Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Miami lawyer Jose Astigarraga was in Ecuador five years ago trying to enforce a loan obligation for a global bank. The case kept getting bogged down in legal red tape. He brought in local counsel to help. The Ecuadorian lawyer told Astigarraga he needed to pay the judge handling the case a “courtesy fee.” “We told him we didn’t do that,” recalls Astigarraga, who left Steel Hector & Davis a year ago with Edward H. Davis to start an international litigation boutique firm, which now has 11 lawyers in its Miami office. Astigarraga promptly dumped that attorney and found another local lawyer to guide him through the Ecuadorian legal system. Ultimately, the case was settled, and no “gratuity” was paid because the case never went before the judge. “We never got to the question of whether the forces of good would have triumphed,” he quips. There’s no doubt political and judicial corruption continues to be a problem in Latin America, where government officials and judges accept bribes in exchange for favorable decisions. Although local political and business leaders are trying to change this, it often presents troubling ethical dilemmas for the growing number of U.S. lawyers doing business in those countries. Experienced international attorneys emphasize the importance of understanding each country’s unique legal, political, linguistic, cultural, and ethical landscape. They warn that those lawyers who aren’t wary — or who don’t really know their clients — can easily become tangled up in unethical, and even criminal, activities. In recent years, many Florida law offices, notably Steel Hector & Davis, Holland & Knight, Greenberg Traurig, Shutts & Bowen and White & Case, have entered the Latin American market. Privatization of formerly state-owned companies has made the region ripe for business, and the demand for legal counsel has mushroomed. The Florida Bar’s International Law Section has grown to 924 members. Some firms have affiliated with Latin American law firms, while others have opened their own offices, particularly in Brazil and Argentina. “It’s up to each firm’s development strategy,” says Tom Raleigh, vice chairman of the Florida Bar’s International Law Certification Committee and a partner in the Orlando office of 381-lawyer Akerman Senterfitt. “There is no question the demand [for legal services] is growing,” says Astigarraga, “It’s the horse we bet on.” But it could be a losing horse if lawyers don’t understand a basic reality: “The rules are different there,” Astigarraga explains. The road, he says, is “fraught with peril.” Attorneys must know what they are doing in order to “resist temptation.” Besides watching their own ethical compasses, U.S. lawyers must comply with the Foreign Corrupt Practices Act. The law essentially criminalizes illicit payments to foreign officials. Individuals as well as corporate entities are subject to prosecution under the act. The law was the outgrowth of investigations conducted about 25 years ago by the U.S. Securities and Exchange Commission into allegations of bribery by U.S. companies seeking to obtain foreign government contracts. More than 400 companies admitted making hundreds of millions of dollars in illegal payments. Outright bribery is rarer these days. Instead, lawyers find themselves “operating under the fog of war,” says Davis. “You don’t really know, but you have suspicions that something’s not right.” For example, your phone may ring repeatedly in the middle of the night, he says. When you answer, there’s no one on the other end. That can be a subtle — but chillingly effective — warning from the client, an opposing attorney, or even a government official who wants to be cut in on the deal. “That’s not really corruption so much as intimidation, which may be designed to get you to see things their way,” says Davis, who recalls a personal experience like this when he was working in Brazil. Davis also describes a foreign asset recovery case that he handled in the Caribbean three or four years ago. The court had been issuing “inexplicable” rulings given the applicable law and the evidence, he says. While he couldn’t identify anything specifically wrong, Davis suspected something was amiss. His solution? “We brought in a local attorney who was so important nobody could ignore the case.” That brought attention from the legal community, and the perceived shenanigans stopped shortly after that, he says. Understanding local politics in foreign countries also is critical for U.S. lawyers, says Paul Richard Jacobson, a shareholder and international tax and corporate lawyer in the Tampa office of 150-lawyer Fowler White Gillen Boggs Villareal & Banker. For example, if a client needs government approval for something, it’s useful to have a law firm that has good relations in that location. Jacobson recalls a case where a U.S. client ended up in jail because the client’s foreign business partner stole money from their joint venture. Jacobson hired local counsel to help him get his client out of jail. “We went round and round for three or four months before we realized we had selected a firm affiliated with the wrong political party,” he says. “The judge just wouldn’t listen to us until we got the right law firm.” After the “right” firm was hired, Jacobson’s client was released. Unwitting involvement in money laundering also is a big worry for attorneys who engage in international transactions. “An attorney can get sucked in very quickly,” warns Tom Equels, who splits his time between Orlando and Miami as managing director of the 18-lawyer firm Holtzman Krinzman Equels & Furia. One area requiring special caution is when overseas clients ask their U.S. attorneys to create a trust account for them in the U.S. Equels identifies certain red flags. If the client regularly puts money into that account for “proposed deals,” but those deals repeatedly fall apart and the client wants the money sent back to him, the client may be using you to launder money, he warns. Lawyers also may become the unwitting pawn in theft if they fail to “know their client,” says Tim Murphy, a partner in the Miami office of the 130-lawyer firm Shutts & Bowen. A lawyer may be handling a variety of transactions for an overseas entity and taking instructions from an officer or director of that entity. But, he warns, the lawyer should never transfer money belonging to a foreign entity to anybody other than that entity, because you don’t know to whom you are sending it. The person on the other end of the line may be using the lawyer to steal funds, says Murphy. He’s been called as an expert witness in cases where the transfer was not legitimate and the hapless attorney ended up being held liable for the transferred funds. “If the lawyer is writing checks out of a trust account he is held to a very high standard of fiduciary responsibility,” he says. Murphy’s suggestion: Make the client open a bank account. Then the client can write his own checks without involving you. Gary Shepherd provided additional reporting for this article.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.