Legal Counsel For a Global Age
There are 675,000 lawyers in the United States, and not one is a global lawyer. Rather, according to Ralph J. Gilbert, a partner at Baker & McKenzie law firm in Chicago, there are plenty of lawyers who practice internationally or transnationally. "An American company doing business transactions in Europe, for example, has to deal with two jurisdictions, two tax systems, two legal systems and a third supranational set of EEC laws and regulations" that may override national commercial laws and frequently are contradictory. "In such cases," Gilbert adds, "a company has to think in terms of three interacting sets of laws in negotiating and structuring the transaction." For complex transactions, this can be a complicated matter at best. For less monumental deals, however, the situation is less forbidding then it would initially appear.
IS A TEAM SPORT
Not even Superman - much less one lone attorney - could handle all aspects of transactions that may cover such diverse issues as trade and customs laws, export controls, tax laws, technology-transfer contracts, and international finance and investment arrangements of transnational litigation. (Whew!) Such transactions require no less than a team approach.
Stuart Freedman, a partner at Schulte Roth & Zabel, recently led a team of 15 lawyers representing Dai-Ichi Kangyo Bank in its $1.4 billion purchase of Manufacturers Hanover's CIT Group - the largest move yet by a Japanese company into the American banking scene. Freedman's 150-lawyer firm, small by Wall Street standards, enjoys a significant Japanese client base. When asked to what he attributes his firm's success among Japanese clients, Freedman replied: "Time. As a team we spend a lot of time understanding our client's objectives." This is critical. An Asian company's objectives may not be the same as an American firm's.
The legal team must understand the client's overall strategic plan, why it wants to make the merger or acquisition, and how it wishes to conduct its business. But a Japanese company, for instance, may prefer to maintain a lower profile in a large purchase than would an American firm. "People talk about the high profile of the Japanese, but this is not always true," Freedman states. And it was not the case in the Dai-Ichi deal. Even after the Japanese purchase, it was business as usual at the CIT Group.
With a U.S. company, a few hours with the client may be enough for the legal team to find out all it needs to know. But when involved in transactions in the Pacific Rim, the law firm must spend more time developing a fuller understanding of the client's motives and objectives. Patience is the key. An attorney must be willing to listen a great deal to determine what is essential for the client and what is not.
PAY NOW OR REGRET LATER
A sophisticated corporation looks for an attorney or law firm with battle scars of judgment and experience overseas, for one veteran is frequently worth two recruits. When you go to your attorney with a question about corporate law in Great Britain, for example, and the lawyer answers, "I'll have to ask my associate and get back to you," it's time to move on to a law firm with a proven track record and political connections abroad, Gilbert advises. Such a law firm may be pricey but worth the added cost. Even at a higher hourly rate, an experienced lawyer may come out cheaper in the long run by spending fewer hours on the transaction, identifying the substantive issues and giving practical advice to the client - experience will keep the veteran from wasting time on non-issues or dead ends.
A top-notch attorney knows not only the legal and business sides of a deal, but is also attuned to the nuances of an international transaction. "I know of a transaction overseas where the attorney spent two years negotiating the wrong issues with the wrong party - someone with no real authority to finalize the deal," says Robert Goodwin of the Washington D. …