Ireland: A case to make

Centuries of imperiousness towards the Irish could be one of England’s greatest historical mistakes, and when Legal Business set about asking Irish independents whether Dublin is a viable alternative to London for disputes work following Brexit, it felt as though this underestimation was very much alive today. However, the Irish legal elite remains defiant in the face of any English condescension.

‘Absolutely it’s viable,’ says Dillon Eustace’s managing partner Mark Thorne when asked if the Irish Bar’s initiative to promote Dublin as a global disputes centre was realistic. ‘You’re asking if the big independent firms have the talent to achieve that, and the answer is yes, absolutely.’

Thorne isn’t alone. Supported by The Bar of Ireland, the Irish minister for justice and equality Charlie Flanagan has set about promoting Dublin as a natural home for dispute resolution, with Ireland set to become the only English-speaking common law jurisdiction fully integrated into the European Union after March 2019.

The move is unanimously welcome in Dublin, with Irish independents long being keen for the Bar to market the country’s legal system abroad, particularly as English-language courts have also been set up in Germany, France, Belgium and the Netherlands as countries begin to circle London for any prestigious legal work lost as a result of Brexit. But any jurisdiction looking to prise work away from London comes up against the City’s longstanding reputation as a global hub for disputes work, as well as London’s proven ability to market its legal system.

‘Historically we weren’t as good at this as the London Bar,’ says Paul McGarry SC, chair of Council of The Bar of Ireland. ‘Because of that, until the last two to three years we haven’t really marketed the Bar here. We probably need to do more of that and continue doing it.’

‘Until recently we haven’t really marketed the Bar here. We need to do more of that and continue doing it.’
Paul McGarry SC, The Bar of Ireland

London’s reputation for disputes work relies more on the calibre of its lawyers and judiciary than slick marketing, but Irish firms bullishly insist their talent compares with that of the City, as Andrew Lenny, head of dispute resolution at Arthur Cox, is eager to point out: ‘The strength and depth of the talent is here.’

Arthur Cox found itself representing automotive companies Volvo and Renault after the European Commission determined in 2016 that five major truck manufacturers had broken EU antitrust laws, with the companies in question colluding for 14 years on pricing, resulting in Volvo and Renault being fined a record €2.93bn. The truck cartel case could be a sign of things to come for both Dublin and London, with EU competition law likely requiring cartel cases to be re-housed to EU jurisdictions post-Brexit.

The global financial crisis, which hit Ireland hard, dominates disputes with the after-effects of the crash still making their presence felt ten years later. Observers cite recent prosecutions as indicative of the progress made in the Irish legal system, such as the high-profile conviction of David Drumm, the former chief of Anglo Irish Bank, in June over a €7.2bn circular transaction scheme between Anglo and Irish Life & Permanent, with William Fry representing the Department of Finance before the Commission of Investigation into Anglo, now named Irish Bank Resolution Corporation (IBRC).

‘In the past a number of cases fell apart due to mistakes in the gathering of evidence,’ says Declan Black, managing partner at Mason Hayes & Curran, ‘but now you are seeing prosecutions in light of the collapse of Anglo-Irish Bank that you wouldn’t have before.’ Black speaks on behalf of a firm heavily invested in the sector, with approximately a third of its income coming from disputes.

‘Cases fell apart due to mistakes in gathering evidence, but now you are seeing prosecutions that you wouldn’t have before.’
Declan Black, Mason Hayes & Curran

The legacy of Anglo-Irish Bank’s collapse and the resulting prosecutions is felt elsewhere, with the Central Bank investing heavily in its enforcement division, providing a boon to any firm with a significant regulatory practice. Eversheds Sutherland has also benefited from post-crash regulatory work, advising the Quinn family in its challenge to enforcement action taken by IBRC. However, there is a sense that the post-crash recovery disputes are beginning to make way for more traditional commercial disputes, reflecting Ireland’s improving economy.

‘The number of significant property disputes has increased,’ says Lenny. ‘We’ve seen a lot of activity in commercial property in particular, there are more cranes on the Dublin skylines than there ever were in the boom times.’

