GPSolo Magazine - January/February 2004

Cultural Savvy in a Multinational Client World

Ît’s every attorney’s professional nightmare. You have just concluded a flawless contract negotiation session attended by your new client, having achieved all that you could have wished for in the best circumstances. Your client, a Brazilian woman, does not speak English. To signal her that you have indeed successfully navigated through the meeting, you flash her the “OK” sign (an “O” made with your thumb and your index finger). Only at a later date, when you are informed that Brazilians view this as an obscene gesture, do you understand why she gave you a very disgusted look.

The world may have become a very small place, thanks to high-speed telecommunication, frequent world travel, the almost universal appeal of Hollywood, and cross-border business, but our small world remains a mass of literally hundreds of individual nations, each with its own cultural dictates. These cultural dictates are not limited to countries that speak different languages. Clearly customs and practices differ significantly even between the United States and Canada, two countries that share a common border, a common language (well, sort of), much common TV programming, and the world’s greatest trading relationship. Failure to recognize these differences can be fatal to the attorney-client relationship. U.S. attorneys working with foreign clients, and in particular foreign clients that are not used to dealing with Americans, must maintain cultural sensitivities in order to effectively serve their clients.

You may ask why such sensitivity is crucial if you are providing the foreign client with the same high-quality level of service you give to your U.S. clients. There are several reasons. First, unless you understand your client’s cultural background and dynamics, you cannot possibly fully understand what is important to that client. For example, clients may be from countries that impose exchange controls. Their way of looking at a transaction will certainly be colored by the impact the transaction will have on their foreign exchange position. Some may want to structure a transaction in a manner that allows them to maintain as much of their capital as possible in dollars, left in the United States, rather than having to repatriate funds home and convert those dollars back into a currency of questionable stability. Others may need you to ensure that the contract contains specific conditions requiring prior approval of the transaction by exchange control authorities, because without such approval they may not have the funds to actually complete the transaction. Concepts like exchange controls are “foreign” to most American practitioners because limitations on remittances of funds abroad have not existed during the time they’ve been in practice. In representing a U.S. client going abroad, there may be no limitations on the ability to transfer funds (except to a handful of countries), but a U.S. attorney in such a transaction must still be mindful of any local exchange controls to ensure that the U.S. client’s funds are properly registered.

Cultural sensitivity is also important in order to avoid a situation where, as a result of ignorance of your client’s local dynamic, you inadvertently prepare a contract that creates recurring problems for him or her. For example, investors from many foreign countries are much more sensitive to issues of privacy and maintenance of confidentiality than are their U.S. counterparts. They do not want to see their names in public documents, whether for financial or for security reasons (e.g., if their country of residence has significant crime or kidnapping problems). If in acting as U.S. counsel you fail to get your arms around these cultural issues, you may fail to create a structure for your clients that will satisfy their unique concerns.

The question then becomes how you, a U.S. practitioner who may never have traveled to your client’s country of residence, can possibly obtain this type of important cultural information. There are several sources. First and foremost is your client. Meet with the client well in advance of commencing work on the engagement, talk through the points that are important to him, try to explain how things are normally done in such situations in the United States, and inquire both how this differs from what he is accustomed to and how proceeding in this manner would impact him. Don’t be shy about admitting to the client that you have things to learn about him and his culture—better to be open and honest, with the hopes of eliciting necessary guidance from the client, than to project an appearance of knowledge when none exists. In advance of your meeting, utilize source materials to learn about ways of doing business in that particular country. There are many commercial journals and websites that outline in general terms issues related to doing business abroad. The U.S. government can also be a wonderful source of information. Sources include sites from the U.S. Commercial Service ( www.export.gov/comm_svc), the CIA ( www.cia.gov), and even the U.K. Foreign and Commonwealth Office (www.fco.gov.uk). By visiting these sites you can learn about local tax systems, exchange controls, and regulatory issues. Once you understand how things work where your client resides, you will be able to sense what issues are particularly relevant for the client when investing in the United States.

Once you have a general understanding of the cultural background of your client, you need to determine how to best interact with that client. Wherever possible, face-to-face meetings are best. Even in an era of videoconferencing, there is nothing better to build a relationship than sitting down around the same table. Language skills also can be crucial. This does not mean that you are expected to speak every language that each of your clients speaks. However, trying to represent a client who understands no English when you yourself do not speak her native language is a formula for absolute disaster. It is impossible to conceive of a situation in which a client could be adequately represented by an attorney unable to communicate in a manner that the client can understand. Most clients doing business in the United States speak enough English to make reasonable communication possible. If this is not the case, however, a translator is a necessity. Even where a translator is used, it is important that the interpreter understand legal issues and legal terminology sufficiently to act as an adequate bridge between you and the client. Sometimes, local counsel can fill this role, provided local counsel is adequately versed in English. However, unless local counsel is also well versed in U.S. practice and custom, he or she may be unable to sufficiently communicate relevant issues and concerns.

