How We Bring Your Company into the U.S.
Formation of U.S. Subsidiary
If you are a manager of a European business that is looking to enter the U.S. or grow its presence in the U.S., you will confront customary business challenges, as well as expected cultural differences. You will also need to resolve a series of legal issues.
We have been assisting overseas companies, like yours, to establish a presence in the United States for more than 80 years. Our experience confirms that the best way to help you address these legal issues is for us to understand your company's short- and long-term business plans and opportunities, as well as the risks confronting your company. We will then explore with you the possible consequences if such legal issues, risks and challenges are not properly addressed, and we will provide you with the appropriate legal solutions that will enable you make the best decisions for your company as it enters the United States.
Financing Your U.S. Subsidiary
The type of U.S. legal entity that your European company should establish will depend upon many factors and we will explore these with you:
How much capital is the parent company willing to invest?
How will the U.S. operations be financed during the start-up phase and how long will such phase last?
What tax considerations will your parent company be concerned about?
If your U.S. operation is insufficiently financed, what will be the results?
If your U.S. subsidiary has inadequate financing, the consequences could be numerous: upset U.S. creditors, shaken relations with employees, embarrassing encounters with the top executives of your European parent corporation and personal claims against the owners.
Governance of Your U.S. Subsidiary
Where you form your new U.S. subsidiary and how you will govern it will depend upon a number of factors:
Forming an entity in some states can expose the parent corporation to increased risks, particularly if there is a minority investor. On the other hand, if the parent corporation will be the minority investor in the new U.S. entity, then it might have insufficient rights and protections. Similarly, overly tight controls might constrict the President from operating the start-up U.S. entity in the most flexible manner; but loose controls may lead to abuses and over-exposure to various risk factors.
The ever-changing immigration rules and regulations make it increasingly challenging to address both temporary work (non-immigrant) and indefinite (immigrant) visa issues. We will evaluate your immigration needs and develop a strategic plan for staffing your U.S. operation with the necessary foreign personnel required by your company. As part of such evaluation, we will consider the following factors:
How many employees will come to the U.S. and what is the proposed duration of their assignments?
What is the nature of each U.S. position and the skill set needed to effectively meet the requirements of such position?
What is the nationality and the qualifications of the foreign nationals that you would like to hire in the U.S. or transfer to the U.S. operations?
What is the ownership of the U.S. entity and the amount, if any, that will be invested by foreign individuals and corporations in the U.S. entity?
What is the current and/or anticipated volume of international trade to be conducted by the U.S. entity and the location of the trading partners?
Considering and identifying your foreign national employment needs up front, and in advance of the start-up of operations, is critical to ensuring that your U.S. entity will be managed according to your corporate goals and objectives. With higher scrutiny and fluctuating governmental processing times, immigration considerations cannot be an afterthought because delays in the transferring or hiring of foreign national personnel can negatively affect the commencement of operations in the U.S.
In comparing the legal and operational frameworks that govern U.S. and European business practices, the greatest differences may be in the employment area. Failure to staff your new U.S. subsidiary properly with appropriate employment guidelines and procedures could have disastrous consequences. We will review a number of challenges that our clients have experienced over the years, thereby preparing your U.S. subsidiary for operating smoothly with its employees. In particular, we will address the following:
- How familiar are you with employment customs and practices in the United States? Do you know how offers are made and what customary documentation is used to govern the employment relationship?
- How many executives will be sent over from Europe?
- Will any one individual be a key person in the organization of the new U.S. subsidiary?
- What employment benefits and insurance arrangements are you considering?
If the employment matters of your new U.S. subsidiary are not properly considered and if appropriate employment procedures are not established, your new U.S. subsidiary might experience high employee turnover, unfaithful employees, or constant management distractions for employment issues. Many companies that are foreign owned operate successfully in the United States with loyal and dedicated employees. We will show you how addressing the legal aspects of employment matters can assist in establishing successful employee relations.
As you consider your company's plans for the U.S. market, you may be exposing the most valuable assets of your European parent — its intellectual property. Whether you are a manufacturer, a service provider or a technology company, intellectual property concerns must be considered, including the following:
Will you want to use the same business names, including corporate name, which your European parent has been using?
Does your European parent have particular patents, trademarks, trade names or service marks that are not yet registered in the U.S.? Will you be considering new trademarks, trade names or service marks for the U.S. market?
- Will new advertising materials be prepared for or introduced into the U.S. market and what copyright concerns might be triggered?
- Will your U.S. operation receive intellectual property from the European parent and, if so, how will such intellectual property be transferred: through a license arrangement with or capital contribution to the U.S. subsidiary? If a license will be used, what are its terms and conditions, including royalty fees?
