By: Edwin Fuller
Founder and President of Laguna Strategic Advisors

Each year, more than 15 million people in the US take the title of this blog to heart and file a civil law suit. Their suits involve everything from perceived negligence to neighborhood disputes and the frivolous suits among them are estimated to cost the US economy more than $200 billion annually. At the same time, nearly 90% of all US corporations are engaged in some sort of litigation as the average company juggles a docket of 37 suits each year.

Why is this so? While in most of the world’s legal systems, the loser in the suit must pay for a large part of the winner’s legal fees, in the US each party pays their own—so in the US a litigant has nothing to lose by going to court, especially since more than half of all US tort trials are won by the plaintiff. And with 1.1 million practicing attorneys in the country, or 80% of the world’s total, starting a lawsuit to see just much can be won is easy. Is it any wonder, then, that US society is widely regarded as the most litigious in the world?

Although “see you in court” may rank among the most favored “sports” activities in this country, litigation is not a step to be taken lightly when doing business abroad. Whether the country’s legal system is based on common law, civil codes or religious tenets, how it applies and interprets its laws are shaped by its unique history. And there may be times when you might ultimately “win” by losing and lose even though your claims are valid.

It goes without saying that you need reputable local counsel familiar with the laws related to your suit if you decide legal action is necessary. Equally important are local “mentors” who can informally advise you of the “lay of the land”— or how your case is likely to play out in the local courts.
Over my 40-year career with Marriott International leading the company’s global expansion, I was involved with numerous situations that required legal resolution.

What we learned the hard way is that contracts do not always stand up in those countries whose legal system fails to meet the US standard. While many complain about our system, there are only a few countries (primarily Western Europe, Singapore, Australia and New Zealand) that can match or exceed our system. We did try to enforce contracts in several cases only to learn that the exercise cost more than any return we may have achieved.

When you hear that 70% of American businesses that try to operate overseas fail, a major cause is clearly the failure to understand the legal system of the country in which they tried to do business. This is a very important point to keep in mind, especially when you have to explain the Foreign Corrupt Practice Laws of the US.

At the end of the day, though, when it came down to maintaining an effective working relationship, we found we could rely only on our ability to maintain a strong RELATIONSHIP between the parties who had signed the contracts. It also helps to keep in mind the old adage prevalent in many countries: “negotiations really begin only after the contract is signed.”

On more than one occasion, the contract may have failed, but the relationship we forged kept the operation mutually profitable and the majority of the contracted points in place. I can’t stress enough that the most important step one can take is to earn, cultivate and invest in your Business Relationships. In fact, if we practiced this in the US, we might reduce the number of litigations here.

As Published