrop describes Taipei as the world’s latest and most sig-
Hotspots                                                          issuers.                                                          nificant intellectual property battleground. Other firms with
Four cities in particular stand out as today’s hotspots:              In Munich, meanwhile, the booming private equity              a strong intellectual property practice have also been attract-
Shanghai, with at least seven new offices in the past two         industry has attracted firms such as Kirkland & Ellis, Skadden    ed in particular by the patent litigation work generated by
years, Munich, with six, Dubai, with five, and Taipei, with       Arps Slate Meagher & Flom, Reed Smith and Hogan &                 the technology industry and semiconductor manufacturers in
four. Each has its own reason to be popular, mainly with          Hartson, who have all moved to city in the past two years.        the city. Orrick, for example, was driven to open a Taipei
opportunistic firms looking to capitalize on specific areas of    Munich is a hub for modern companies in industries such as        office in 2005 in direct response to client demand for intel-
economic growth.                                                  information technology, aerospace and biotech, many look-         lectual property advice.
    Shanghai’s appeal, for example, is owed to its rapid expan-   ing to match the success of local industrial corporates such as       More than half of all new office openings in the past two
sion as a financial centre in the fastest-growing economy in      Siemens and BMW. Germany is Europe’s second biggest               years have taken place in just these four markets. But not all
the world.The city’s estimated growth rate, at 10.8%, out-        market for private equity investment after the UK.                firms are happy to follow the prevailing fashion in global
strips even that of China overall, where GDP is expected to           In Dubai, firms have flocked to take advantage of the cre-    expansion.These pioneers aim to win business from multina-




                                                                                                                                                                   www.iflr.com
                                                                                                                                     IBA Daily News - Friday, September 30 2005                       5
  New offices in Europe                                                                                            riding concern has been that Gide is able to       favour jurisdictions where there is an estab-
                                                                                                                   spread itself internationally without losing its   lished active market, a strong client base, and
                                                                                                                   identity. “To continue its initial practice and    lawyers of sufficient merit. Opening in
                                                                                                                   remain itself, Gide had to go into markets         major centres rather than more peripheral
                                                                                                                   where it had the same chance as everyone           jurisdictions also averts uncomfortable dis-
                                                                                                                   else,” says Tavernier.                             parities in compensation and eases the diffi-
                                                                                                                       Gide is not alone in worrying about loss       culty of having different levels of profitabili-
                                                                                                                   of identity. A number of firms (such as            ty in different markets.
                                                                                                                   Wachtell Lipton Rosen & Katz, Slaughter                Cleary Gottlieb Steen & Hamilton epito-
                                                                                                                   and May, and Cravath Swaine & Moore)               mizes this pragmatic type of firm. Its first
                                                                                                                   have been famously reluctant to open over-         international office opened in Paris in 1949,
                                                                                                                   seas offices. Beside the less tangible cultural    but over the next 50 years it has established
                                                                                                                   pressures of opening overseas offices, these       just nine more – with a Beijing office to
                                                                                                                   firms worry about the effect on profitability,     open within the next six months. Managing
                                                                                                                   the difficulty of recruiting, the problems of      partner Mark Walker says proposals for a
                                                                                                                   imposing standards of quality and the              new office must always be carefully consid-
                                                                                                                   administrative drag created by managing a          ered and justified in terms of a firm’s overall
                                                                                                                   more diverse organization. “Our competitors        strategy. “We firmly believe that opening
                                                                                                                   would recognize that in some of their inter-       more offices doesn’t have any particular
                                                                                                                   national offices, the quality isn’t as good,”      value in itself,” he says.The firm is continu-
                                                                                                                   says David Frank, partner at Slaughter and         ously active throughout Latin America, for
                                                                                                                   May. “Hiring your own capability means             example, but does not see a need for a base
                                                                                                                   you have to start small and you lack strength      when it can send its lawyers to the region.
                                                                                                                   in depth and specialist skills.”                       Paul Hastings Janofsky & Walker, which
  tional investors in jurisdictions or regions                 central and eastern Europe, which,                      The consensus among these more conser-         has opened three European and three Asian
  where the competition from other interna-                    Heidinger believes, will make Wolf Theiss           vative firms is that the best form of quality      offices in the past five years, takes a similar
  tional firms is not a concern.                               more attractive to international banks and          control is to handpick local firms to provide      view.“[We] expand our international presence
      Austrian firm Wolf Theiss, for example,                  corporates looking to invest there.                 local advice.At the same time, Slaughter and       in a well-planned, step-by-step manner,” says
  has focussed its expansion on emerging mar-                      French firm Gide Loyrette Nouel has             May and Wachtell make most of their revenue        chairman Seth Zachary.“We do not expand
  kets in central and eastern Europe. “We                      followed a similar approach, opening offices        from domestic M&A advice so it makes sense         anywhere if it is not strategic.”The firm
  choose small countries where the major                       in Belgrade in 2004 and in Algiers and              for their partners to focus on that area.As        requires each office to contribute to prof-
  international firms don’t have a presence and                Casablanca in 2003, and was also early into         both firms have high partner profits compared      itability, as it considers its international offices
  are unlikely to have a presence in the fore-                 Tunis, Hanoi and Istanbul, where few firms          to gross revenues, the diluting affect on prof-    to be long-term global investments.
  seeable future,” explains partner Markus                     have followed. Senior partner Gerard                itability of expanding into new jurisdictions          The firm’s recent activity reflects the
  Heidinger.Within the region, the firm is                     Tavernier says that the firm’s expansion            would be unwelcome.                                broader economic strength that has driven
  opportunistic in its approach. It has no                     strategy has been to select three discrete              The pattern of new office openings             expansion among several US west coast firms
  intention to open in the major global finan-                 emerging markets (eastern Europe, Asia and          shows that most international firms toe a          rather than a change in thinking. Of those
  cial centres, because it does business with                  north Africa) and within them countries             line between the most adventurous and the          firms, Latham & Watkins opened five
  those centres, rather than in them. Instead                  that have good relations with France and a          most conservative of their peers, and seek         European offices between 2001 and 2002 and
  the priority is to become a leading firm in                  legal system similar to French law.The over-        methodical expansion.These firms tend to           a Shanghai office in 2005. O’Melveny &