The increase in property work is a trend Garrett Breen, disputes partner at William Fry, also cites: ‘We’re seeing a re-emergence of property litigation. The other thing is Ireland has a great many pharma companies who hold their IP through Irish subsidiaries, which brings a lot of work.’

Other cases may yet also prove lucrative, with an application for High Court inspectors in progress to investigate Ireland’s largest media group, Independent News & Media, over a data breach in 2014 expected to provide mandates. William Fry is likely to deploy its 21 partner-strong disputes team in the defence of the case.

For William Fry this would follow other high-profile cases, such as advising investment company Defender over losses in excess of €3.5bn incurred as a result of the Madoff Ponzi scheme. The Madoff case also provided significant work for top-six firm Matheson, which advised one of the major international banks involved in the fraud of Bernard L Madoff Investment Securities.

Another rival, A&L Goodbody, has also been active in high-profile disputes, notably representing Volkswagen over its emissions controversy and TSB Group in litigation related to the bank’s €1.4bn capital reduction and €500m capital raising programme.

Irish justice and equality minister Charlie Flanagan is promoting Dublin as a natural home for dispute resolution, with Ireland set to become the only English-speaking common law jurisdiction fully integrated into the EU.

While global offshore firm Walkers is a newer entrant into the Dublin disputes scene, opening its practice in 2014, it has not stopped the firm making inroads. It is advising the special liquidators on the collapse of IBRC, which is expected to cost up to €306m by the time the work is completed at the close of 2022, while A&L Goodbody is also working on the insolvency.

Elsewhere, ByrneWallace still counts itself as the leading public sector firm, with disputes counting for approximately 45% of income at the Irish independent. Most recently the firm assisted the Department of Public Expenditure and Reform over the inquiry into protected disclosures in Ireland.

DAC Beachcroft, meanwhile, first entered the Dublin disputes scene midway through the financial crash, initially setting itself up in the insurance and healthcare spheres, while recovery work dominated Irish disputes. Since then, the firm has expanded into more conventional commercial litigation with the addition of Lisa Broderick, formerly of Matheson, who says the firm is finding itself acting on larger cases.

‘Most of our cases over the last 12 months have been solved through mediation, on what could have been very high-profile claims.’

Broderick also stresses Ireland needs to shake off its self-deprecating nature if it is to successfully challenge London in light of Brexit: ‘As a nation, we’re very self-critical. We need to give ourselves more credit – we have a tendency to underestimate ourselves.’

Work to be done

Dublin has been busy then, with the types of dispute beginning to diversify as the fruitful post-crash work begins to dissipate. However, while firms are quick to advocate Irish legal talent, they’re less likely to endorse the legal infrastructure – crucial if the capital is to make a serious play to become a hub for cross-border disputes.

‘There’s always more that can be done. The talent is certainly here but maybe the infrastructure is stretched a little bit,’ notes Breen.

‘The number of property disputes has increased. There are more cranes on the Dublin skylines than there ever were in the boom times.’
Andrew Lenny, Arthur Cox

The consensus is that while there is only one loser in disputes from Brexit – London – there may be multiple winners, and the extent to which Dublin can become one of them is still up for contention, with the local economy likely to also suffer when the UK breaks ties with Europe.

‘It’ll never be beyond the scale of what London is, nowhere is going to displace London,’ says Joe O’Malley, commercial litigation and disputes partner at Hayes Solicitors. ‘But in terms of close comparisons, Dublin compares favourably.’

The caution comes over concern that Ireland is unable to commit the appropriate level of resources. Some believe the government is eager to say the right things but reticent to find the necessary resources, a mismatch McCann FitzGerald’s Karyn Harty is quick to emphasise: ‘There’s a contradiction that the Minister of Justice is spearheading this initiative when the resources aren’t being put in.’

The areas in need of change are widely agreed upon, with one of the main frustrations for Irish litigators being delays at the Court of Appeal, where there is a backlog of cases after the Supreme Court decided to focus on larger, constitutional matters. Partners in Ireland stress as many as six or seven additional judges may be needed to work through the bottleneck of cases, while others believe the work ethic of the Court of Appeal is not matched by the Supreme Court.

