In a lengthy interview with the business newspaper Les Echos, Gide's senior partner Frédéric Nouel talks about the strategic partnership Gide x Regimbeau - Patent Litigation and about our first cases before the Unified Patent Court.
Frédéric Nouel, Gide’s Senior Partner, talks to Les Échos about the latest seismic shifts in the legal profession: negotiated justice, sustainability regulations and artificial intelligence.
Nouel was elected Senior Partner of Gide in January 2021 and secured his re-election last summer. (DR)
The stakes involved in litigation against companies and corporate officers are higher than ever before. Why do you think that is?
The threat of criminal liability in the business world and for corporate leaders is nothing new. We saw high-profile cases of corruption and fraudulent use of corporate assets back in the 80s and 90s. But two things have fundamentally changed recently: the severity of the fines imposed and how such cases are handled.
The Autorité de la concurrence [France’s competition regulator], headed by Bruno Lasserre, was the first regulatory body to start imposing significantly higher fines. But others, such as the AMF [France’s financial regulator] and, more recently, the CNIL [France’s data protection authority] soon followed suit. A number of appeals against these hefty fines have progressed all the way up to the Paris Court of Appeal but, for the most part, to no avail – much to the chagrin of the companies involved.
We are seeing a similar trend throughout Europe. And it is not limited to regulatory fines. The courts are waking up to the need for adequate financial compensation in corporate litigation and are awarding significantly higher sums in damages.
How are companies and the courts responding to this more litigious environment?
Although France was later to the game than some other countries, it has now embraced the concept of negotiated justice as a way of speeding up the process. Deferred prosecution agreements, or DPAs [convention judiciaire d’intérêt public or CJIP in French], were introduced under the Sapin 2 Act of 2017 and allow companies to negotiate fines with the public prosecutor’s office without having to admit guilt. Once negotiated, a DPA still requires the court’s approval, but does not result in a criminal conviction for the company involved.
“To date, DPAs have replenished France’s public coffers to the tune of more than €3 billion.”
The Airbus DPA was unprecedented, not only for the sheer size of the penalty (over €2 billion) but also because it saw the US Department of Justice, the French financial prosecutor’s office and the UK’s Serious Fraud Office cooperate to conduct an investigation involving multiple jurisdictions for the first time. DPAs have given companies an alternative to plea-bargaining. With plea-bargaining, corporate entities and individuals can similarly negotiate penalties, but only if they accept a criminal conviction.
What other changes have DPAs wrought?
They have revolutionised who does what. Investigating is no longer the sole purview of the police and pre-trial judges: the public prosecutor’s office can now demand to see a company’s books and compel it to cooperate. This has greatly speeded up the whole process. It also facilitates discussions of the technical complexities involved in cases of financial crime – something that used to be a Herculean task for the police and pre-trial judges back when they had to do it alone.
The first DPAs came with huge fines: no doubt to prevent them being seen as an easy way out. With them have come sharp increases in fines, higher awards for damages and the requirement for companies to cooperate with the public prosecutor’s office. DPAs and plea-bargaining have altered the whole approach to corporate litigation and disciplinary sanctions, as the regulatory authorities have increasingly come to realise the power they can wield through fines.
BNP Paribas was ordered to pay an $8.9-billion fine to the US authorities under a DPA in 2014. Does the trend towards using DPAs signal the end of extraterritoriality for US law?
I don’t think it spells the end of extraterritoriality in itself, no. But negotiated justice does allow for negotiations on a more equal footing between the French authorities, the companies implicated and the US Department of Justice (DOJ). In the past, the DOJ tended to feel that the wheels of justice turned too slowly in France, leaving it no choice but to pursue matters independently – even in areas such as corruption, where we actually share the same values and goals.
Since the Sapin 2 Act passed into law, the French financial prosecutor’s office has had much more frequent discussions with its international counterparts, underpinned by a body of law that is now relatively well harmonised throughout Europe.
