Cross-cultural differences: Lessons for lawyers

Lawyers are experts in the letter of the law, the minutiae of legislation and how it applies to their clients’ businesses. But a new report from the International Chamber of Commerce, Jus Connect and McCann has revealed that lawyers also need to play close attention to the cultural and emotional laws which dictate how business relationships run.

The report polled 1,700 business leaders, general counsel and arbitration experts in nine countries, including India, and has exposed a number of interesting cultural differences around the world related to how businesses approach contracts and manage conflicts arising out of them and specifically, how lawyers fit in.

After 500 hours of engagement with global business leaders, the perception within the legal industry that B2B relationships are purely transactional and free of emotion has been dispelled. Cultural factors have emerged as the key to harmonise the tension whilst reshaping global business relationships.

For instance, in India, ‘anticipation and excitement’ is the defining emotion at the start of an international business relationship. At the same time, in countries like China and Saudi Arabia, ‘trust’ between parties is the key pursuit at the outset. The report mapped how different countries’ cultures are similar or different and the results were certainly interesting. For example, it revealed that India and Nigeria are similar from a business culture perspective – both were listed as ‘strategic balancers’. This means that those doing business in India tend to lean more towards calculated risk-taking while aiming for realistic goals backed by proven success and being receptive to creative solutions. For those embarking on business relationships with a ‘strategic balancer’, it’s helpful to know they value transparent and direct feedback. Those polled based in India were most likely to agree with the statement:

“I prefer to address concerns promptly, even if someone gets offended.”

Mapping culture in this way gives an insight into how to adapt to ensure business cultural fluency, and the friction you could encounter based on local values. It also helps to shift some potential misperceptions. For example, although India and UK follow similar common law legal systems and China is geographically adjacent to India, their approaches to business and the cultures vis-a-vis India are actually very different. The UK and China are labelled as ‘pragmatic realists’ focusing on clear expectation, practical approaches with tolerance to pragmatic “little” white lies. Conversely, India is a ‘strategic balancer’.

Identifying these cultural indicators really helps businesses work cross-border with increased ease and fluency, but also, crucially, assists lawyers when advising on these relationships. Essentially, it means that a ‘one-size-fits-all’ approach to doing business globally just doesn’t work and various strategies should be employed across the world to establish and grow relationships.

The research also revealed business people engage emotionally in the B2B journey and lawyers often join B2B relationships when emotions are at the lowest ebb – during friction and challenges. This is to be expected – many lawyers are used to being seen as a distress purchase. However, by analysing the emotional highs and lows for people in the life of a contract - from signing the deal to contract end - this pointed to some counter-intuitive truths, indicating points where lawyers could do more to help avoid disputes. For example, emotions are usually positive at the point a contract is agreed, but surprisingly, they quickly dip during the onboarding process. Businesses would like lawyers to do more at this early stage to avoid future conflicts - specifically during supplier engagement and around the onboarding phase, when long-term relationships are being established. Lawyers should pay close attention to this, and think about how they engage with their clients. Could earlier involvement or advice mitigate more serious disputes down the line?

When asked how serious disputes occur in business relationships, the respondents were split down the middle, with half citing the weakness of the contract or scope of work. The other half put it down to the people or business relationships being weak. Across jurisdictions, contract expectation varies. For some countries, the contract is the opportunity to lock down a scope of work, for others it is like the first sketch marking the start of a flexible relationship. In India’s case, by and large, the preference is to set realistic and achievable goals as opposed to stretching, sometimes impractical goals.

However, business leaders are keen to salvage relationships and renegotiate unfavourable contract terms, something all lawyers would do well to keep in mind. More than 77 per cent of businesses interviewed said their preference is for non-legal resolution of commercial conflicts. This underlined the point above: that lawyers tend to focus their role in the wrong place - when conflicts arise, rather than in the contract creation and onboarding period before, where they could do more to smooth contracting relationships at the start and avoid future problems.

Naturally, no matter how carefully a contact is crafted, or how involved a lawyer is in the onboarding process of a new client, disputes will happen. This survey revealed that arbitration dominates as the preferred dispute resolution method if a contract is being disputed, with 60 per cent preferring this route over legal proceedings in court. The majority (60 per cent) enter into any dispute with a desire to reach a fair resolution for both parties – only 26 per cent are looking to find errors by the other party. Again, this is valuable learning for lawyers, particularly those involved in dispute resolution. Many parties just want to find a resolution and move on – mudslinging and aggressive tactics won’t be welcomed by your clients. In India particularly, keeping sensitive commercial information private was a priority in using arbitration. Other cultures place a particular value on other benefits of this route, such as allowing a detailed investigation or ensuring enforceability.

Overall, there are lots of lessons for lawyers to take from this survey – particularly around the importance businesses place on a lawyers’ early involvement. For general counsel, we have seen much more of a drive in recent years for these individuals to have more of a wide-ranging and strategic role, and with changes such as the increased global focus on ESG for businesses, a lawyers’ role has moved beyond drafting a solid contract or interpreting the technicalities of legislation. It’s more strategic and commercial.

Another significant takeaway is that 85 per cent of business leaders support use of AI and technology in conduct of proceedings to resolve disputes.

The survey also exposes how different cultures approach business relationships and how key it is for lawyers to really understand these nuances. Small behaviours across jurisdictions are indicators of bigger cultural priorities, these may range from copying a reporting manager on an email or expecting an agenda before meetings.

Thanks to modern technology, the world has shrunk over the last decade or so, but it is a mistake to work from a far-reaching, global strategy. Everyone approaches business relationships with different mindsets and many companies will be looking for lawyers who understand this, and have invested in their soft skills such as emotional intelligence, to ensure the very best outcomes.

Shania Elias is the Deputy Director, Arbitration and ADR, ICC India.