Looking for Greater Export Profits? Consider "Onshore" Options in Your Search for an "Offshore" Strategy

Can the formation of "offshore" companies offer tax benefits to an internationalizing US business, and are many companies overlooking the benefits of structures using US "onshore" entities?

The business press has left some of our clients with the sense that they are missing-out on great benefits though "tax haven" structures. Yet, clients often assume that such structures are used mainly by the likes of Tyco and Enron, are complex and risky, and may not be a good way to win friends at the IRS.

Offshore entities can be useful in some situations that have little to do with US tax savings. For example, companies investing in China or India can benefit by holding their local investment through an intermediate company established in Hong Kong (for China) or Mauritius (especially for India but also for China) or some other low-tax jurisdiction. The Hong Kong or Mauritius entity can more easily be sold -- local law restrictions on transfer of ownership may not apply since only the ownership of the "offshore" entity is transferred. The shares of the local Chinese or Indian company do not change hands. Even if the shares of the local company are later sold, the local withholding tax on capital gains may be reduced for a payment made to a jurisdiction like Mauritius than for a payment made directly to the US.

If a US company is not investing or forming an entity in another country but is exporting, licensing or otherwise selling to other countries, offshore entities offer at least the potential of deferring the impact of US tax. It would be difficult to reduce US taxes simply by routing payments though a third jurisdiction such as the Cayman Islands, no matter how attractive its tax laws. This is mainly since the US taxes a US company's or individual's income on a worldwide basis, even if the income source has nothing to do with US activities (this is not true for tax systems of most other countries). Parking income in low-tax country may be possible, though this defers but does not reduce the US tax burden (and will still require current US tax payments on many types of passive "subpart F/controlled foreign corporation" income, even if funds are not actually distributed back to the US).

Too great a focus on "offshore" structures can also cause US companies to overlook the benefits of US "onshore" structures. This can be as simple as the use of a US limited liability company for exporting US goods. Net income would then be taxable to owners of the LLC but would not be subject to the added US corporate tax that would apply to a corporate entity.

US exporters can also continue to achieve significant US tax savings through the formation of a separate US international sales corporation under special IRS rules. This technique is available to certain partnerships, S corporations and LLCs, which establish an export sales corporation and then pay it a commission of up to 50% of the export net income. The commission is deductible by the company paying the commission and is not taxable to the export corporation. The accumulated income in the export corporation is subject to a 15% dividend tax when distributed to the payer of the commission. Though there are a few other wrinkles, a savings of 10% or more off US taxes can easily be achieved so long as a company's exports are of US origin.

Better yet, the set-up costs are modest, and your family and friends won't likely be reading about your IRS troubles in the local business press!


CIRCULAR 230 DISCLOSURE: ANY STATEMENTS REGARDING TAX MATTERS MADE HEREIN CANNOT BE RELIED UPON BY ANY PERSON TO AVOID TAX PENALTIES AND ARE NOT INTENDED TO BE USED OR REFERRED TO IN ANY MARKETING OR PROMOTIONAL MATERIALS.

Enforcement of US Court Judgments in China - Even a Single Example?

As noted in my last posting, we seldom recommend that clients specify US courts as the choice for dispute resolution in cross-border agreements that may need to be enforced in another country. Arbitral awards are simply a better enforcement bet among the many signatory countries to the New York Convention.

Don Clarke, the George Washington Law School professor who moderates an excellent China law discussion group, is reviving his search for even a single example of a US court judgment that has been enforced in China, and I will report back on specific examples. Don's criteria are as follows - a typical scenario wherein the local party challenges the enforceability of the judgment:

"1. I'm talking about judgments, not mediated settlements.

2. I'm not talking about cases where both parties wanted the judgment recognized (e.g., consensual divorce cases). I want cases where one side argued that the judgment should not be recognized and enforced, and lost the argument.

3. I'm talking about cases where the issue was whether or not to enforce the judgment without going into the merits, not where the merits of the matter were litigated (since in that case it wouldn't really be a case of enforcing a US judgment).

4. I really need a specific and independently verifiable reference, not something you heard about from somebody else. This is important because so far, every time I hear about a case that I'm told meets my criteria, when I am able to look at the specifics it turns out that it does not.

Our last discussion failed to uncover any cases meeting the above criteria; are there really none that anyone knows of?"

Online Terms and Conditions - Binding in the US and Internationally?