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6 www.iflr.com - Friday, September 30 2005
  IBA Daily News
Myers recently opened in Beijing and               closures, however, Singapore stands out as a      New offices in Asia
Shanghai, while Orrick has opened 10 inter-        special case.There has been a steady rate of
national offices over the past seven years.This    departures from the city, including Orrick
year Orrick opened a Moscow office to pro-         and Simpson Thacher & Bartlett in 2003,
vide a base for advising clients on mergers and    and Slaughter and May this year. Eversheds
acquisitions, oil and gas law and private equity   is also to end its interest in its current
deals.The firm’s capacity in Asia was also bol-    Singapore office and subsequently open a
stered by a Taipei office in January 2005, and     different office in the city.
then the takeover in August of Coudert’s               Reasons for the closures vary. Slaughter
Hong Kong and Shanghai offices, as well as         and May’s David Frank says his firm’s
part of the Beijing practice.                      Singapore exit was “a question of allocation
                                                   and resource”.The firm felt it could provide
Growing together                                   as good a service through its best friends
The well-documented proliferation of suc-          network as it could with a team on the
cessful start-up companies on the US west          ground. Alan Jenkins, head of international
coast over the past two decades, many of           at Eversheds, cites “differences of opinion in
which have expanded their businesses               Eversheds’ direction” for the change of
abroad, has been the main motivation for           office.
much of the expansion. Because start-ups               Behind these explanations lies a more
have few entrenched relationships with local       general disillusionment. Many firms see the
law firms in other jurisdictions, it is easy for   joint ventures imposed by the Singapore bar
west coast firms who already provide them          as unduly restrictive. Singapore is also
with domestic counsel to continue advising         dependent on its neighbouring economies,
them through international offices.                which are not growing at anything like the
   West coast firms also feel competitive          speed of China. Due to structural problems in
pressures in their home market. “There are         the so-called tiger economies, there has been
basically two ways to grow,” says structured       a long-term slowdown in deal flow.Those
finance partner Cameron Cowan at Orrick.           firms that have prospered in Singapore have
“Either you go to where your clients say           usually done so either through working with
you should go, or you think strategically          outstanding local partners (in the case of        economic growth and political instability.        but the political stability of the country is not
about where you should be.” Orrick’s speed         Linklaters) or through sheer persistence.“We      India is growing rapidly but bar rules remain     entirely certain. China and Dubai will remain
of expansion is the result of a blend of both      hung in there and didn’t look at it as a short-   restrictive and so the market is closed to        the latest locations of choice for some years
approaches.The firm has a strategy team that       term proposition,” says one lawyer of his         international firms, while lower fees would       to come, but US firms may also look to
devises a roadmap for new office openings,         firm’s office in Singapore.                       make local offices uneconomical.                  expand in Europe with offices in secondary
but it has also opened some offices (such as           There are many exotic locations available         Instead, the most likely locations for fur-   financial centres such as Madrid and Lisbon.
Paris and Taipei) earlier than expected, as a      to pioneering law firms, but it is difficult to   ther new office openings are former Soviet        Meanwhile, the same opportunistic streak
response to client requests.                       assess where the next hot markets will be         countries such as Bulgaria and Ukraine, with      that has seen law firms open in unlikely loca-
   Of course, not all international offices are    and where will turn out to be an unwise           burgeoning real estate and project finance        tions from Ankara to Zambia as well as in
a success, and some are shut down or hand-         investment. Central and southern Africa           opportunities.Turkey is another country on        Bergen, Botswana and Baku, will no doubt
ed over to other firms. In terms of recent         offers few prospects, given the slow rate of      Europe’s frontier with a developing economy,      continue.