‘In fairness, when the Court of Appeal was set up it had to take on a body of work,’ stresses Lenny. ‘It had a challenge with its workload but it’s going in the right direction and it’s getting addressed.’

Dillon Eustace’s Thorne is also optimistic about the Court of Appeal overcoming its recent spike in workload: ‘It’s not been as quick as it could have been but it had a very high workload because of the cases given back to it. When it works through those it’ll get better.’

‘Dublin will never be beyond the scale of London, nowhere is going to displace London. But Dublin compares favourably.’
Joe O’Malley, Hayes Solicitors

However, there are wider problems beyond the overburdened resources, with archaic laws around litigation funding standing between Ireland and a modern and efficient system. As such, meritorious claims often fail to proceed due to the cost of litigation.

The case Persona Digital Telephony and Sigma Wireless Networks v The Minister for Public Enterprise & Ors last year put the brakes on third-party litigation funding, with the Supreme Court confirming it is prohibited under Irish law.

‘I’m slightly bemused as to why Ireland is one of the last common law jurisdictions to relax these rules,’ says Jon Legorburu, head of disputes at ByrneWallace. ‘In the UK it really transformed the market and sophisticated funders do not tend to fund spurious cases.’

Any potential change in litigation funding, however, will require legislative action with Gavin Smith, partner and head of insolvency at Walkers, confused as to why the nature of third-party litigation funding in Ireland is decided by the courts: ‘It shouldn’t be up to the judiciary to determine the way litigation funding is regulated, it should be a matter of legislation.’

However, word from the top of the Bar is that the issue is overstated: ‘Litigation funding can be a polarising issue,’ comments McGarry. ‘A lot place great store in it, but it would only effect a very small number of cases in this jurisdiction. I’m not sure it’s the answer to everything.’

The jaded will point out that the state remains a significant defendant in many disputes, and that the lack of political will by government over third-party funding can be explained by simple self-interest. Whatever the cause, Black understands the apathy: ‘There is a political legacy in which politicians didn’t want to be seen to help fat cat lawyers. But there has been a transition in the political mindset, in that people are seeing that what is good for litigation is good for law, which is good for society.’

‘There’s a contradiction that the Minister of Justice is spearheading this initiative when the resources aren’t being put in.’
Karyn Harty, McCann FitzGerald

Regardless of any obstacles, Ireland is determined to prove itself capable of handling any work that spills out of London. But sceptics suggest the much-touted ‘spillage’ of disputes from the City may be more of a slow drip, and exactly who the beneficiaries will be remains uncertain.

‘Just as we are experiencing in Dublin, businesses are attracted to places where there are reliable and fair dispute resolution institutions,’ says Legorburu. ‘I have watched the Dubai International Financial Centre develop its legal system, and the evolution over time of Hong Kong as a legal centre, but it will always be the case that many international businesses value London for its judicial system.’

There is data to support Legorburu’s theory. A survey conducted by Thomson Reuters indicated that around two thirds of law firms and businesses have not changed their approach to the selection of jurisdiction in dispute clauses in light of Brexit. Meanwhile, almost a fifth (18%) of respondents said they were selecting different jurisdictions and/or governing law clauses, all of which declared a preference for EU countries. However, the preferences were predominantly in favour of France or Germany, while Amsterdam and Brussels are also vying for scraps. Precisely where Dublin sits in all this is unclear, as businesses maintain a frequently-cited ‘wait-and-see’ approach to Brexit.

Ireland, however, can make claims European rivals cannot when it comes to comparing with London, not least a common language and time zone as well as a similar business culture, none of which should be underestimated. Most crucially, however, Ireland shares with the UK a common law history that many see as synonymous with legal integrity.

‘I think Dublin is in a good position,’ states DLA Piper’s country managing partner David Carthy. ‘Culturally for businesses it’s the closest to London and Dublin is very well positioned.’