To date, DPAs have replenished France’s public coffers to the tune of more than €3 billion. The flip side of this development, however, is that companies and their officers can often face overwhelming pressure to negotiate an agreement and disclose their records.
Do you find it shocking that companies can now negotiate with the justice system?
Not especially, given that, with the French version of negotiated justice, the courts still have the final say. Fines negotiated with the public prosecutor’s office still need to be approved by the courts in a public hearing. And this approval is not a mere formality: the courts recently rejected a plea bargain negotiated with a company’s officers, despite having already approved the DPA agreed with the company itself… The situation was complicated!
What does this change for you as a lawyer?
Negotiated justice has upped the ante. No single lawyer, however talented, can take on these cases alone anymore. With fines this high and regulatory bodies this specialised, such matters now call for a multi-disciplinary team – something not many firms are able to offer. If you’re negotiating a plea bargain in a tax matter, for example, you need a lawyer who understands the technical aspects of the offence.
Negotiated justice certainly piles more pressure on companies but, on the plus side, it offers them the opportunity to defend themselves against hasty conclusions and take some of the heat out of investigations, especially in cases requiring time and effort to get to grips with the complexities involved. Both sides in these cases are dedicating more resources to negotiations in return for more certainty.
Moving on to sustainability, how will your work be affected by the new regulations on green finance and the duty of care – with the attendant requirement for multinationals to be mindful of human rights and the environment in their supply chains?
One way or another, cases involving environmental regulations and the duty of care are often going to end up before the courts. NGOs, shareholders and other stakeholders will hold companies to account on their commitments. For now, this is mostly happening in the court of public opinion, but at some point, cases are likely to become a matter for the law courts.
It’s already happening. In one widely reported case, the Paris Administrative Court found the French State guilty of inaction on global warming. Moreover, DPAs can now be used for environmental offences and have proliferated accordingly. Plaintiffs want concrete results, and a DPA can deliver them: more often than not, companies have been required to implement remedial measures rather than simply paying a fine.
Do you worry about the rise of class actions in France?
Class actions have been allowed in France for eight years now, but have not really caught on yet. They can only be filed in certain types of case, and only by certain types of non-profit organisation; the latter have argued for a loosening of the conditions limiting their use. There is little enthusiasm for them amongst companies or indeed – perhaps more surprisingly – from the public authorities, who fear that class actions could put France on a slippery slope to a US-style litigious mindset.
In March, French MPs unanimously passed a bill designed to simplify class actions, via a single judicial regime and shorter timeframes. The bill (which has yet to be passed by the upper house) would allow for class actions in all fields of law. That would change everything. Class actions could be used to seek damages for material losses, personal injury or moral prejudice. It would also extend the right to file class actions to a broader range of non-profit organisations. So far, only accredited organisations such as consumer associations (UFC-Que Choisir and CLCV being among the most prominent) are allowed to do so. Under the bill, any group of 50 individuals or 5 corporate entities could form an ad-hoc organisation to file a class action.
Employers’ organisations are reviewing the bill but are concerned that it could take on a political tinge and end up being pushed through parliament before they get a chance to put their side of the argument.
Will artificial intelligence revolutionise the practice of law?
AI is certainly a revolution. For us and for our clients. The law is perfect fodder for the algorithms behind artificial intelligence: it is based on a finite set of rules, is highly codified and relies heavily on the written word. In more general fields, AI scours the entire web for data, without specifying or accounting for the source of its information. But when we limit it to the strict confines of the law, we can reduce the risk of “hallucinations” (credible but utterly false output) to virtually nil.
How do you see yourself using AI?
It can save time and boost productivity. Lawyers often spend a great deal of their time on research. A lot of that could be automated, for faster and more accurate responses. We are already trialling solutions together with other law firms, providers of large language models and leading IT operators.
So will we still need lawyers?
