By the Blouin News Business staff

Financial litigators around the world unite

by in Global Economy.

The International Network for Financial Litigation founding members

The International Network for Financial Litigation founding members. Javier Cremades, its president, is seated second left

Financial services firms are global. Financial regulators would like to be global. Can financial lawyers be far behind? Not now. Twenty-two international law firms have formed the International Network for Financial Litigation, an alliance to facilitate effective cross-border legal representation for clients in global financial disputes.  “A global financial system requires a global litigation strategy,” it says.

The network, launched in New York this week, draws from law firms in a broad swath of countries: Colombia, India, Morocco, Spain, the U.S., Macau, Israel, Austria, Finland, Luxemburg, Turkey, Ireland, Italy, Brazil,  Britain, Denmark and Pakistan. Its moving spirit is Javier Cremades of Cremades & Calvo-Sotelo, a Madrid law firm that in 2010 led a group of 60 law firms, representing 720,000 international investors, that ended up reaching a $15.5 billion settlement with banks that sold Bernie Madoff’s funds, a Ponzi scheme that was the biggest financial fraud in U.S. history.

The network bills itself as collectively having the “capacity to resolve disputes over complex financial products in order to increase accountability and, therefore, legal certainty in the international financial field.” Yet there is the kernel of a trade association or lobbying group in their goals to push for making financial litigation more plaintiff-friendly.

Cremades tacitly acknowledges that he is setting his sights on more than just cross-border financial litigation and fighting complex global fraud. “There’s a wide-spread reluctance and lack of confidence in the financial sector due to the failure of the supervisors,” he told Blouin News.  “We know the risks so we must collaborate to safeguard the rights of consumers and shareholders of financial institutions.”

The network’s soft power will be used, Cremades says, “to make sure the financial system plays by the rules and, since we are close to the clients, we want to be part of the solution.” The network will “help guarantee that best practices are standard in the financial sector.” It intends to create an International Code of Good Practice in the upcoming months, he confirms.

The timing of the alliance’s formation could scarcely be better. Europe is expanding its bank regulatory regime and corporate tax transparency. The U.S. is putting the flesh of rules and regulations on the bones of Dodd-Frank. That rule-making will be ripe for testing through litigation. Neither is there likely to be a shortage anytime soon of the fraud and failures like those that led to Madoff’s Ponzi scheme, the downfall of Spain’s Bankia, blamed for setting off the country’s banking crisis, and old-fashioned corporate wrongdoing in an ever more complex legal environment.

Footnote: The International Network for Financial Litigation sets out is goals to be:

1. Promote the creation of an international framework that would provide legal security, transparency and market confidence.

2. Seek the establishment of an international body with the capacity to resolve disputes over complex financial products.

3. Seek to introduce of good practices in order to increase accountability and, therefore, legal certainty in the international financial field.

4. Follow closely the functioning of the recently created Resource Center for Dispute Resolution in the Financial Markets that was recently created at The Hague.

5. Provide resources, experience and access to communication and know-how to effectively apply and maximize the use of collaborative tools generally available in complex international and local cases among member firms.

6. To establish a platform for international collaboration among member firms to facilitate and disseminate information among member firms of available local case law, innovative legislation and exchange of financial litigation experiences that although local in nature, can help to improve security and transparency of international financial markets.

7. Promote the proactive creation of opinion to help the improvement of good practices and good governance tools for investors and financial market regulators.

8. Enhance the member’s capabilities to better serve the needs of our clients in financial litigation.