‘No-one sees Brexit as a positive. The wider effects on the Irish economy will be pretty disastrous in the event of a hard Brexit.’
Paul McGarry SC, The Bar of Ireland

The needed finishing touch may be Ireland’s Commercial Court, which is expected to pick up the majority of cases that might arrive and could yet prove to be the perfect tonic to frustrations with the Supreme Court and Court of Appeal.

‘The Commercial Court is a great success story since being established in 2004,’ says Norman Fitzgerald, Eversheds Sutherland’s head of disputes in Dublin. ‘The average time for a case from start to finish is 9-12 months for commercial disputes and you’re guaranteed proper judges and case management.’

‘The majority of cases in the Commercial Court are handled in less than a year, which by international standards is right up there.’
Gavin Smith, Walkers

The time taken for the Commercial Court in Ireland to handle a case compares favourably with anywhere in the world, according to Smith. ‘The majority of cases in the Commercial Court are handled in less than a year, which by international standards is right up there, but is there more to do? Of course, there is.’

There is also a view among litigators that the Irish Bar comprises real talent, with names like Paul Gallagher SC, Michael Collins SC, Eileen Barrington SC, and Brian Murray SC all cited. But while markedly similar, there are other key distinctions between London and Dublin’s legal systems. The lack of a chambers system in Ireland means barristers are subject to different work requirements, effectively being sole practitioners often juggling a number of cases at once, while some partners in Ireland feel London’s barristers can provide lawyers and clients with undivided attention.

All the while the view remains that the price of running a case in Dublin – while expensive – compares favourably with London’s hefty rates, with McCann’s Harty claiming she has had to be ‘scraped off the floor’ after hearing some of the rates being charged in the City.

A deeper issue and a big barrier to the overall appeal of Ireland as a disputes package is the relative inexperience of Irish judges, who lack the back catalogue of significant civil cases that are commonplace for their London counterparts. However, William Fry’s highly-rated disputes partner Michael Quinn was recently appointed a judge of the High Court in Ireland, reflecting the competence of the top litigators as Irish courts become increasingly specialised.

‘In terms of calibre they are comparable, but in terms of depth of experience London leads by some way,’ says Carthy, a sentiment shared by Harty: ‘There just aren’t enough judges, and the judges in the High Court just aren’t experienced enough.’

‘I’m bemused as to why Ireland hasn’t relaxed third-party litigation funding rules. In the UK it transformed the market and sophisticated funders do not fund spurious cases.’
Jon Legorburu, ByrneWallace

However, there is a sense Dublin is only ill-prepared for a scale of work it was never likely to receive, with Ireland being well-placed for more realistic expectations.

‘It’s not about competing with London, that’s a misnomer people have,’ McGarry stresses. ‘It’s about business leaving London for regulatory reasons, and we think there’s plenty of capacity to get a small amount of work that spills out of London.’

And there are encouraging signs for Ireland’s legal infrastructure, with six appointments in July to the courts, four of which were High Court appointments, while the Bar has set about stressing to the government the economic benefit of hiring, with McGarry estimating the cost of recruiting a new judge could be recouped in six to eight weeks through additional taxes. Meanwhile, the Bar has seen an uptake in interest over the last year, with an increase in those being called up as Irish solicitors in London who are looking to return home.

Economic turbulence always has mixed results for law, with uptakes in some work matched by a downturn in other sectors, though overall the view remains that Brexit will be detrimental to the Irish economy, to an extent no amount of disputes work will offset.

‘No-one sees Brexit as a positive,’ stresses McGarry. ‘The wider effects on the Irish economy will be pretty disastrous in the event of a hard Brexit.’

William Fry’s Breen, meanwhile, shares McGarry’s apprehension: ‘Nobody knows what’s going to happen. From our perspective we don’t want it to happen – we don’t think it’s good for the Irish economy.’

For Dublin, a lot of work has been done but more is left to do. Although quality is vital, so too is arithmetic, with other jurisdictions currently managing to eclipse Dublin’s ability to resource its legal system. For now though, Ireland should not be underestimated on the global disputes scene. LB

thomas.alan@legalease.co.uk