Dispute Resolution - due diligence, litigation and demand letters
Negotiations going nowhere? Have you been wronged by a party in Asia? Need help getting your money back?
Dispute Resolution - due diligence, demand letters and/or litigation
Unfortunately there is no Better Business Bureau in most parts of Asia where you can take your grievances. You will find very little support from government agencies and local police unless your loss is large or you have political connections.
This page is designed to explain your options for dispute resolution.
Demand Letter or Litigation: Where to start?
Jump right to litigation?
Unless you are sure you have an "open & shut case" and all negotiations with the target company have been exhausted, in the interest of time and budget, it is probably not in your best interest to take the target company to court as your next move. Consider a demand letter first.
Do you have a strong case from a legal perspective?
Issuance of a demand letter is suitable in situations where the client has solid evidence allowing a sound legal case to be built against a real company/individual in China.
Demand letters leverage the threat of legal action. If the subject company is not responsive to the demand letter, the case can be taken to court.
The Demand Letter Service is invoiced as a fixed fee and no commission is applied to the recovered funds. Visit the rate sheet for more information.
What if you have a weak case?
When the case is weak from a legal perspective (lack of evidence, for example) a reasonable settlement is possible when leverage is applied outside of court, using the proven tools & techniques offered by AsiaBridge Law's "Negotiated Settlement/ Loss Recovery Consulting" Service as a last resort.
As such, even if your case is weak, it is almost always best to engage AsiaBridge Law’s Demand Letter Service first, in hopes of achieving some type of resolution before exploring the "Negotiated Settlement/ Loss Recovery Consulting" option.
What if you don't know if your case is weak or strong?
The first step of the “Demand Letter Service” is a formal case review, conducted by a Chinese lawyer.
If the case review shows your case is weak or that your project would be better served by another option, the remaining fees will be credited to your balance or returned to you if AsiaBridge Law is unable to provide the required service.
Why not skip the demand letter and start with litigation, police action or loss recovery consulting?
The simple answer is that those options require a deeper investment in time and money.
Demand Letters are far less costly and can be enacted in a matter of days/weeks rather than months/years.
While not always successful, they do provide the "most bang for the buck".
Demand Letter Service: Expectations
The goal of the demand letter is to reopen negotiations, help the client settle out of court and ideally gain a resolution that is acceptable to the client.
- There is no guarantee that the demand letter will succeed in recovering some or all of the client’s loss.
- On average, 30% of cases are closed to client’s satisfaction during the demand letter phase. The remaining 70% of the cases are either moved to litigation, dropped by the client or the client elects to continue negotiations.
- Most demand letters can be drafted and issued within 10 work days from the date of project launch.
Demand Letter Service: 3 Step Process
Formal Case Review (Step 1)
A paralegal will collect the case file from the client on behalf of the lawyer.
Tip: Avoid overwhelming the lawyer with non-essential information.
If the lawyer is requested to review a large case file, full of irrelevant emails for example, it will significantly increase the workload for the paralegal and lawyer, possibly resulting in a higher than necessary expenses for the client.
The better option is to provide a clear summary of the situation, state what you feel are the key arguments and offer the lawyer the core pieces of evidence supporting your position. The lawyer will review and request additional information if needed.
A local lawyer will review the case file and suggest the right message for the Demand Letter and provide an overall strategy for recovering funds.
Important: If the initial "Case Review" (step 1) concludes that a demand letter is unlikely to be respected, the remaining Demand Letter Service fees for "Due Diligence" (Step 2) and the "Issuance of the Demand Letter" (Step 3) will be returned to the client.
Due Diligence (Step 2)
Demand letters have little impact if the target is a fake company or bankrupt. Luckily, Due Diligence is affordable and effective.
Because the central government collects detailed data on Chinese businesses, it is fairly easy for a Chinese speaking investigator to collect key Due Diligence if they know where to look. The subject company will not know the research is taking place.
As the local language is the official language of the legal system, it is essential to know the exact legal name (in local language) of the subject company and full names of the key representatives of the target company in order to conduct Due Diligence and issue an effective demand letter. For example, a demand letter addressing the English name of a Chinese entity is likely to be ignored.
Due Diligence gives the client and lawyer the transparency they need to make a decision about moving forward with the demand letter.
Important: If the "Due Diligence" (Step 2) shows the company is broke or closed, the remaining service fees for the "Issuance of the Demand Letter" (Step 3) are returned to the client and other options will be explored.
Issuance of Demand Letter (Step 3)
Assuming the Due Diligence report indicates the target company is real and has assets, the next logical step is to issue a Demand Letter. Here are the action items:
- Demand Letter issued by lawyer
- A follow up call is made to the target company by the lawyer, whenever possible
- Client is updated on results
- Demand Letter Service considered complete
What if the demand letter is not successful in ending the dispute to client's satisfaction?
Demand letters fail for a number of reasons, but the most common three are:
- target company has gone out of business, is broke or doesn't care about its brand/reputation.
- target company gambles the client is not willing to go to court
- client's demands are excessive
If the demand letter is not successful in meeting the client goals, lawyers in the AsiaBridge Law network will advise on the remaining options available to the client which may include:
Overseas companies can indeed win against Chinese entities when they have the right lawyers and a solid case.
Chinese Court Cases: Costs & Time Fame
Court cases in many parts of Asia, such as China, are actually fairly straight forward and affordable compared to the US and Europe. But it is worth noting that some courts will ask for key evidence to be notarized, authenticated or translated. This is an additional expense to consider, especially if you have a large case file.
Court fees are invoiced at cost with no mark up.
The legal fees for the attorneys in the AsiaBridge network are found on our rate sheet, which can be downloaded from the website at https://www.asiabridgelaw.com/contact-us.
Coordination of Police Action
Local police often require a Chinese-speaking local representative as their interface. AsiaBridge Law can serve as your representative and encourage the police to take action. Police efficiency and interest in a given case can vary dramatically from district to district.
Negotiated Settlement/ Loss Recovery Consulting
When the case is weak from a legal perspective and litigation is not an option, a reasonable settlement may still be possible if leverage is applied using AsiaBridge Law’s proven tools & techniques.
An AsiaBridge Law senior business advisor will serve as the client’s Loss Recovery Consultant to:
- prepare a strategy
- structure the research
- draft communications to the target entity.
The process for a Negotiated Settlement is quite different from the Demand Letter Service or court action in three specific aspects:
Tactics: Negotiated Settlement/ Loss Recovery Consulting
As the client has a weak case from a legal perspective, pressure needs to be applied by other means.
Thugs aren't hired to break legs, but aggressive tactics are explored.
All tactics recommended by the Loss Recovery Consultant will be in full compliance with local laws.
Key Players: Negotiated Settlement/ Loss Recovery Consulting
The Loss Recovery Consultants are advisors (rather than Chinese lawyers) who have deep experience recovering funds in China on behalf of foreign entities.
Costs: Negotiated Settlement/ Loss Recovery Consulting
Unlike the Demand Letter Service that is inexpensive with a well-defined scope, loss recovery consulting projects can be very time consuming for the consultant and client.
As such, even if your case is weak, it is almost always best to engage AsiaBridge Law’s Demand Letter Service first, in hopes of achieving some type of settlement before exploring the Negotiated Settlement/ Loss Recovery Consulting service.
Loss Recovery Consulting is offered under our Business Advisor Service (BAS) and invoiced to the client in “blocks of time” which can be 4, 10, 20, 40 or 80 hours.
In this fashion, the clients only pay for one block at a time and have direct control over the amount they spend on the Loss Recovery Consulting. The larger the block, the lower the per-hour fee.