Why Zurich is a tough place for a solo commercial litigator
Three years ago, I launched my solo commercial litigation practice. Had I known at the time how difficult it will be to establish myself as a solo litigator in the Zurich market, would I have done it? Probably not, but having done it and now being three years in, I do not regret it. It is in any event a very interesting experience with various facets that I will never forget.
What makes it so difficult to be a solo commercial litigator in Zurich today? And I mean a pure play commercial litigator, not one of the many lawyers who do some commercial litigation but also a lot of other work, such as transactional work in the area of employment law and/or data protection law, for example.
There are the obvious reasons why running a solo commercial litigation practice today is difficult in Zurich, such as the important number of lawyers in Zurich (who do, at least partially, offer litigation services) or the current structure of Swiss civil procedure law that makes litigating before Swiss courts especially expensive. Concerning the latter point, it would seem that the number of commercial disputes before Swiss courts has decreased significantly because of the mentioned structure of Swiss civil procedure law. As a lawyer who has been following the case law of the Swiss Federal Supreme Court for years, it is striking how strongly the number of judgments in the areas of family, social security and criminal law has increased over the recent past, while during the same period the number of judgments related to contractual disputes has significantly decreased. This is not a statement based on a statistical analysis, as it was done for the canton of Zurich, but just my personal impression that I formed in recent months on the basis of a regular review of the new Swiss Federal Supreme Court judgments.
So, above are two of the obvious reasons why running a solo commercial litigation practice in Zurich today is difficult. But there are also some other, less obvious reasons that have to do with the mentality of the Swiss. Below, I would like to share some reflections about such Swiss-specific factors. But before I do this, I have to make the following disclaimer: First, there are, of course, exceptions to the rule. My following observations do not claim general validity. They describe only tendencies, from which – fortunately – there are always deviations. Second, to remove any doubts, I would like to mention that I am Swiss myself. Among other Swiss ancestors, my great-grandfather on my father’s side came from the beautiful Haslital, from the Bernese Oberland, and my great-grandfather on my mother’s side originally came from Solothurn before he settled in Mogelsberg, in the eastern part of Switzerland.
So, what are the factors, based on the mentality of the Swiss, which make it difficult to run a solo commercial litigation practice in Zurich? Here are my thoughts on such factors, in random order:
(1) The Swiss are, generally speaking, not litigious people, quite to the contrary. As a general rule, Swiss people try to avoid confrontations and conflicts as much as possible. I think this is a trait that is deeply rooted in the Swiss, which can be seen in various areas, such as Swiss politics. The entire political system in Switzerland is geared towards balance and cooperation, which is expressed, for example, in the fact that there have been no changes of government in Switzerland for decades as in other democracies, but that the Swiss Federal Government is static in its party-political composition due to the so-called magic formula. Swiss civil procedural law also strongly reflects this pronounced Swiss tendency to conflict avoidance and compromise. This includes, for example, the circumstance that civil proceedings before Swiss courts can generally only be initiated if the parties have first attempted to reach an agreement before a conciliation body. So, while in the USA or Germany, for example, people are rather quick to file a lawsuit, in Switzerland as a rule quite a lot has to happen before a person decides to initiate a lawsuit. This could also be due to Switzerland being so small, which is responsible for the circumstance that people tend to meet more than twice in their lives. If one expects to do business with each other again in the future, then this is a weighty argument for not fencing through at all costs one’s position in a current dispute, but rather seeking a compromise. But, of course, it is not the case that the Swiss would never litigate. Fortunately, as one has to say from the perspective of a commercial litigator operating in this country.
(2) I mentioned above that Switzerland is small. In terms of commercial litigations, Switzerland is even smaller than you might think. There are several reasons for this. First of all, it should be borne in mind that Switzerland consists of three language regions: the German, French and Italian language regions. As far as I know, it is hardly ever the case that Swiss lawyers conduct civil proceedings beyond these language barriers. This is probably due to the circumstance that one would have to master the other language(s) so well that one really feels completely at home in it (them). Only a few people should be able to reach such a level. Hence, in practice, Zurich based lawyers do not conduct civil litigations before the courts in Geneva, and vice versa, to give just one example for illustration purposes. Obviously, these language barriers do already significantly limit the geographical markets for Swiss commercial litigators. However, the geographical limits do not end there. With regard to German-speaking Switzerland, which is the biggest of the three mentioned language regions, the relevant market is in practice even smaller, which is due to the circumstance that clients generally tend to prefer local lawyers. The Swiss traditionally have strong local patriotism and a tendency to favor local offerings. The Swiss reader will know that we even have an expression for this mindset in Switzerland: we refer to it as Kantönligeist. In the field of civil procedural law, for example, this has been demonstrated by the fact that Switzerland did not receive a single Code of Civil Procedure until very late, namely in 2011. Before 2011, every Swiss canton had its own code of civil procedure. With 26 cantons, this obviously gave a barely manageable patchwork of cantonal peculiarities. This tendency to favor local service providers means that in my experience clients often do not actively seek to compare commercial litigation attorneys from all over German-speaking Switzerland (even if today, thanks to the Internet and the applications running on it, the possibilities to do so are available, for instance in the form of lawyer search databases). Hence, in practice, it is not very common, in my experience, for a client in Bern to be represented by a lawyer from Zurich before a Bernese court, to give just one example for illustration purposes.
(3) The Swiss are generally very risk-averse people. This is reflected, for example, in the tendency of the Swiss to insure themselves against as many risks of life as possible. Studies have shown that the Swiss are the best insured people in the world against risks such as illness, etc. Against this background, it is probably no coincidence that businesses handling risks have such a successful tradition in Switzerland, which is manifested, for example, in the form of the strong insurance and financial sectors in Switzerland. But to take personal risks, Swiss managers are generally reluctant to do so. In my opinion, this pronounced risk aversion has the consequence that GCs of Swiss companies tend not to have the courage to mandate solo practitioners, but rather stick to continuously mandate large(r) law firms. Casually put, if they are mandating a large(r) firm, their business executives cannot blame them if something goes wrong in a case. Again, fortunately there are exceptions, i.e., in-house counsel and GCs who have the experience, market knowledge, and standing in their organization, not to always rely on the same usual suspects, but to assign mandates regardless of the size of the firm.
One thing is for sure, it is certainly not boring to work as a lawyer in Zurich today. On the contrary, we are operating in interesting times, in which the legal market – as many other markets – is undergoing significant changes.
PHH, Zurich, 31 January 2019 (www.haberbeck.ch)
Rechtsgebiete: Allgemeines Vertragsrecht