LEGAL
As the relentless march of globalization pushes corporations to pursue a full spectrum of deals and investments in the far corners of the world, corporate counsel face mounting anxieties.
Not only must today’s in-house lawyers worry constantly about the possibility of legal fires breaking out in far-flung jurisdictions and time zones, but they must also concern themselves with a shifting terrain of laws and regulations. Countries, particularly but not only in the developing world, are rapidly evolving the ways they regulate transactions and disputes, leaving little certainty of outcomes for even the most well-constructed agreements.
One thing that isn’t changing: A significant percentage of deals lead to disputes. So corporate counsel are forced to manage those disputes, no matter how far away they occur.
In that tumultuous environment, a panel of experienced corporate lawyers gathered at the 2016 DLA Piper Global Technology Summit to discuss the challenges that international expansion has placed on in-house counsel, and dispense advice on how to navigate those challenges. Led by Cedric Chao, a trial partner and U.S. head of DLA Piper’s International Arbitration practice, the panel was fittingly entitled “What Keeps Corporate Counsel Awake at Night When Their Clients Go Global, and How to Plan for Cross-Border Disputes.”
Chao observed in his introductory remarks: “Over the past several decades, we have witnessed trade, investment, supply chains, R&D, and human capital increasingly go cross-border. Today, Fortune 500 companies, middle tier companies, and even start-ups think and work globally. Inevitably, cross-border transactions bring cross-border disputes, which are an entirely different animal from U.S. domestic disputes. We have assembled an expert panel to address their concerns and techniques for managing risk in this global economy.”
The following are highlights from the discussion. The panelists were:
What are the greatest risks in doing business overseas?
Lam: We do business in 55 to 60 countries, and I hear people talk about international law. But there really is no such thing as international law. There are overlaps here and there, but basically, in every country where you do business, you’re dealing with a completely different system and nobody can be an expert in all of those systems. So what keeps me awake is that something unexpected will happen and we won’t have the infrastructure to deal with it. The legal department is a cost center – we can’t have a lawyer in every country.
Do you have any tips for managing corruption and transparency risks?
Kuo: We’ve found that, especially as we move into developing countries, if we invest in the compliance infrastructure up front, before revenues come in, it’s very helpful. Because not only does it help you in establishing your compliance, but it also actually helps you in establishing a business presence. We’ve found that our people on the ground are more confident in doing business when they have their lawyers and compliance infrastructure in place. And that confidence shows with customers, and they have responded to that.
How does your American legal training come into play?
Weed: There are three risks that I see for U.S.-trained lawyers dealing with legal systems that are for the most part drastically different than ours. The first is over-reliance on contracts – we may have written a very good, carefully worded contract. But we’re finding that in other legal systems the exact wording of the contract may not prevail over the spirit of the deal or the intent of the parties. The second is patents. We have our R&D in the U.S.; patents are often written without knowledge of how you enforce them in Asia where there’s no discovery. The third risk is that I make assumptions based on my U.S. training when I give advice to our business people, but foreign parties often approach the contract and the business relationship differently.
How do you manage overseas outside counsel?
Robinson: You need to own that relationship. You don’t want to be calling someone for the first time when an emergency comes up. So I do what I call my world tour, where I go and meet with the outside counsel we’re working with most closely – not because there’s a case pending, not because there’s a hearing coming up, just because I want to build that relationship and make sure I’m comfortable. So if my GC comes to me and says “who are we using for this trade-secret thing in India,” I can say more than “I talked to them on the phone once.” I want to know who they are and have confidence that I can trust them.
What techniques can tech lawyers rely on to take advantage of international arbitration without putting their IP at risk?
Tuchmann: First, be very specific about the arbitrators you’re selecting. Describe in the arbitration agreement the technical expertise they need to have so you know that everybody who’s appointed, whether it’s one or three arbitrators, will understand the technical implications and the value of the IP. Second, the ICDR actually does have appellate arbitration rules, which are fairly new. You generally can move to set aside an arbitration award in the courts on only a narrow basis, but you can create whatever kind of arbitration process you want. So if you really have a bet-the-company situation, and maybe you need an international arbitration agreement to get the deal done, you might be able to agree to an appellate arbitration process, so if you have some sort of odd result, you’ll have another chance to correct that.
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