Setting your International Legal Priorities for 2011

Well, 2010 is coming to a close and a new year is now before us.  What’s the new year without new year’s resolutions?  Naturally, a new year presents a tabula rasa that encourages people to change habits and start/engage in activities they have wanted to but have long procrastinated.  This can exist in your legal work as well, and that’s why I’m proposing the following checklist for those businesses that do business overseas.

1. Have you had your standard contracts adapted for use overseas? I am always amazed at how some companies doing vast business overseas often use very poor contracts that sometimes have provisions that are unenforceable overseas.  Some companies do not even use agreements!  It is absolutely important for all commitments, such as distribution,  franchise, and purchase and sale agreements be tailored for each individual market.  You probably do not want the purchase and sale agreement you use for sales to Idaho to be modified by a non-lawyer in your company and then used to manage a sale or distribution arrangement in China or Brazil.  Yes, there has arguably been considerable consolidation of international laws and business principles in some respects, but remember that the minute a contract becomes international you have to worry about two things – (i) whether the contract is enforceable overseas; and (2) whether the contract covers what you need it to cover (which may be significantly different from your concerns in the United States).  Save yourself the trouble and have experienced counsel (and local counsel, where necessary) review all the terms.

2. Are you sure your standard forms and agreements are not obsolete? Still using a form agreement from 10 years ago, when your company was one-fifth the size it is now and had zero international operations?  This is also a time to ensure your standard agreements are “cleaned up.”  Not only can laws change over time, but so can your  legal concerns, so make sure you are protected.

3. Are your permits current around the world? A huge problem. Many companies with international portfolios often lose track of all the necessary permits, from business registrations to import licenses work visas to driver’s licenses for their employees.  Make sure everything is in order, and if you cannot keep track of it, you may want to consider talking to counsel who can maintain your corporate documents and licenses around the world in an organized manner.

4. What is the status of your current commitments? This is a good time to look at every ongoing commitment to make sure you remember the key terms, refresh your clarity on your obligations, and make sure that they do not expire unexpectedly!  If you are not pleased with an agent in one of your territories, the end of your current contract may provide only a limited window to change agents – so make sure you are on top of things.

5. Have you met all your foreign and domestic tax obligations? Taxes are an exceptionally touchy subject and companies doing business overseas often have to keep track not only of obligations in multiple jurisdictions but also make sure that their U.S. returns properly reflect their international operations as may be necessary.

6. What types of vendors are you using to handle your international work? Every now and then I see a company that uses inadequate  accountants or banks for their international activities.  Large companies may not be the best choice necessarily but sophisticated vendors who can handle your international work satisfactory can save you a lot of trouble.

7. Have you identified potential areas for expansion overseas? Thinking about expanding overseas this year? Maybe Turkey, UAE, Australia, Hong Kong, or France?  Make sure you educate yourself on your options and what steps you will have to take (and how much time it will consume) early on.  The worst is when clients come up and say things like “we need our office set up in 4 weeks.”  Depending on the jurisdiction, it could be doable. More often than not it’s not. Lawyers can only work but so hard! So make sure you use the early part of the year when business is generally slow to educate yourself on these topics.  You don’t necessarily have to commission comprehensive reports from your lawyers but it may be a good idea to start looking into your potential projects.

Happy Holidays!