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                                                                                                                                         IBA Daily News - Friday, September 30 2005
                                                                                                                                                                                                           7
  Diversity


  Judges panel makes case for more diversity
           iversity is essential for a just and legitimate judicial           The project covered France, The Netherlands, Germany,

  D        system, panellists agreed at a session on gender
           and ethnicity on Wednesday. Lack of diversity
  undermines the legitimacy of a judicial system both in
                                                                          England, the US and Canada – all countries in which
                                                                          immigration is common and that have predominately mul-
                                                                          ticultural societies. The findings show that there is little
  terms of public perception and the quality of its judges,               ethnic and religious diversity in the judicial system and
  they said.                                                              that post-war immigrants are under-represented in the
     Speakers said that, in their experience, appointments are            judiciary.
  rarely made solely on merit. The Honorable Justice Roslyn                   In the UK, immigrants make up 9% of the population
  Atkinson of the Supreme Court of Queensland, Australia,                 but only 4% of the judiciary. In the other European coun-
  said: “A system based purely on merit would be likely to                tries surveyed this ratio of judges to ethnic population was
  see men and women thriving equally,” she said. It is also               even lower. In the US, immigrants make up 31% of the
  wrong to assume that a diverse judiciary is not an elite                population but only 19% of the federal judiciary and 5% of
  judiciary, she argued. “In fact, widening the pool ensures              the state judiciary.
  the best people are considered for appointment.”                            De Groot van Leewen stressed that diversity is not
     Scott Wenner of Schnader Harrison Segal & Lewis in                   about focusing on a particular race, gender, culture or reli-
  New York referred to the Rodney King case in Los                        gion. Judges as individuals are expected to be impartial,
  Angeles, saying that the legitimacy of the judiciary was                and so their race or gender should not be an issue. Instead
  damaged by the public’s perception that the outcome of                  it is important that the culture of a judiciary as a whole
  the case was affected by racial bias. He also related his               supports diversity, representing as wide a range of groups as
  experience living in California during the high-profile                 possible.
  OJ Simpson case, when he noted that the reaction of peo-                    Justice Atkinson believes that diversity will have a posi-
  ple around him could be distinguished directly on racial                tive effect on the rights of all people, not just women and
  lines.                                                                  ethnic minorities. In the US, research covering decisions
     “Life experience shapes the way in which we look at                  by women judges in obscenity and death penalty sentenc-
  the world,” he said. “That must carry over, not only into               ing showed that female judges were more likely to make
                                                                                                                                                                                       Justice Roslyn Atkinson
  how the justice system is perceived, but also into what                 liberal decisions to uphold individual rights in both areas.
  goes on inside the system as well. We need a microcosm of               The presence of women in the court system also tended to                    Lastly, Justice Atkinson warned against being compla-
  our community in the courthouse.”                                       increase the probability that male judges would adopt simi-              cent about the rights of women and minorities in today’s
     Research recently commissioned by The Netherlands                    lar decisions.                                                           context. “One assumes that all right-thinking people sup-
  Council of Judiciary into the extent to which ethnic                        Panellists agreed that it was up to judges to actively pro-          port the notion of gender and ethnic diversity in judges to
  minorities are represented in the judiciary shows that                  mote judicial diversity. “Responsibility for diversity is an             ensure that the widest pool is available so that appoint-
  diversity is still some way off. Leny de Groot van Leewen               institutional affair,” said De Groot van Leewen. “But all insti-         ments can be made of the best people. But unfortunately
  of Radboud University in The Netherlands, who took part                 tutions consist of individuals.” High-profile judges have a              my experience tells me that this is not necessarily the
  in the research, presented her findings at the session.                 responsibility to build public confidence in the system.                 case,” she said.


