By Akana K.J. Ma
Small business clients often view international commerce as too risky because it is complicated, expensive and somehow indecipherable. The twists and turns of world events frequently reinforce a sentiment among small business owners that international markets are too unpredictable to pursue. However, given the growing interconnection of business worldwide, small business clients should be aware of a host of resources available through legal counsel to help them mitigate the risks and maximize the profits of international commerce. This column focuses on the role of international business attorneys as resources for the U.S. entrepreneurial and small business client.
Lawyer as Counselor and Gatekeeper
The international business attorney, like attorneys in any discipline, must be a counselor. Clients will only seek our advice if we can efficiently and sympathetically understand their situation and spot relevant issues. We must assess the risks and benefits of various alternate courses of action and formulate plans to mitigate those risks while maximizing the potential upside of a client’s options. As part of the process, we must navigate a maze of U.S. and foreign laws and regulations as well as understand the intertwining of customary international business practices. We are often called upon to finalize negotiations between the parties, review and draft the relevant documents, and close the deal. In the end, if the attorney has done a good job, the risk and costs of future conflict between the international parties should be greatly reduced.
The international business attorney is also a gatekeeper of information. Since each employee of the client company may be preoccupied with a small portion of the entire deal, the international business lawyer is frequently the best person to ensure that the transaction is comprehensively negotiated.
U.S. as well as foreign laws and regulations may be at play, and legal counsel must ensure that the documents are legally binding on both the foreign and U.S. parties. In addition, we must determine whether the representative of the foreign party has the authority to make binding commitments in any preliminary discussions as well as in subsequent, final negotiations. Furthermore, the international attorney is the ideal person to conduct the necessary due diligence review of foreign parties to ensure, among many things, that the foreign party is legally, operationally and financially capable of fulfilling its contractual responsibilities. The well-known, but pervasive Nigerian scams that have continued in different forms over the last decade are a poignant reminder that there is no substitute for 'know your partner.'
Lawyer as Internationalist
Despite an increasing international acceptance of the Western business model, everyone will agree that differences abound between U.S. and foreign laws and customs. Although no one can hope to know all of the laws and regulations of even one foreign country, the international attorney should be experienced in spotting commonly recurring issues in international commerce. While the specific answers may vary from country to country, the dilemmas and principles involved recur often.
In this regard, questions arise across a broad range of transactions in many of the same categories. For instance, in the sale of commodities, parties often need to know about foreign tax holidays, import duties, VAT and exemptions. As to foreign treaties, some clients may know enough to ask, 'When do WTO standards apply?' and 'How are goods eligible for NAFTA certification?' But others may not know about the application of the U.N. Convention on Contracts for the Sale of Goods or the EC Directive on Sales Agents and Distributors.
Typically, it is the international attorney’s responsibility to refine or propose transaction terms that maximize foreign legal and tax incentives, account for as many operational issues as possible, and put into place a harmonious exit strategy for all parties. At other times, the international attorney may need to prevent a client’s violation of international laws. For example, we might need to render an opinion as to whether a seemingly inconsequential act is instead restricted by a relevant U.S. law or regulation. Some may be familiar, such as the U.S. Foreign Corrupt Practices Act, while others may be obscure, such as the Denial Guidelines of the U.S. Department of the Treasury Department of Foreign Assets Control.
Although an in-depth knowledge of international transactions is essential, other expertise is less academic. An integral part of an international attorney’s repertoire is his or her Rolodex. The age-old maxim remains applicable today that 'it’s not only what you know but who you know.' This points up the fact that the experienced internationalist is that much more effective when he or she is able to pick up a phone and find out an answer from a relevant contact many time zones away.
Finally, the international business attorney’s bread and butter is to close the deal. Here, the attorney is ultimately a scrivener — we must correctly memorialize the client’s transaction, while at the same time make it effective, notwithstanding a veil of confusing U.S. and foreign laws and regulations. In this way, the international business attorney helps clients succeed in their chosen endeavors, while bridging the gap between parties of different foreign languages, laws, customs and time zones.
ABOUT THE AUTHOR
Akana Ma is a sole practitioner in Portland. He renders legal services in such areas as structuring international joint ventures, complying with foreign laws and regulations, distributing and selling commodities, protecting intellectual property, promoting imports and exports, the licensing of technology and general corporate practice. He can be reached at (503) 997-2200 or akanalaw@ attbi.com.
© 2002 Akana K.J. Ma