We have worked with clients to help ensure that online terms and conditions are enforceable, both in the US and in other countries. Apart from online agreements accepted by clicking "I accept," some agreements are signed by parties yet refer to materials posted online as part of the agreement terms. Will such online terms be enforceable?

Not always. In a US court case in Florida, the parties signed a written agreement yet tried to make various online terms binding through the following language:

“This contract is subject to all of X's terms, conditions, user and acceptable use policies located at http://www.X.com/about/legal/legal.htm."

These online terms included an agreement to arbitrate, and the Florida court found that the agreement to arbitrate was not binding. Why? In essence, the incorporation of the online terms needed to be more specific than a simple reference that it is "subject to" the online terms. There was no specific reference in the "offline" written document that is meant to include the online document that contains the arbitration provision, and the web address link apparently did not directly point to the terms containing the arbitration provision.

Such a defect can be devastating in a cross-border context. We often recommend arbitration for international agreements, in part to stay out of unfamiliar local courts and in part due to the greater chances of enforceability in many other countries of an arbitral award as opposed to a foreign court judgment. If a US court is reluctant to enforce online terms which are not clearly meant to be binding by the parties, courts in many other countries may be even less likely to enforce terms, especially if they disadvantage a local party.

The decision is Affinity Internet, Inc., d/b/a SkyNetWeb v. Consolidated Credit Counseling Services, Inc. No. 4D05-1193 (Fla. Dist. Ct. App. 4th Dist., March 1, 2006)

We Don't Pay Foreign Officials - Why Are We At Risk?

As they expand internationally, our clients want to be good corporate citizens and understand that payments should not be made to foreign officials in order to get business. Yet, many mid-market companies would be surprised to learn that they are at risk for failing to recognize "red flags" and failing to follow even basic corporate compliance practices.

The reason is the Foreign Corrupt Practices Act and the heightened enforcement activity over the past 18 to 24 months - companies are facing the highest level of scrutiny since the Act's introduction in the 1970s.

Are employees on that trip to Beijing handing over fists of cash to ministry officials in order to land new business or obtain approval for a new venture? Perhaps not so likely. What about that recent distributor in New Delhi and its relationship with government officials - is "don't ask, don't tell" good enough? Are you confident that you are not dealing with government officials - have you really explored the ownership of that "private" company in Shanghai or that hospital system in Bahrain?

If a U.S. company is faced with a murky set of facts, it may have sufficient "knowledge" of a possible improper payment to open the door to an investigation and potential fines (or worse). "Red flags" can include the insertion of a local intermediary without a clear business purpose. Due diligence on relationships and transactions is an important part of the response. Contractual language piously prohibiting corrupt payments is advisable, but will not be sufficient without more, including evidence that the company took steps to implement a compliance program and educate employees (something more than "thou shall not hand over bags of cash").

Better a little up-front investment than a front-page Wall Street Journal or Crain's article and a cloud over the international team.

Abe's Shameless Malarkey Refuted

Do I now have your full attention? Ready to take a break from cross-border legal updates?

Yes, this is in fact a North Korean news headline, in one of those priceless English translations. Here are a few excerpts:


"Abe's Shameless Malarkey Refuted

Pyongyang, March 14 (KCNA) -- Japanese Prime Minister Abe's reckless remarks aimed to throw the past crimes committed by Japan into the limbo of oblivion remind one of the saying that "Leopards don't change their spots," observes a Minju Joson analyst Wednesday.

Noting that he totally negated Japan's past crimes, letting loose a string of rubbish woefully lacking common knowledge, the analyst goes on: . . . . "


The next time I am out of good arguments on a client's behalf, I will simply accuse the other side of spouting "shameless malarkey" and of "letting loose a string of rubbish woefully lacking common knowledge."

By the way, the satellite image of North and South Korea shows in the starkest terms how economic development can turn dark into light. Whatever your political persuasion, many of us can agree that our cross-border efforts and market liberalization can lead to something positive.

India's Growth - Don't Overlook Manufacturing (and the Consumer Market)

We just received an update from one of our India-based contacts - the Indian economy continues to steam ahead, and note the importance of manufacturing to this growth. This economy has much more in its favor than software and back-office outsourcing.

"Goldman Sachs has projected that India will sustain over 8% growth until 2020 and become the second largest economy in the world ahead of the United States, by 2050. In their words- “…we project India’s potential or sustainable growth rate at about 8% until 2020...”. Standard & Poor’s, the global rating agency, has raised India’s sovereign credit rating to ‘Investment Grade’ (BBB-/A-3).