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8 www.iflr.com - Friday, September 30 2005
  IBA Daily News
Ethics


Revised IBA ethics code announced
                                                                                                                                       we understand a code with detailed rules and commentaries
                                                                                                                                       aimed at resolving all ethical issues of the various legal tradi-
                                                                                                                                       tions and systems,” he said.“The world is too diverse, and the
                                                                                                                                       bars’ structures and functions remain dissimilar.”
                                                                                                                                           But Mullerat does believe that a universal code of ethics
                                                                                                                                       will emerge at some point in the future.“As the Roman jurists
                                                                                                                                       said, it is certus an sed incertus quando – it will certainly happen,
                                                                                                                                       but it is not certain when,” he said.
                                                                                                                                           He pointed to the progress of the CCBE (the Council of
                                                                                                                                       Bars and Law Societies of the European Union), in which all
                                                                                                                                       28 member states have now adopted an individual code of eth-
                                                                                                                                       ical rules.At present this does not apply to cross-border activi-
                                                                                                                                       ties, although the CCBE is reviewing its code in this regard.
                                                                                                                                       Additionally, the Ethics 2000 Commission reviewed the
                                                                                                                                       American Bar Association code of ethical rules in 2002, and
                                                                                                                                       the Law Society of England and Wales will shortly release its
                                                                                                                                       own rules of professional conduct.
                                                                                                                                           The growth of these codes has been spurred by the increase
Ramon Mullerat and                                                                                                                     in law firm mergers and cross-border deals, which have created
Alejandro Ogarrio                                                                                                                      more conflicts of interest. Law firms’ more business-like
                                                                                                                                       approach has also led to the likelihood that they will be treated
        he IBA has announced the revision of its 1956 code       vant to a globalized legal environment. “It’s not about draft-        more as businesses rather than defenders of justice, according to

T       of ethics and after this week’s conference will invite
        member organizations to evaluate the new draft code.
   Emilio Gonzalez de Castilla, from Mexico, Ramon
                                                                 ing a new code of ethics, nor about changing the rules,” he
                                                                 said.
                                                                     The revised code aims to provide “basic aspirational princi-
                                                                                                                                       Hans-Jurgen Hellwig.
                                                                                                                                           Helge Jakob Kolrud said law firms are facing a crossroads:
                                                                                                                                       either they have to incorporate a business ethos and develop as
Mullerat, from Spain, and Helge Jakob Kolrud, from Norway,       ples that will act as a point of reference for different jurisdic-    commercial consultancies, or they need to apply core values
drew up the new code of which this is the the fifth draft.       tions worldwide”, especially for developing countries.The code        more rigorously.
   Speaking at a session this week to discuss the new draft,     will focus on the core values of the profession: independence,            Alejandro Ogarrio, officer of the IBA’s Bar Issues
Gonzalez de Castilla said the IBA cannot proceed without         loyalty, secrecy and a commitment to pro bono work.The code           Commission, added:“A general code of ethics is difficult and
an up-to-date code of global ethics. But he assured delegates    is intended as a guideline and will not be obligatory.                quite remote.Any proposal must be kept to the level of very
that the revision did not attempt to harmonize all ethical           Ramon Mullerat had earlier said that it was impossible to         general concepts.An attempt to harmonize all ethical concepts
directives, nor provide singular solutions to ethical problems   create a comprehensive and universal code of ethics that would        would always be doomed to failure.”
worldwide. Instead the document is intended to make a            successfully incorporate the 4.5 million lawyers practising in            The session was run by the Professional Ethics Division and
code of ethics more accessible to local bars and more rele-      the world.“We cannot have a global code of conduct, if by this        the Bar Issues Commission.




