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Good Lawyers Gone Bad On China. What Were They Thinking?

Posted in Legal News

I have never written a will, not even for friends or family. I have never handled a DUI, a divorce, or a real estate closing, not even for friends or family. I have never negotiated with a union, drafted a pension plan, or handled a debtor-side bankruptcy. I could go on for pages listing out the legal matters I have never handled and will never handle.

And there is a reason for that.

There is a reason why I have never handled any of the above matters and there is a reason for my telling you all this in this post. I have never handled any of the above matters for the simple reason that I am either wholly unqualified to do so or there are so many other lawyers out there far more qualified (and efficient) than me at such matters, that my handling them would be a disservice to the client.

I wish more lawyers thought like I do when it comes to international contracts as I am getting tired of cleaning up their messes.

In just the last few months, I have seen the following:

1.  An employment contract between a United States company and its three ex-Chinese employees. The United States company brought me this contract after its Chinese subsidiary was sued by these three ex-employees. The United States company wanted to argue in China that the three ex-employees could not sue the subsidiary both because they were not employees of the subsidiary and because the contract made very clear that any disputes needed to be resolved in a U.S. court. They had actually paid a U.S. lawyer to draft this document. I told them to ask for their money back from the U.S. lawyer and try to settle with the three ex-employees as quickly as possible. Their employee agreement was illegal on multiple counts.

2.  I met with a company who wanted us to draft a supplier agreement with their new Chinese manufacturer on terms “somewhat similar” to those in the distribution agreement they provided me. Upon further questioning from me, I learned that they had been using this distribution agreement with their other suppliers, but they were having doubts about its efficacy. Not only was this distribution agreement written all wrong for China, it was the complete wrong agreement. It set out a relationship whereby the U.S. company was acting as a distributor of the Chinese company’s product, when in reality, all the U.S. company was doing was buying OEM product from Chinese manufacturers. Very strange.  I also told this client to ask for their money back.

And here’s the kicker. The law firms that wrote these two contracts are decent law firms, though neither do any international work. Not sure if they are so hard up for work that they are willfully deciding to cross into legal arenas in which they do not belong, or if they simply do not know any better. Not a good thing. 

What do you think?

  • LH

    It’s easy to see how someone gets into this kind of bind. They start out not being able to read or write Chinese and with a basic unease at using a Chinese law firm. They trust U.S. law firms and if the latter have no real experience in China they may actually imagine that they can write clauses like “the parties agree that the U.S. courts will have jurisdiction” even though the underlying matter is actually *statutory* (like the employment stuff) so such a clause is tantamount to trying to overthrow Chinese statutes with a contract, haha. I understand however the unease that comes from having a Chinese contract drafted by a Chinese lawyer and never knowing exactly in detail what it says. It is one thing to trust a lawyer to write a contract, but all good businessmen develop some ability to read contracts, and when that’s taken away it leaves you open to all kinds of pitfalls.

  • http://www.foarp.blogspot.com FOARP

    Don’t claim to be able to do things you don’t know how to do. Very simple.

  • justaguy

    “I don’t Know” is often the most intelligent thing you can say. Its amazing how otherwise smart and capable people can do insanely stupid things because they haven’t figured that out.

  • Fredrick N.

    Same thing happened to me. I paid a lawyer $2500 to draft a non disclosure agreement for me to use in China and he gave me something in English that provided for me to sue in the United States if something went wrong. Something went wrong and I went to go sue and another lawyer (a real lawyer) told me there is no point in suing the chinese company in the United states and my contract should never have said that. We went back to the first lawyer and he gave me all of my money back, but i am still stuck with a worthless non disclosure agreement.

  • http://apentium.net/ugyvedi-iroda-budapest.htm ugyved

    I quite agree with FOARP – things can go wrong really.