The vast majority of cases I work on are a lot like the material we read in law school. My Torts professor told us on more than one occasion that “there are real people behind every one of these cases.” My cases are no different.
She also told us that they were in these casebooks because some lawyer goofed.” Or words to that effect, anyway. I took both thoughts to heart, and they have guided my immersion in the profession ever since.*
Last year, when I posted “Five Essential Things All Business Owners (and Their Lawyers!) Should Know Before Signing Global Contracts,“ I had those real people– and preventing lawyerly goof-ups– in mind. But lately, I’ve realized that some elaboration is necessary. Why those five things matter ought to be apparent. But some nuance is necessary, so I offer a five-part series that elaborates on each point, more for than benefit of lawyers than for the business owners who want to venture abroad.
Those five things, in turn…
- Designate an agent for service in the United States.
- Include a choice of venue.
- Choose a governing law.
- Determine the operative language.
- Secure a guarantee of judgment debt.
If you choose not to decide, you still have made a choice.
— Neal Peart, 1979
To elaborate on Point One…
Designate an agent for service in the United States.
All U.S. entities must designate an agent for service when they incorporate, organize, or register with their respective Secretary of State. Foreign (that is, non-U.S.) entities usually bear no such responsibility. If a lawsuit against one of those entities becomes necessary, you probably won’t be able to just hire a process server in the foreign country. You will need someone like me to handle it for you or, worse, you’ll spend hours just researching how it’s done (and then bill you for that time). With a U.S. agent, regular U.S. practice is perfectly fine. (And to go one better, have the contract stipulate that the agent can be served by email!)
When you hire me, I’m going to charge you at least a few hundred bucks per defendant. And although your client is going to save money if you hire me instead of doing it yourself (I elaborate here), I’m not cheap, and neither are my competitors if you’re doing it right.
Now, who should that agent for service be? Well, that’s a tough one, especially if the foreign party isn’t registered with a particular Secretary of State (very few are– and don’t just assume you can serve a Secretary of State by default, because the Secretary is usually just a link in a chain of service, and Hague restrictions still must be observed). The foreign party may have counsel, they may have a U.S. subsidiary, or they may have some other U.S. presence that can be specifically designated and authorized to accept service on their behalf. Just be careful about who is selected. Some pitfalls:
- Designated counsel: imagine that in the contract, the foreign party has designated its Boston attorneys– Crane, Poole, and Schmidt— to accept service on its behalf. A year into the contract, the foreign party fires the firm because the principal partner has mad cow disease. Then what?
- Designated U.S. subsidiary: imagine a similar scenario, but instead of firing its lawyers, the foreign party dissolves its subsidiary or moves it offshore. Then what?
- Designated U.S. presence: perhaps the foreign party has a storefront location in Peoria, or a satellite office in Kansas City, and they designate that U.S. presence as their agent for service. Maybe the storefront is destroyed by fire, or maybe the KC office can’t hold onto its staff because the labor market is so vibrant. Then what?
Your best course of action might be an established agency in the capital of the state that you expect to be the locus of performance. A simple Google search pulls up dozens of agents who can be hired for fifty bucks a year. Prepay the agent for the life of the contract, et voilà. When a dispute arises, you don’t have to pay me a thousand dollars (and pay a translator six thousand dollars!) just to get the defendant into court.
It’ll cost you $37.00 in courier fees to overnight the summons & complaint to an agency in Dover.
* I learned Torts from Nancy Levit. It was my best grade that very first semester, which isn’t saying much, but I definitely learned a bunch from her. The learning continued after I graduated, with two books she co-wrote with Doug Linder (my ConLaw professor, two semesters worth). I highly recommend The Happy Lawyer and The Good Lawyer.