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                                                                                                                                         IBA Daily News - Friday, September 30 2005                            9
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10 www.iflr.com - Friday, September 30 2005
   IBA Daily News
Today’s schedule



TIME                 TOPIC                                                                    LOCATION         TIME                TOPIC                                                               LOCATION
All day                                                                                                                            Managing and resolving disputes in IT transactions          Meeting Hall V, PCC
0900                 International Construction Projects Committee excursion                The Drevcice                           Maritime lawyers – the new millennium                      Meeting Hall IV, PCC
0930 – 1700          Civil litigation in Europe European Forum                      Conference Hall, PCC                           New York Convention workshop                              Meeting Hall I, PCC 33
                                                                                                                                   Terms of trade: the status of CISG, INCOTERMS
                                                                                                                                   and other model laws and contracts                              North Hall, PCC
Morning                                                                                                                            The challenges of introducing antitrust regimes                 Terrace 1, PCC
0930 – 1230          Corporate criminal liability – the CEO in the dock                     Club B, PCC                            The impact on legal opinions of EU directives
                     Format rights in broadcasting                                          Club D, PCC                            and regulations relating to insolvency                             Club A, PCC
                     Group policies/third-party beneficiaries of cover                      Club E, PCC
                     Illicit trade of art in Eastern Europe                                 Club C, PCC        Afternoon
                     Increase the value of current clients:                                                    1400 – 1700         The lawyer’s role in society: perception of core values     Panorama Hall, PCC
                     the R-A-I-N-B-O-W approach                                      Panorama Hall, PCC
                     International corporate takeovers – pitfalls and tips                 Club H, PCC         Evening
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Human rights


Human rights court overwhelmed by cases
           judge at the European Court of Human Rights said                  to increase the amount of money given to the national courts,

A          yesterday that the institution risks being transformed
           into a complaints body unless governments improve
the efficiency of their national courts.
                                                                             to make them work better,” she said.
                                                                                 Meanwhile, Fura-Sandström also said she sees no need for
                                                                             the European Court of Human Rights to begin targeting cor-
    The European Court has a backlog of 80,000 cases, with                   porations themselves rather than governments.At present only
over 22,000 applications lodged in 2005. So far this year the                states can be obligated by the European Court to act on
court has managed to hand out nearly 600 judgments.The                       human rights violations.
danger, Judge Elisabet Fura-Sandström said, is that the judges                   “Corporations must be hit indirectly, so to speak,” said
have to sift through a number of “manifestly ill-founded cases”              Birgit Spiesshofer, of Hengeler Mueller, Germany.“The
when they know that numerous cases of serious human rights                   European Court makes corporate social responsibility applica-                  (L-R) Birgit Spiesshofer, Emilo Cárdenas, Elisabet
violations are among the backlog. Over 13,000 applications                   ble by obligating signatory states in the first instance.”                     Fura-Sandström, Patrick Doris, James Rayis
have been disposed of this year alone.                                           While the Human Rights Convention at present forbids              rights whenever possible, thereby setting strict limits on the
    Eastern European states account for most of the applica-                 state interference in the private sector, many multinationals         activities of governments in cases where potential for human
tions. Russia,Turkey, Poland and Romania were responsible for                have voluntarily drafted their own corporate social responsibili-     rights violations exists.
over half of all applications sent to the court from January to              ty codes. Fura-Sandström sees this as more effective than a               Spiesshofer pointed out that signatory states were only liable
June this year.“Governments know what they have to do, and                   mandate for minimum responsibilities.“Any top-down meas-              if the conduct of the corporation could be attributed to the
how to do it,” she said.“All the case law is already there.”                 ures would have to set minimum standards,” she said, adding           state in some way.“If there is no involvement by the state in a
    A new protocol on the criteria for admissibility of cases to             that it was better for companies to develop individual pro-           corporate social responsibility complaint, then the road to
the court is being ratified. In the meantime, some governments               grammes more suited to their businesses.                              Strasbourg is barred,” she said.
have taken it upon themselves to improve the efficiency of                       A recent example was the case of Hatton v UK, when resi-              The European Court is also restricted to the territory of the
hearings. Italy, for example, has introduced legislation that enti-          dents and property owners near Heathrow airport brought a             signatory states, and so has nothing like the reach of the Alien
tles plaintiffs to compensation if a case takes too long.                    case to the European Court on the grounds that the volume of          Tort Statute in the US. Spiesshofer said that this was a pity
    Fura-Sandström is unconvinced that this measure represents               night flights was in breach of their right to family life.The         given that most corporate social responsibility infringements
the best answer to the problem, however.“A better solution is                court ruled that states must minimize infringements on human          occur in developing countries.




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                                                                                                                                                      IBA Daily News - Friday, September 30 2005                        11

				
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