Going Global

As clients pursue worldwide opportunities, Detroit’s law firms advance their international practice
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Attorney Larry McLaughlin gathered his bags at Seoul’s Incheon International Airport and wondered about the reception he would receive. As chair of Honigman’s real estate department in Detroit, McLaughlin was in South Korea to negotiate a large retail project for luxury mall developer Taubman Centers Inc. of Bloomfield Hills.

“A lot of the early negotiations turned on the prevailing language of the contract — whether it would be in English or Korean. It was critically important that if a dispute arose, we [could] settle it using English law,” says McLaughlin, who had traveled to South Korea on three separate occasions to seal the deal on behalf of Taubman.

Compounding the negotiations were the vast differences in law between the two countries. In some cases, legal terms did not translate well, if at all. What’s more, a Korean-based department store involved in the project only wanted to use a standard six-page lease document with boilerplate language.

“You want to be very patient when expanding on foreign soil, because you may be giving up certain rights that can come back to haunt your client,” McLaughlin says. After months of negotiations, the groundwork for a financial center complemented by housing and retail developments was accomplished. Once the Korean team finalizes the overall development, Taubman will complete its end of the agreement, he says.

McLaughlin also is working in Macao, a region in China, on behalf of Taubman, while partner Richard Burstein is working on another Taubman project in Puerto Rico. As the chair of Honigman’s Corporate and Securities Department, Donald Kunz has witnessed firsthand the steady growth of inbound and outbound foreign business. “Over the years our international practice has grown tremendously, because it mirrors the activity of our clients,” says Kunz. “Twenty years ago there was a sense that the U.S. was the market and, if you did well there, that’s all you needed to do.”

While cross-border negotiations were rare 20 years ago, improved transportation and technology — and the opening of foreign markets — are providing new revenue streams for metro Detroit’s legal industry.

“Our international practice has been increasing every year for two reasons,” says Laurence Deitch, a partner at Bodman who chairs the firm’s automotive industry team. “One, the biggest auto suppliers based in Michigan have a significant portion of their growth overseas; and two, strong companies in India, China, Japan, and Europe now have a presence in the United States.”

Vikramaditya Khanna, a corporate law professor at the University of Michigan Law School in Ann Arbor, says regional law firms by necessity had to become more international in scope with the U.S. gaining access to markets in China, India, Eastern Europe, Russia, and Latin America, as well as the implementation of GATT (General Agreement on Tariffs and Trade) and NAFTA (North American Free Trade Agreement).

“There was market pressure for the Detroit firms to service their clients internationally,” Khanna says. “Because an increasingly large number of deals had an international component, (they had to) become familiar with global legal issues and collaborate with foreign law firms, or else their clients might go elsewhere.”

 

Ironically, initial legal work emanating from Eastern Europe in the early 1990s pioneered by young associates at two of Detroit’s larger law firms created the foundation for international practices at Miller Canfield and Butzel Long. Both attorneys obtained bachelor’s degrees in political science as well as East European studies.

As a U-M undergrad, Rick Walawender became fascinated with the rise of solidarity in Poland and enrolled at Jagiellonian University in Kraków in 1981 (as a foreign exchange student) for two semesters. The experience proved to be fruitful. When Lech Walesa’s Solidarity Party gained control of the Polish government in 1989, party representatives contacted Walawender, then a third-year associate at Miller Canfield, to create and find investors for the Solidarity Bank — one of the first private commercial institutions in the former communist-controlled country.

“The work in Poland opened the door for our international practice as we represented U.S. firms overseas while developing an expertise in international M&A, financing, joint ventures, and greenfield operations,” says Walawender, who heads Miller Canfield’s corporate, international, and automotive practices. Michigan’s largest law firm now has foreign offices in Mexico and China, two in Canada, and three in Poland.

As it stands today, more than half of Miller Canfield’s corporate practice is international, including representation of companies going inbound to and outbound from India, China, Mexico, Brazil, and Eastern Europe. Walawender says Russia will be included in the near future, and the firm is studying expansions in six other countries; the hope is that they will be operational in the next five years.

After graduating from U-M Law School in 1988, Nicholas Stasevich landed a research fellowship at the Ministry of Foreign Relations in Warsaw before joining Butzel Long. The overseas experience helped create a measure of reserve as Stasevich cautioned a Fortune 500 company to avoid investing in the former Yugoslavia because of a possible civil war in the early 1990s.

With his early international work serving as a foundation, Stasevich was the harbinger of Butzel Long’s overseas practice.

“We probably had one international law matter when I joined the firm in 1988, and today approximately 25 percent of our revenue stems from inbound and outbound international work,” says Stasevich, who has assisted clients in 60 countries on M&A, antitrust, joint ventures, and employment matters. “I believe that within the next decade, over half of our work will be international.”

Increasingly, law firms are strategically recruiting or utilizing their own attorneys to enter new markets. Such lawyers have the cultural background and relationships to cultivate and obtain work from domestic- and foreign-based companies.

Mahesh Nayak, a native of India raised in metro Detroit, directs Clark Hill’s India Practices Group. “With the shift in the world economy, we saw the opportunity to work with our automotive and IT clients that were seeking to go to India, while recognizing that Indian companies were also planning to land in the U.S.,” says Nayak, who was recently named president of the Michigan South Asian Bar Association.

