Wednesday, October 10, 2012

An Ideal Client Brings New Challenges, Cooperation . . . and Excitement!

You know the old saying: “You can choose your friends but not your family”? Well, what about clients? Someone asked me the other day, what is my ideal client? That’s an easy one. They are a client I recently picked up from a referral, which is how I develop a majority of my business.

My new client is an asbestos abatement company located in south King County here in Washington. They were contracted by a very large company in China, to train and certify their workers to become licensed asbestos handlers. The Chinese operation must put together a team of workers to abate asbestos on worldwide ocean-going vessels. As you might expect, China can perform the abatement tasks at about two-thirds the cost of doing the work in Seattle.

This is exciting territory for me! Thanks to this American enterprise, it’s a great opportunity for the Chinese company, and I’m right in the center of the action, serving as a legal liaison. I just love it! Initially, I drafted the letter of intent outlining basic parameters and the provisions for a confidential non-disclosure agreement regarding the business venture. I just finished the third phase, which is the training service agreement. My client will be dispatching four or five instructors to China to reside there full-time and train workers.

I also drafted the licensing agreement for the use of the manuals and training materials by the Chinese, assuring that the American company will keep full ownership of its intellectual property. There is going to be a host of other contracts to develop, too, as we move forward with this business arrangement.

So far, my observations are quite optimistic. I am seeing firsthand how this business is going to evolve. I have a very good relationship with my client and an equally good relationship with the party in China. Fortunately, this is not a case where you are battling with the terms of agreement. This is the ideal situation in which you’re discussing matters of importance with both sides — what they each want to accomplish with the agreement. And I get to memorialize it in simple, easy-to-understand language that is going to help everyone move forward and understand their working relationship

In terms of the business contract, all legal provisions are based on American law via a choice-of-law provision, which is why it was very wise of my client to take the initiative in developing the first round of draft agreements. This entire process will be governed by Washington state law, and we’ve placed a choice-of-law provision in the contract, to guarantee this. Not only is this good business sense, it is a sound practical move. Licensing for asbestos abatement falls under the strict guidelines of the U.S. Environmental Protection Agency, and the Chinese company is seeking accreditation under an American licensing system. This, of course, will give the Chinese more credibility when they’re marketing their services to international shipping companies.

As part of my oversight responsibilities, trust is a vital issue. We have incorporated provisions into the contract regarding payment and have clearly set forth an agreement that payment is due within 15 days upon invoicing. I consider this matter to be the most contentious, potentially speaking. If there’s a dispute along the way, it will probably be over payment issues.

The larger concern focuses on the intellectual property rights to the manuals and training materials that are being licensed. You quite often hear about the Chinese knocking off other companies’ research, patents and property rights. Again, there’s the matter of trust; we are hoping that this Chinese company is not going to mass-produce these manuals and materials, thereby undercutting my client’s ability to do business in China.

To contractually safeguard against this violation, we have assigned this business arrangement a finite two-year term, with the ability to renew or not renew after that period of time. Within two years, we’ll certainly know whether any piracy issues have surfaced. If any do, we’ll just pull the plug on the contract. However, I believe it is beneficial for the Chinese to work with my client and abide by the rules, so I’m going to keep an optimistic outlook.