Recent reports released by the Central Statistical Organisation (“CSO”) and the Reserve Bank of India (“RBI”) further affirm the above facts. According to CSO, real gross domestic product (“GDP”) growth accelerated to 9.2% in the second quarter from 8.9% the preceding quarter and 8.4 % a year ago, led by manufacturing and services sectors. The manufacturing sector with double digit growth of 11.5% maintained its position as key driver of industrial activity, contributing almost 91.2% of the growth in industry. Growth in the services sector accelerated to 10.6 %."

Middle Market Companies Go International - A Terrific Conference

How many conferences really focus on the special needs of middle market companies as they expand abroad through acquisition, manufacturing, distribution and otherwise? What about the exploding interest among private equity firms in helping their portfolio companies into new markets and in exploring direct investments in China, India and elsewhere?

I was pleased to be part of a fine group of international committee members who organized ACG Chicago's "Is the World Really Flat? Middle Market Companies Competing in the Global Economy."

The February 28 event drew about 300 participants and featured Fareed Zakaria as our lunch keynote speaker (congratulations on a fine presentation, Fareed) as well as Julie Sell of The Economist and her cross-border dealmaker roundtable with Jay Jordan of The Jordan Company and Steve Pagliuca of Bain Capital (which I thought really went to the heart of many of the middle-market's cross-border challenges).

In addition to working with Julie, Jay and Steve on their panel, I put together and moderated our "Sourcing Cross-Border Deals" session. As described below (click on the images to enlarge), I was joined by senior dealmakers from Illinois Tool Works (a very international Fortune 100 company), Cathay Fortune Corp. (a China-based private equity firm) and S.H. Lang & Co. (Scott Lang, formerly of Brown Gibbons Lang, the mid-market investment banking firm).

Our China Roundtable Discussion

InternationalCounsel hosted a China roundtable discussion at our offices on Monday, February 26. We had a good group of attendees, including some manufacturers, consultants, representatives from Illinois and Wisconsin trade organizations and others interested in or already doing business in China.

I spoke on manufacturing and distribution in China, and Shawn He of MeetChinaBiz moderated the discussion.

These roundtable discussions allow participants to voice their special problems and concerns and learn from each other. We are finding something of an oversupply of China events in Chicago and elsewhere - how many more lectures on direct foreign investment in China are you prepared to sit through?

A roundtable format offers a more interactive setting, and most companies entering China are facing contracting, investment and IP issues that are not rocket science but require small teams of experienced advisors.

Investing in India? Our Recent Article

As part of our cross-border legal advisory services, we work with US companies investing and doing business in India (and also with Indian companies doing business in the US). China is also important to us, but it is seldom "all China, all of the time" for our clients!

Here is my recent article on foreign equity investment in Indian companies - published in the Association for Corporate Growth's Cross-Border Transactions Bulletin (we are active with the international activities of this mid-market-focused dealmakers' association). Click on the images to enlarge.

Clifford Chance Outsources Legal Support to India

London's Legal Week reported on October 2 that Clifford Chance expects to transfer 300 support staff jobs to India - at a savings of close to US$60 million. This is in addition to the outsourcing of document production which is run by Integreon in India.

Why do we care? Major law firms are feeling ever-greater pressure to meet the budget needs of corporate clients. Our practice offers a sophisticated cross-border legal capability at costs far below our large-firm competitors. I can tell you that we will not be able to find $60 million of savings in our overhead no matter how hard we look!

India - A Day Out of China's Shadow

There seems to be some convergence of India developments this week in our office and in the press.

Our office is closing this week on an acquisition of convertible prefered shares on behalf of an Indian publicly-listed company. Congratulations to the parties!

Already this week, the Wall Street Journal has reported on Wal-Mart's plans to expand in India through a joint venture with Bharti Enterprises Ltd. Plans call for "several hundred" stores within the next 5 years.

Here in the Chicago area, Crain's reported that Salton Inc. is in talks to acquire a majority interest in Softel Machines Ltd., an Indian home appliance make. Softel manufactures water purifiers, ice cream makers and popcorn maker, and the venture could expand into the manufacture and distribution of other appliances.

We are all seeing endless China conferences, and China's opportunites are just too massive to treat lightly. Work for US companies entering China is important to our practice. Yet, while everyone knows India as a great location for outsourced call centers and business services, India is also an important consumer market and manufacturing base.

Establishing a Presence in a Foreign Market - Korea

One of the core beliefs of our InternationalCounsel practice is that a legal advisor's "toolkit" of international law skills is generally of far greater importance to the success of a project than the particularities of a target country's local law.