Nayak says India and other Asian Pacific countries offer a deep well of business opportunities. “India is the most populous capitalistic democracy in the world, it has a flourishing economy, English is the universal language of business, and all of that presents a tremendous opportunity for inbound and outbound business,” he says.

 

Following several working vacations, Noam Raz convinced his peers at Jaffe Raitt Heuer & Weiss in Southfield to open an overseas office. Born in Israel but raised in the U.S., Raz specializes in e-commerce, intellectual property, and real estate matters. “A light bulb kind of went off and the firm decided to coordinate our efforts and try to do some active marketing in Israel, because there are many companies there looking to do business in the U.S.,” he says.

In war-torn places like Iraq, James Y. Rayis, principal of the law firm James Y. Rayis in Birmingham, says American-based companies are greeted with plenty of opportunity. But, he says, it can be difficult to navigate the government procurement process. “The country is not quite there yet in terms of infrastructure and stability, and I think northern Iraq is further ahead than the rest of the country,” he says.

Still, Rayis has noted that automakers like Ford Motor Co. are very aggressive in the Middle East. “Ford is busy setting up distributorships and laying the groundwork for expansion as Iraq improves,” he says. “There is still a very high regard for American-made products, no matter the political winds. American-made equipment, machine components, and tooling are very much in demand.”

Rayis also consults European companies looking to distribute and set up offices in Michigan and other states. “There are a number of smaller, high-quality wineries that are looking to grow in Michigan,” he says. “There are also cheeses and specialty foods, medical devices — just a whole gamut of products that are ripe for importation.”

Brian Benner, a partner with Benner and Foran in Farmington Hills, operates offices in London, Paris, and Berlin. In many cases, he works on behalf of Americans traveling overseas who may be injured in an accident. He also has represented Holocaust victims, as well as an American human rights activist who lost both of his legs when terrorists bombed the United Nations Building in Baghdad in 2000.

“We filed and won a lawsuit in Mount Clemens against an English manufacturer of industrial equipment that supplied a piece of machinery that didn’t have any guards on it,” Benner says. “A worker at an auto supplier in Mount Clemens lost his arm in the machine. We’re also hired by insurance companies that represent tour operators.”

Practicing overseas for more than 30 years, Benner, an Irish citizen, says some of the work is difficult emotionally. One case involved an American father and son vacationing overseas. “(They) were killed in a train that was headed to a ski resort in Austria. The train caught on fire. The boy was 14 years old and had his whole life in front of him.”

Although expanding into the often-complex international law arena has been rewarding for metro Detroit’s law firms, it doesn’t come easy. Challenges include cultural differences, ever-changing multijurisdictional laws, increased competition, and different time zones.

 

While business can seemingly move at the speed of  light, Jaffe partner Holli Hart Targan says U.S. companies seeking to replicate their operations in emerging markets should be cautious. Specializing in credit and debit card processing, as well as payment systems law, Hart Targan says there is no cut-and-dried system to gain a foothold in such a dedicated area, with its unique laws.

“I think it would be difficult for someone in this industry to go overseas because, culturally, it’s such a different environment — and also because the payments business, internationally, is not quite as mature as in the U.S.,” she says. Still, as technology improves, she predicts more companies will integrate electronic devices into their operations to reduce costs and boost efficiency.

As director of Asian client initiatives at Dykema Gossett, Daniel Malone says there’s more to assisting expansion-driven executives than solving language and cultural barriers. “Clients have expectations these days of service providers bringing some differentiating thought, considerations, and recommendations on how they can better position themselves legally in other markets, and you have to be prepared to do that,” he says.

Since Bruce Thelen joined Dickinson Wright in downtown Detroit 30 years ago, the size and scope of the firm’s international practice has increased dramatically. The firm now does work for more than 500 overseas clients. When the U.S. opened the door for American investment in Vietnam in the late 1980s, Thelen handled Chrysler’s joint venture there.

“Now we have clients with operations in China and, as costs have risen there, they are looking to Vietnam as a possible destination to find lower costs,” Thelen says. “The world is always changing, and our law practice has to change with it. So the challenge is keeping our clients informed so they can stay ahead of the curve.”

Although practicing law has never been a 9-to-5 job, with an international law practice, round-the-clock time zones present a unique set of challenges.

“A 10-and-a-half-hour time difference with India is challenging because there’s an expectation of a great work turnaround, and you want to live up to that expectation,” says Stasevish, who on a recent evening was up late on a call to Asia, followed by a 5 a.m. conversation with a client in Germany. “I only had three hours of sleep, and I’m on my fifth cup of Chinese green tea. The bottom line is that you have to be awake and ready to go on their time.”

As Detroit’s largest law firms continue to compete for increasingly cost-conscious clients across the globe, they may have a leg up against the mega firms in New York, Chicago, and London.

“The ability of the Detroit firms to charge more reasonable rates compared to the giant firms based in New York provides a competitive advantage in market transactions because our quality matches up well in comparison to theirs,” Bodman’s Deitch contends.

According to U-M Law School’s Khanna, the opportunity for overseas growth among metro Detroit law firms will endure. “I believe you will see that these firms will continue to ratchet up their international practices, and that there will be increased market pressure to provide quality services at reasonable rates,” he says. “It’s a growth market.”

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