L.A. law firms tout international ties to win clients.

Claims often lack substance, but bolster firms' image

An increasing number of Los Angeles law firms are touting themselves as "international experts" to pick up new clients in an otherwise flat market, local trade experts said.

But skeptics warn that, in many cases, these new "international experts" springing up around Los Angeles County merit judicious scrutiny. That's because, as Japanese multinational firms have demonstrated, building the financial, marketing and distribution networks needed to successfully navigate the intricacies of international trade requires decades of effort, trade experts stressed.

"Historically, there were about 100 attorneys throughout the United States who had solid expertise in international trade. They were the small firms," said Leonard M. Fertman, a Century City-based customs attorney with 27 years of customs law experience.

"Five years ago, a lot of the big firms in Los Angeles, New York and San Francisco started hiring attorneys or naming partners they claimed had international law expertise," Fertman said.

While some of the large, multidiscipline law firms can deliver international trade expertise in some form, Fertman claimed a good foreign trade attorney is someone who knows the law, but also has the global network of contacts. Those established contacts are crucial to prevent billable hours from going through the roof. Indeed, legal bills can get mighty high when neophyte attorneys waste time casting around for contacts.

"For example, a client doesn't want to get billed for a trip to Washington, D.C., from a law firm when the information or decision-maker they need is actually officed in Los Angeles," Fertman said.

The growing popularity of attorneys and other professionals positioning themselves as "international" is being fueled by both the pending North American Free Trade Agreement and the Maastricht Treaty, trade experts asserted. Southland professional firms, struggling to survive the recession, are betting those two pacts will encourage more local companies to export, which would spawn an increased demand for trade-related services.

NAFTA has already been approved by Canada, Mexico and the United States, but still needs enabling legislation to pass Congress. Some consultants estimate that will happen in summer 1993.

As for the Maastricht Treaty, Europe's core industrial countries are considering that measure, which would knock down trade barriers.

When domestic sales plummet, companies often look to exporting as a way to pick up the slack. But once they experience the complexities of international trade, many quickly lose interest, said Stanley Epstein, president of North Hollywood-based American Export Co.

Some international trade experts, such as Epstein, further asserted that Los Angeles companies, as well as most companies nationwide, have not sustained diligent export programs. Instead, they whimsically move in and out of the export field.

Consequently, companies in Los Angeles, as elsewhere, must use extra caution to avoid buying services they do not need or, even worse, buying trade-related services from self-professed international experts who don't have bona fide deal-making knowledge and contacts.

Many U.S. companies are not prepared to take full advantage of the new opportunities brewing under NAFTA and Maastricht because the companies don't understand international business, trade experts said. To fill that information void, more and more companies are running to lawyers for advice. Problem is, many of those "international trade" advisors can't deliver, Epstein said.

"The truth is, 20 percent of the Los Angeles lawyers who say they are international law experts do 80 percent of the work," Epstein said.

Vivian Miller, manager of international trade and customs consulting for accounting firm Price Waterhouse in Long Beach, agreed there has been a rise in the number of attorneys labeling themselves international trade experts, but who "actually have little experience in it." However, she wouldn't mention any names.

Large law firms, such as O'Melveny & Myers and Gibson Dunn & Crutcher, have listed international law among their service specialties for many years.

Companies typically must spend several years cultivating an international network of experts sufficient to expedite exports. That stark reality paints a bleak short-term future for Los Angeles and other U.S. cities trying to boost exports. The importance of trade growth has become even more important in light of the hundreds of thousands of defense and construction industry jobs that have been lost. But that importance is not being supported with action, Epstein of American Export Co. said.

"There is no commitment to exporting here in Los Angeles or anywhere else in the U.S.," he said. "In Japan, it's an 'export or die' policy. The U.S. government needs to sit down and change regulations to encourage U.S. business leaders to form international trading companies."

Only long-time law firms, banks and consulting firms that have a lengthy background in international trade affairs can offer competent advice, Epstein continued. That excludes many of the newcomers.

Grey Bryan, a partner with the Los Angeles office of O'Melveny & Myers, said businesses should conduct extensive research to see if they really need an international consultant.

"The Department of Commerce and the Department of Export Administration can provide businesses looking into exporting with a lot of information," Bryan said. "So can the Foreign and Commercial Service.

Once a business decides it needs help exporting, it should look for a law firm that knows international contracts and learn key questions a qualified trade attorney should be able to answer, Bryan said.

For instance, a competent attorney or consultant should be able to tell an exporter under which country's laws the export contract should be drafted. If a Los Angeles company is exporting to Mexico, the attorney should be able to ascertain whether the contract would be governed under Mexican or U.S. law, Bryan said.

"The exporter also needs to see if there is an implied warranty," he added. "For example, under the U.S. Uniform Commercial Code, there is an implied warranty on products imported here from other countries."

Anthony J. Wall, a trade law expert with Gibson, Dunn & Crutcher, offered some additional tips to first-time exporters looking for attorneys or consultants.

A company seeking export expertise from an attorney or consultant should ask for a list of export transactions previously completed by that person or firm. The client should then call the parties involved in those listed transactions, Wall said. The client should also ask if the law firm or consulting firm has offices in major international, financial and government centers, such as New York, Los Angeles, Tokyo, Singapore and London.

Of equal importance, Wall said, clients should make sure firms they retain have multidiscipline expertise in international transactions, tax, corporate law, financing methods, trade law, litigation and arbitration. Potential clients should also make sure the consultant they use has the language skills to negotiate in foreign countries, Wall said.