For example, in the typical international transaction, whether a license, franchise, agency or distribution agreement or manufacturing/sourcing arrangement, substantial legal risk balancing goes into choosing among basic types of arrangements, and a dozen or so key agreement provisions require substantial modification. Local law modifications are important, but someone needs to be asking the hard up-front questions and have a handle on the kinds of issues that cut across many markets.

The same is true when deciding on market entry vehicles in a target country. A recent client project is a good example of factors to consider in establishing an office in another country. Like many projects, this challenge began with a simple message: "we need to distribute our product in Korea and want to establish a subsidiary there to show that we are serious."

1. Is an in-country office really essential? Keep in mind that (a) a local office typcially means that revenues from the country will be taxed by that country, and such revenues will also be taxed in the US or other home country. Yes, a tax credit in the home market may offset the foreign tax, but not always; (b) the cost of setting-up and maintaining the office may not be fully offset by the potential revenues (or margins that might otherwise be taken by a local agenty/distributor); and (c) local parties operating the office will likely be employees subject to laws making them difficult and expensive to terminate. Do such factors cause you to reconsider appointing that local agent or distributor to at least test the market first?

2. If an in-country office is chosen, countries often offer 3 main choices:

(a) a liaison/representative office, if the activities can be structured as non-revenue-producing. For example, it may be possible to route revenues directly from an in-country customer to the parent company and limit the liaison to strictly exploratory/promotional activities;

(b) a branch office, which is an extension of the home office and not treated as a separate entity for liability purposes. Special-purpose US companies can act as a firewall to protect against liabilities; and

(c) a subsidiary in corporate form, which will limit liabilities but be more expensive to maintain and may prevent a company from offsetting profits and losses against parent company income. Consider forming an in-country entity that will be treated as a corporation for local purposes but will have flow-through tax treatment for US purposes.


Yes, each country has local-law nuances, though this example of a "toolkit" of issues is meant to show that the overall structuring issues and interplay between the two countries can have even greater importance.

More Cross-Border Lawyering But Thinning Capabilities?

Several data points have left me wondering whether corporate America is better or worse off given the growing number of lawyers who profess to offer some type of international legal services.

In the last 5 years or so, a broader number of law firms have felt compelled to market some type of international legal services for a number of reasons, including (1) a perception that China is hot and they had better jump on the bandwagon, (2) a concern that internationalizing clients will take their work elsewhere unless they are persuaded that their law firm can offer some international support, and (3) more lawyers have had some exposure to international matters, often dragged along by their expanding clients.

This may have led to a spreading of intenational work to large numbers of newcomers to the cross-border world who may not be able to offer a real depth of experience.

A few trends may support this theory. We all have noticed the continued proliferation of "world law networks" - a growing range of law firms may believe that joining a network may be a shorthand way of communicating that they are serious about international work. To the extent that membership in such a network really draws and retains clients, what is the actual depth of teaming experience among network members and is the client offered an "adult in the room" who has substantial experience in the key risk-limiting and revenue enhancing deal terms for cross-border matters?

We have also seen a tendency among some large corporate in-house law departments to shift in-house control over cross-border matters from more specialized international attorneys to generalist domestic corporate/commercial lawyers who have not focused as deeply over extended periods for multiple projects on the deal terms and issues that are key for cross-border matters. For example, two large Chicago companies have de-emphasized their parallel international teams in recent years. Will there be an experience lag as the corporate/commercial generalists catch-up to the skill levels of their former international colleagues?

Growth in Internet Advertising = Global Online Compliance Challenge

When you think "e-commerce" and "Internet advertising," erase all of your images of inflated dot.com companies headed toward doom. The largest and most successful companies are driving an ever-greater percentage of their advertising dollars to the Internet. For example, a front page article in the April 17 Wall Street Journal presented a chart showing an expected $12 billion in U.S. online advertising revenue to be generated in 2005, up from just over $9 billion in 2004 (and less than a $1 in 1997).

Whatever the source of this increase in online advertising, companies will need to pay greater attention to the cross-border implications of their online content. Particularly when advertising is in local language and products are being sold into local overseas markets, local laws will impact just what can be claimed and online terms will need to be adjusted to take into account local laws and provide for preferred means of dispute resolution.

For some added background, see some of the issues noted in my earlier blog comments on the globalization of e-commerce conference and raised in some of our publications found at www.internatinoalcounsel.com.