- What steps might you need to take with your U.S. employees to protect the intellectual property? Will confidentiality agreements be required?
Will you be sharing any intellectual property with your suppliers or customers? If so, will you need Nondisclosure Agreements?
The issues and concerns relating to intellectual property are significant and broad. Protecting the intellectual property of your business is critical. A careful review can highlight the specific concerns, as well as identify the actions that can be taken to protect such valuable assets.
The U.S. sales market has different customs, practices and legal requirements from those of national sales markets in the European Union. If your U.S. subsidiary does not have distribution agreements, sales agreements and terms and conditions of sale that are tailored to the U.S. market, then both your U.S. subsidiary and your European parent could have significant legal exposure. In advising on terms and conditions and in structuring the sale agreements, we will review numerous issues with you, including:
- Which entity do you propose will enter into sales contracts in the United States?
- What is your parent company's history of product liability or customer complaints and litigation in the home market?
- What distribution networks have you established and developed in your home markets?
- What steps will you take with respect to your website and product offerings in the United States?
- What supply chain risks, if any, might you face?
- How will your product be serviced in the U.S. market?
Managing risks is an important issue in any market, but the prevalence of litigation in the U.S. market makes this issue particularly critical. Well designed sales documents can significantly reduce your risk exposure. Careful consideration of how the proposed U.S. business will operate, together with appropriate sales documentation, can position your U.S. subsidiary to avoid many pitfalls and limit various concerns.
Real Estate Considerations
Similar to your European operations, establishing and maintaining your U.S. business location can be one of the largest monetary investments your company will make. In addition to being your "business home" in the U.S., your employees will spend most, if not all, of their working day at the company facility and your customers will almost surely visit your operations on a frequent basis. Therefore, much consideration is required to choose the right location not only for the present time, but also for the future. In particular, we will help you address the following:
- Where is the optimal location for your business based upon proximity to transportation, employment pools, clients and potential clients, suppliers, utilities, and availability of economic development incentives? We will involve other professionals in our nationwide network, such as site selection specialists and real estate brokers, as necessary.
- Is it more advantageous to initially lease a facility and for what length of term (with options to extend or terminate early), or is it best to purchase a facility? And, in the purchase situation, does the property allow for expansion of the facility with minimal disruption?
- What due diligence is necessary with respect to a desired location, such as determining zoning compliance, local business licensing requirements and suitability of a desired premises for operations, including property condition, need for current or future repairs, etc.?
- What are the contract risks in both leasing and purchasing a facility?
- What do you need to do to insure ongoing compliance with regulatory requirements such as air emissions, building code requirements and other legal requirements for maintaining operations in compliance with U.S. laws?
Failure to address these concerns can have negative results: your U.S. subsidiary may be sited in a location that does not properly serve your subsidiary's business needs; your decision to lease or own a facility may not provide the flexibility to promote company growth and expansion; your subsidiary may incur additional unforeseen expense. The failure to address legal compliance issues can result in fines, penalties and business interruption. We will assist you with all aspects of addressing your real estate needs, so that you can maximize your real estate assets to promote your business.
Business Dispute Resolution and Litigation
One of the keys to success for European companies and individuals doing business in the U.S. is instituting effective preventive risk management. We counsel you on how to manage your legal and business risks to reduce or avoid your exposure to costly dispute resolution and litigation. Some important considerations include:
- What documents govern the rights and obligations of the parties? Have such documents been reviewed by legal counsel?
- What business or other leverage might you have that might help you to maximize a recovery or minimize the exposure?
- Are there potential counter-claims?
- Will the other party have access to the documents of your U.S. subsidiary or to the documents of your European parent, and is there material in such documents that might be harmful?
- Can the other side depose your personnel or your European personnel, especially upper management, and if so, at what locations?
- Can the other side obtain documents and/or testimony from your parent or affiliated entities?
- Is there a way in which to prosecute or defend a claim while minimizing the damage to your relationship with the other party - often a customer?
- What is the appropriate forum for the lawsuit?
- What is the expected timetable for resolution of the dispute or litigation? What might the costs be?
- Will attorney's fees be recoverable?
A solid dispute resolution/litigation strategy is key to managing litigation matters. When litigation is unavoidable, we partner with you to successfully navigate the U.S. legal system. Our lawyers handle simple and complex commercial disputes in federal and state courts, as well as collection claims and bankruptcy and secured creditors' rights disputes. As technological advances make litigation matters more complex than ever before, and with the average amounts involved in litigation disputes constantly on the rise, being unprepared for litigation can spell disaster for your company, in terms of exposure, as well as with respect to the time and resources that may have to be committed to the process.