Language, however, is only part of the process of understanding your client. You do need to get a sense of the nuances—that is, how people from that country interact with each other and how such interaction differs from what we are used to here in the United States. Although as Americans we may think of our way of doing things as the norm, that clearly is not the case from the perspective of a foreigner. Rather, Americans do, in many ways, interact with each other in ways that are much different from those in other parts of the world. For example, Americans tend to be much more politically correct and formal in the way we speak to each other. Foreign men may routinely use terms such as “dear” or “darling” when speaking to women professionals. Such terms would be viewed as inappropriate in the United States. In some countries this may simply represent conversational differences; in other places this may be symptomatic of what Americans would view as underlying sexism. On the other hand, Americans tend to be very direct in their discussions, sometimes cutting right to the point and bypassing the niceties that abroad may be routinely part of the process of setting the stage. Some foreigners view this directness in a positive light, but many others view this as crass and inappropriate. When you first meet a foreign client, you must take time to get a sense of how direct you can be in your dealings, and thereafter proceed with caution to ensure that you are not progressing too quickly.

Even the manner in which personal contact is made often differs between the United States and other countries. Americans, having been raised in an open and fluid society, tend to think of themselves as informal and relaxed as compared to those from some older cultures and societies. In fact, however, Americans can be much more formal in their interaction than those from many foreign countries. You need to get a sense of where your client fits on this continuum. For example, the concept of physical contact can be dramatically different depending on with whom you are dealing. In some cultures any physical contact, even shaking hands, may be deemed inappropriate, especially between people of opposite sexes. Americans tend to be somewhere in the middle on this. At the other end of the spectrum are clients from countries where men and women routinely kiss each other, even if they have only just met. Failure to kiss your counterpart in such a situation may mark you as cold or even offensive. How do you determine how to act with your new client? There are actually books, such as Roger E. Axtell’s Gestures: The Do’s and Taboos of Body Language Around the World, that provide country-by-country information. These books can be consulted in advance of a first meeting with a new client.

Once you can comfortably navigate the cultural differences, you must still provide the client with professional legal services. Part of this process involves sensitivity to the differences between our legal system and that of the client, which can in certain circumstances be fundamental. In litigation, for example, procedural differences between the U.S. system and foreign law can be enormous. Most countries do not have the types of discovery that we take for granted in the United States. Similarly, the process of using pleadings and depositions will often be confusing for foreigners. The cost aspects of U.S. litigation are in many instances the opposite of what foreign clients are used to at home. Many foreign jurisdictions provide for automatic awards of all costs to the winning side, and thus foreign clients are often perplexed at how they could win the litigation process but still be out-of-pocket for the related costs. The enormous cost of the litigation process in the United States is also often unanticipated by foreign clients. In order to effectively represent a foreign client in a litigation matter, you need to properly inform the client of these costs in advance of commencing the litigation. It is also helpful to warn the client that once the process of litigation begins, it is difficult to control or stop it (and the related costs), even if your client is the party that commences the litigation.

Equivalent issues must be considered in contract negotiations when you are representing foreigners. Such clients are often unfamiliar with the use of detailed contractual representations and warranties. The idea of indemnification over long periods of time, with significant dollar exposure, may be unfamiliar to the client. Because foreign contracts often provide for much less in the way of representations, warranties, covenants, or indemnification, they are frequently much shorter. This can result in concern and reluctance on the part of your client when presented with a standard U.S. agreement, dozens of pages in length, with complete representations and warranties. You need to assist your clients by carefully explaining to them, in the context of the U.S. system, why you need to utilize what is standard in this country for their contract.

One final note on advising your client on contractual and corporate matters: State corporate laws in the United States share and expand upon common-law concepts of fiduciary duty. These translate into imposition of obligations on various parties, including officers, directors, and shareholders, which can be traced back to the common law. Most countries in the world do not follow common law, but rather utilize civil law. In civil law jurisdictions the rights and obligations of various parties will be outlined in the statutory law, and these statutes are generally different from those rights and obligations under the common law or related U.S. statutes. When advising a foreign client who is acting in a position in which they may be subject to a fiduciary duty in the United States, you need to advise them of this and how the concept of fiduciary duty applies.

Multicultural practice can be absolutely fascinating, providing the U.S. practitioner with exposure to clients from different lands, each of whom carries preconceptions related to his or her individual culture and legal system. However, this experience can be tarnished if the lawyer fails to properly understand the client’s cultural dynamic, or to properly advise the client of the cultural and legal dynamic in the United States.

Stuart M. Berkson practices law with McDermott, Will & Emery in Chicago, Illinois, with an emphasis on international tax and transactional matters. He can be reached at sberkson@mwe.com.

 

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