International Law

Better Without the Clients

By Stan

A running joke with some lawyers is that the practice of law wouldn’t be so bad if it were not for all the clients one has to deal with. (Yes, we are nasty, ungrateful people.)

Anyhow, Dan at CLB relates the circumstances of one client’s China business experience, and it is ugly. Here are some of the basics:

We started the company in China about two years ago. I hired Mr. Wang [name is made up] to head up our operations there and he eventually brought on about 20 more people for us. I knew him from my days with _________ and thought I could trust him….. We spent two years on this and more than a quarter of a million dollars and the product is now finally ready and they’ve just taken the whole thing for themselves.

No contracts, no protection, just a lot of misplaced trust in one individual.

I know what you’re thinking. No way is anyone that stupid/inexperienced. Dan has to be exaggerating the facts to bolster his argument.

Sadly enough, this sort of factual scenario, while undeniably ridiculous on its face, is also unfortunately commonplace in the foreign investment biz. (Although less common than it was 10 years ago, when I started over here.)

The facts Dan relates stack up against a lot of my own horror stories. I should also point out that we see these things not only after the fact when disputes erupt, but also at the beginning, during the counseling phase of representation. I am admittedly biased here — most of these situations involve a client that has failed to take good advice because they did not want to pay legal fees. Can’t blame them for that since lawyers are expensive, but when you do a cost-benefit analysis of all this . . . well, you can guess what side I’m on here.

Case in point, a potential client came to me about two weeks ago with a new project, probably either a joint venture or a cross-border tech licensing deal. After I read him the riot act about not allowing the potential partner to push him around, control the timetable, and not fall for the usual "we trust each other, why do we need a contract?" traps, what do you think happened?

Yes, he went ahead with the deal without proper representation, and in fact never retained me at all. I hope it works out for him, but I have my doubts. I really don’t want to see him again in two or three years with a potential lawsuit on his hands, particularly one revolving around a set of agreements (if any) that I never had the chance to review/revise.

Glad I got that off my chest.

Full post as published by China Hearsay on March 11, 2009 (boomark / email).