Legal Outsourcing to India - Part II

An M & A deal financed by a major UK bank has apparently outsourced legal due diligence work to an Indian law firm, as reported in the Financial Times and picked-up by a law marketing blog.

We have been hearing about an increasing range of litigation support, document review and very basic corporate work going to India, and it is no surprise that India is receiving a share of ever-more-sophisticated legal work. As noted before, this is not for India law work - it is for projects from other countries based on US, UK and other laws. Those of us who have worked on major M & A deals are well-aware of the large revenue streams flowing to law firms from due diligence work handled by junior associates.

US National Security Interests or "Let's Keep Out the Foreigners"?

Actions to stop non-US companies from acquiring US companies or doing business here are growing increasingly troublesome - note the blog posting from the VC world's Brad Feld on efforts to stop China's Lenovo from selling to the US government.

I'm all in favor of a secure US but we need some reasonable evidence before we do ourselves greater long-term economic harm. Other countries have used security and other "national interest" arguments in spades to block US and other companies from entering their markets. China did not invent this game - Japan had actively used national security grounds in the past, and I recall this line from my days in Korea in the late 1980's. Our own use of such reasons will only embolden protectionist measures elsewhere - though if there are real security threats, let's by all means get these out in the open for evaluation.

Cross-Border eCommerce Legal Issues - China and Beyond

The drive to “localize” web site content and e-commerce into multiple countries is alive and kicking. Many of the largest companies have made tremendous progress since we began working on cross-border legal compliance issues in this area 6 years ago. Examples include HP.com, which is in 67 countries and 35 languages, and eBay, which is in 14 languages. Google is itself in multiple languages and expanding into countries such as China.

My fellow presenters at the Managing Global Websites and eCommerce Conference in San Francisco on March 28 and 29 were in an ideal position to help us understand the current state of global web site penetration. These voices from the front-lines included Dennis Hwang, Google’s Webmaster (pictured at the podium here), Marcia Hutchinson, the person behind HP.com’s drive for global consistency and market penetration, and Marcel Bregman, eBay’s kingpin for international web site expansion.

My own contribution to a panel moderated by Ion Global's Wei-Tai Kwok was a presentation on key legal issues in China for online content and e-commerce strategies. I addressed three important groupings of legal issues in the PRC: (1) online compliance, outlining important licenses, registrations and “web scrubbing” issues (such as advertising, consumer protection and privacy/data protection) for informational web sites and e-commerce providers, (2) enforcement of online agreements in China, including digital contracts and clickwraps, and (3) governing law and dispute resolution – should online agreements specify Chinese or foreign law and Chinese or foreign courts or arbitration?

Cross-border online issues have fit well with our law practice’s focus on providing cross-border market entry and transactions legal advice to companies entering multiple countries. As we have been seeing from the days of our first “cross-border web compliance” white papers and advisory projects 6 years ago (we were the legal compliance partners to a few of Silicon Valley’s early entrants into the cross-border online “localization” drive), while China shares many issues in common with other countries in Asia, Europe, Latin America and elsewhere, there are surely some twists.

Yes, content is carefully controlled in China, and I would not recommend testing this through ignorance of the political, religious, social and related standards. Sites are taken down with some regularity, and we are all aware of the challenges of Microsoft, Yahoo! and other companies in China. Of even more importance to the average corporate strategy, operating licenses and approvals tend to be more significant in China than in other countries and a range of local (Beijing, Shanghai, Guangdong, etc.) and national law is often difficult to interpret with the specificity that companies may be used to in the US. (Though China has no monopoly on open-ended legal provisions and selective enforcement - welcome to the realities of international expansion!)

For example, “Internet content providers,” – most companies providing information on their web sites whether or not they engage in e-commerce – must either obtain a license for their web site or at least register the site with PRC authorities. Such a requirement surely applies if a company has obtained a local “.cn” domain name and there is some uncertainty for companies which otherwise have business activities in the PRC and are targeting mainland Chinese users through their web sites.

One of the lessons of experienced companies at this conference, which was sponsored by the Localization Institute, is that careful “localization” of web site content pays off. This is partly a matter of the enormous investment in content management tools for rolling-out thousands of pages of online content in multiple countries. When Carly Fiorina resigns from HP, how is the content of 67 country web-sites changed before the press can even react to the morning news? (Marcia from HP had a good war story on this one.) How does a company avoid too much in-country control of web content with a dilution of the corporate brand through inconsistent local versions of a web site yet build local goodwill while avoiding damaging cultural gaffs? A combination of software “content management” and machine translation is coupled with the art of human translation. Language itself must be accompanied by the critical component of “culturalizing” the web content to more fully connect with local users.