Clients will become more discerning and demanding, and lawyers will need to up their game, but there will still be a need for our expertise on complex deals and in litigation. Our clients do not come to us for our research skills. While research is naturally part of what we do, they hire us for our experience, our quick thinking and our ability to identify and implement the best solutions for them. And in litigation, there is also the art of controlling the narrative. Technical expertise has always been a prerequisite for a great lawyer, but it has never been enough in itself.
“What we offer is the ability to put together teams of highly skilled specialists to assist and defend our clients in all aspects of their business.”
Gide is a general practice firm, in an industry filled with niche specialists. How are you handling this elite competition?
Rather than calling us a “general practice” firm, I would say that we are among the best out there for business law. Our competitors are the other big French, US and UK firms that, like us, offer high-level expertise in all fields relevant to our clients, helping them close major deals and defend their interests.
Business leaders are operating within an ever-more complex and restrictive environment. What they want from their lawyers is comprehensive solutions that align with best industry practice, not a niche specialist’s exposé on a specific point of law. What we offer is the ability to put together teams of highly skilled specialists to assist and defend our clients in all aspects of their business.
Niche firms lack our experience on major deals. In an acquisition, a good M&A lawyer is one that can pull together a team capable of ironing out foreign direct investment and anti-trust issues before they arise, identifying the most advantageous structuring and tax arrangements, ensuring labour law compliance and handling all aspects of the deal, ranging from, say, environmental law to intellectual property.
Similarly, if you’re in strategic proceedings before the Unified Patent Court (UPC) – established this year by 25 EU Member States and based in Paris – then you’ll need a legal team with both judicial and technical expertise at their fingertips. Gide is the first law firm to have put together just such a team, in partnership with Regimbeau, a leading intellectual property firm.
Teamwork is in our DNA at Gide. Our top talents head up cross-disciplinary teams, ensuring clear organisation and a focus on collaboration, to deliver the best possible service for our clients. And like our major UK and US competitors, we are constantly on the lookout for opportunities to bring new teams on board, so as to offer our clients ever more seamless, comprehensive support.
For that, you have to offer an appealing package…
Gide has more partners ranked within the top three in their respective fields than any other French firm. No fewer than 32 of our partners hold podium positions; our closest competitor has only 26. In the first half of 2023, we dominated the French M&A market, with more deals for a higher total value than anyone else.
As for attracting and retaining talent, former members of the firm who had tried their luck elsewhere are now coming back to the fold. And young graduates are knocking at our doors, eager to embark on a lifelong career with us.
The firm’s continued success is, I think, down to its clear strategy and culture, recognised by our lawyers and clients alike. They are proud to be associated with us. And our efforts have paid off: since 2018, we have increased our revenues by 25% (to €250 million) and our margin by 40%. And I’m happy to say that this positive trend has continued over 2023, despite the challenging environment.
Frédéric Nouel was called to the bar in the mid-80s and joined Gide Loyrette Nouel – the firm co-founded by his father – in 1989. He made partner in 1994, was elected Senior Partner in January 2021 and secured his re-election last summer. Over his almost 30-year career with the firm, which has opted to refocus on the French market after forays into the international arena, Nouel has specialised in M&A, primarily for major French real-estate and hotel operators. He holds a master’s in business management, specialising in finance (Paris-Dauphine University, 1983) and a post-graduate degree in business law (Sorbonne University, 1985). He also chaired the Union des jeunes avocats de Paris [a union that represents newly-qualified lawyers] from 1999 to 2000.
Gide employs 500 lawyers, around 100 of them partners, from 35 different countries in 11 offices around the world. The three founders made the firm a general practice partnership in 1957, pioneering the model in Paris. Since then, the firm has resolutely pursued a full-service offering, while many of its competitors have opted for niche specialisation. It is one of the few big Parisian firms to have outlived its founders, withstanding pressure from the US and UK behemoths. Since 2018, the firm has increased its consolidated revenues by 25% (to €250 million) and its margin by 40%.