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, litigation and demand letters)
Unfortunately there is no Better Business Bureau in most parts of Asia where you can take your grievances. Unless your loss is very large, you will find very little support from government agencies and local police. This document is designed to explain your options for a dispute resolution.
Process & Options (Dispute Resolution)
Before reading the rest of this page, please review the flow chart carefully. It will save you a lot of time and probably answer a lot of your questions.
Demand Letter vs. Litigation
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.
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 a commission is not 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 a signed contract, for example) a reasonable settlement is possible when leverage is applied using AsiaBridge Law’s proven tools & techniques. An AsiaBridge Law senior business advisor can serve as the client’s Loss Recovery Consultant to prepare a strategy, structure the research and draft communications to the target entity. The process is quite different from the demand letter service or court action, in terms of tactics and costs. As such, even if your case is weak, it is almost always best to engage AsiaBridge Law’s Demand Letter Service in hopes of achieving some type of settlement before exploring the 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.
Demand Letter Service: 3 Step Process
Step One: Formal Case Review
A paralegal will collect the case file from the client. A local lawyer will review the case file and suggest a strategy.
Step Two: Due Diligence
Due Diligence is affordable and effective.
The subject company will not know the research is taking place.
Due Diligence gives the client and lawyer the transparency they need to make a decision about moving forward with the demand letter. If the target entity is fake, closed or bankrupt, the demand letter wouldn’t work very well and other options would need to be explored.
As the local language is the official language of the legal system, it is essential to know the legal name (in local language) of the subject company and key representatives in order to conduct Due Diligence and issue an effective demand letter. A demand letter addressing the English name of a Chinese entity is likely to be ignored.
Step Three: Demand Letter
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 will give up
- client's demands are excessive
If the demand letter is not successful in meeting the client goals, as part of the Demand Letter Service, AsiaBridge Law will advise on the remaining options available to the client. This report is provided at no additional cost but the fees associated with taking the next step may require additional invoicing.
If the demand letter is not successful, a suitable next step will depend on the case, but may include:
Overseas companies can indeed win against local firms and individuals 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 counsel to 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 and draft communications to the target entity. The process is quite different from the demand letter service or court action, in three aspects:
Tactics: 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: The Loss Recovery Consultants are American nationals (rather than Chinese lawyers) who have deep experience recovering funds in China on behalf of foreign entities.
Costs: 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 in hopes of achieving some type of settlement before exploring the loss recovery consulting option.
Loss Recovery Consultants are offered under our Business Advisor Service (BAS). The work of the Loss Recovery Consultant is invoiced to the client, in the form of a “block 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.
Access the rate sheet via our "contact us" page to learn more about Business Advisory Services.
FAQ: Dispute Resolution
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