One of the hardest things for non-U.S. companies to understand is how to work with U.S. lawyers. Like it or not, in the U.S. business does not generally get done without the assistance of a lawyer. Unlike in most other countries, U.S. lawyers play a role as a counselor, advocate and legal advisor. In most other countries, lawyers tend to focus solely on interpreting the law.
In many cases, this role works to the benefit of non-us companies. Chosen correctly, your lawyer will not only be a subject matter expert on the legal issues facing your business, they will also have a good idea who are the major players in your industry (at least in the U.S.), have negotiated with them before, and can advise you whether the business terms you are getting are standard for your industry. Because there are so many lawyers in the U.S., we tend to have pretty specialized practices, or practice area. As a result, it is generally relatively easy to find a lawyer who has handled your issue before, and is active in your industry.
It is important in your initial consultation with your lawyer, that you adequately explain what you want. What this means is that you need to do more than send an email that says “I want a new customer agreement.” The more detail you provide to your lawyer, the better service you’re going to get – and the less expensive the engagement is going to be. While most lawyers are good at figuring out what clients want, the process can be frustrating and time consuming. In addition, because of cultural barriers, setting very specific expectations is crucial.
Before you do anything more than ask general questions, you should sign, or at least agree to, the lawyer’s contract. This contract is called an “engagement letter.” The engagement letter sets out the terms that will govern your relationship with the lawyer, is generally required by the regulations that govern the lawyer’s ability to practice, and serves as evidence that the attorney-client relationship has been established.
This last point is very important. Because most lawyers in the U.S. do business with many different clients, you need to make very sure that your lawyer has the duty to keep your information confidential. While the attorney-client relationship can be created in many different ways, having an engagement letter firmly establishes that one has, or has not, been created.
Your lawyer’s engagement letter should set out the lawyer’s fee or fee structure. Many U.S. lawyers will agree to talk to you at no charge to simply figure out whether they can help you. This should be set out in the engagement letter. However, it is important to know that this preliminary talk will be very general. You shouldn’t expect to get answers to your questions during the no charge consultation. Once you have adequately explained your issue to your lawyer you should get a rough estimate of fees. It is perfectly acceptable to negotiate fees – including the lawyer’s hourly rate.
Finally, non-U.S. clients should accept the “American Rule” on legal fees. The American Rule is that each side pays their own legal fees. This rule applies 98% of the time and is waived very infrequently. While your lawyer may say that he will try to get your attorney’s fees paid, this rarely happens, and you should not count on it. Regardless of whether you agree, or disagree, with this rule, it is an important part of doing business in the U.S. Wishing it wasn’t there, or arguing that it shouldn’t apply, isn’t going to change that fact.
Next up: choice of law.
