Our China lawyers have probably a thousand combined times had a foreign company seek help with a China problem for which we cannot economically help them because the contracts on which they wish to sue do not give them any protections. For some reason, we tend to get an increase in these sorts of problems at the end and the beginning of every year and this year seems even worse than years past.
Of those approximately thousand times, the foreign company absolutely never used a good law firm for help with their contract. They instead did the following:
1. Drafted the contract themselves, without a lawyer.
2. Used the contract provided to them by their Chinese counter-part, usually without any changes to it.
3. Used a domestic American, European, or Australian lawyer not fluent in Chinese and not at knowledgable about Chinese law to help them with their China transaction.
4. Used a consultant or an accountant or a “China expert” to help them with their China transaction.
My usual advice to these companies is that they consider hiring the right lawyer to look into suing the lawyers for malpractice and the non-lawyers for practicing law without a license.
What is with these companies, anyway? I realize that lawyers truly qualified to draft contracts with Chinese companies are expensive, but these costs pale in comparison to the costs eventually incurred by not using the right people for the legal job.
And lest anyone at this point think this is a calloused call for you to retain my law firm, you would be mostly wrong. We’ve never written a post like this, but if I can help just one foreign company not lose its shirt to China, this post will have been worth it. For that reason alone, I cannot resist.
This is a call for you to retain any qualified law firm to help you with your China legal matters and to do so before you encounter big problems. There are many qualified such law firms, in the United States, in China, in Europe, in Australia, in Canada, in Latin America, etc. How do you find such a firm?
- Ask your existing lawyer to find you the right lawyer for China.
- Ask around about the right lawyer for China. Ask other companies you know that have done business in China. Ask your consultants and your accountants to refer you to the right lawyer and if they claim that they are the right lawyer, you should probably start wondering whether they are the right consultant or accountant for your business.
- Search the Internet, but very carefully. See China Lawyers: The Fakes and the Quasi-Fakes and China Lawyers: The Fakes and the Quasi-Fakes, Part 2.
In searching for the right lawyer for your China transaction, you need to realize that there is no free lunch, or even anything close to it. If you get a $8,500 estimate or flat fee from one law firm and a $350 flat fee from a “virtual” lawyer on the Internet, there is almost always something very wrong with the $350 lawyer and, in most instances, you would actually be better off not having a contract than paying (or even not paying) someone to draft a bad contract for you. See e.g. Why Your NDA is WORSE Than Nothing for China.
What are you seeing out there?