Whatever the level of enforcement risk for violating local laws, whether due to actions of local authorities or individual user actions, a company’s branding and corporate reputation is also at stake unless it takes the online legal environment as seriously as it does its more traditional joint venture, licensing, agency/distribution and other global compliance obligations. We see this as one of the important international lawyering challenges of the next several years and are privileged to be playing a part as the cross-border ground rules begin to take form.

Indian Lawyers Perform US Law Work - A Welcome Trend

Today's Wall Street Journal carried yet another article on the usage of Indian lawyers to perform various US legal tasks. Note that we are talking about US law matters, whether litigation support or contract matters, and not usage of Indian lawyers for advice on Indian law. We are aware of in-house legal teams pushing this trend more than law firms and recall that GE received some publicity a few years back when it kept an India-based team to handle some US law matters.

Why is this a good thing? The US corporate/commercial legal industry heavily emphasizes the buidling of large firms to carry-out the kinds of legal work that can maximize the billable productivity of partners and associates. Without substantial competition from other law firms and types of legal service providers, there is little incentive for such large firms to find ways to reduce their costs and pass-on the benefits to clients. Since many Indian lawyers have fine academic credentials and wonderful English-speaking abilities, we will likely see ever more sophisticated work being transferred to India and elsewhere (the Philippines, for example).

By the way, many refer to the transfer of legal work to India as another form of "outsourcing," though "outsourcing" has become an overused buzzword to describe a fundamental aspect of our free-market system. Having work performed by those with a competitive advantage due to pricing, performance and other factors is the nature of the beast, whether the work is limited to a single economy or includes a transfer of production across borders.

Korea as Northeast Asian Regional Hub

Korea continues to pursue its goal of becoming a significant regional hub, including as a major destination for multinational company regional headquarters. Recognizing its challenge in the face of a significant investment flow into China and the rising prominence of Shanghai as a regional headquarters, Korea argues that companies can benefit from locating their adminstrative and logistics headquarters in Korea even if manufacturing will be based elsewhere, such as in China.

Particularly for companies that plan to run part of their regional operations out of a hub based in Northeast Asia, and whose plans are not completely dominated by China, such a pitch may make sense. With such an overwhelming degree of focus on China these days amongst US companies, some pay too little attention to opportunities for collaborating with Korean companies and doing business out of and in Korea, let alone Japan (an economy showing some signs of revival).

The Multinational Law Firm - One Size Fits All?

Over dinner with a Korea-based former colleague and friend, the discussion turned to the news of law firm expansion, including the latest on DLA Piper Rudnick, and collapse, Coudert Brothers in particular. What is really driving the belief among some that they must build mammoth multi-country law firms in order to survive and prosper?

The largest companies typically have a team of experienced in-house cross-border lawyers who structure, draft and negotiate deals. Much of the work is handled by the in-house lawyers, though with on-the-ground back-up support from local lawyers in the target country. While the local office of a multinational law firm may be turned to, more often projects are executed by one or two in-house lawyers in one country working with a local lawyer in one of the many excellent local law firms in the target country.

Multinational law firms have their place, such as for the kind of very large multi-country M&A, project finance or securities projects that can benefit from some added element of coordination and control among several offices simultaneously. (An in-house colleague in a major Chicago-area company recently had just this sort of a multi-country firm need for the sale of a business unit with assets in more than a dozen countries.) Yet, what is truly added by a multi-country firm for the day-to-day joint ventures, manufacturing agreements, licenses and agancy/distribution arrangements between one country and another?

The largest law firms tend to feed the beast by seeking-out and emphasizing the largest and most expensive kinds of projects for the largest companies. While the day-to-day cross-border projects will not be turned away, these types of projects may not get the kind of senior attention and care unless they are part of a broader relationship or seen as feeders for larger and more lucrative assignments.

It is true that some companies just want to get a project done and are not particularly cost-sensitive in how a project is executed. There may be some comfort taken in having a very large firm with many offices tend to needs large and small. Some companies take such a route because they are inexperienced and do not have the internal resources for a hands-on role in cross-border legal matters, including for working with local counsel in target countries. Yet, others are simply not aware of their options and may over-value size and the existence of foreign offices. Such a perception is not discouraged by the largest firms who are investing substantial marketing resources in attempts to become the next one-stop shop for worldwide legal needs.