General Guide For Clients On Hiring Us To Work for You
(Who are we, what we can do for and what we need, mainly for commercial disputes)

*******************

Table of Contents

1. Who are we?
2. What problems may let you hire us to work for you?
3. What you can claim?
4. The statute of limitations on filing a complaint in Chinese Court
5. The procedure to work with us and standard legal actions available
6. Charge of this law firm
7. Expenses
8. Whether and when we will need to sign one official engagement agreement?
9. Guide of litigation and arbitration cases
10. Authentication of documents
11. Hire a lawyer in advance of disputes -- Early prevention is always better than legal actions after disputes rise (Standing counselor services and more)

*******************

Dear Sir / Madam,

First of all thanks for your interest of hiring us to work for you, here are some answers to some FAQ of clients, which may give you a whole picture on how to hire us to work for you and related costs before we proceed. Please read this guide, and feel free to contact us in case you decide to proceed or have any further questions.

< Back to top >

1. Who are we?

Zhejiang Xinmu Law Firm is a professional legal service provider, under administration of Justice Administration Bureau of Zhejiang Province Government, P. R. China. It is a partnership Law Firm established according to Chinese Lawyer Law with 20 lawyers and 6 paralegals. All of our lawyers are graduates from well-known law schools in China and abroad, and is a young team with well-knit law theory knowledge and experiences which are accumulated from many years of practices. At same time, the team has the character of youth, that is, with energy and enthusiasm, and acuminous attention to national economy policies, reforming of legal environment and trend of social direction.

We are a team of Chinese lawyers dedicated to offer foreign and domestic clients with solutions for their transnational trade and investment businesses relating to China. Our team has extensive in-country experience advising Chinese and foreign clients including clients from U.S. and Europe on law issues of International Trade and related commercial debt collection and recovery, Standing Counselor and Non-Controversy, Transnational investment, Mergers and acquisitions, Maritime and Admiralty, and other commercial and civil issues throughout mainland China and especially in Yangtze River Delta.

We are local Chinese and trained in well-known local law schools. And after many years of practice of transnational commercial laws, we have international views, and we can understand your needs. And we regard clients’ benefit as our working tenet, and realizing clients legal right and benefit to utmost as our working aim.

< Back to top >

2. What problems may let you hire us to work for you?

If you have one commercial contract with a Chinese company or individual, selling them cargos/ services or buying cargos / services from them, or license them to use your IP(trademark, patent and/or copyright), and so on, and in one of below situations, you may hire us to work for you and protect your legal rights:

2.1. You paid them but they did not deliver you cargos or offer you the service, or did not do it in time, or

2.2. You sent them cargos or offered them with services but they did not pay you or did not do it in time, or

2.3. They delivered defective cargos to you or did not offer you with right service, or

2.4. They breached the commercial contract with you in other ways or other type of commercial contracts besides sales/purchase contract with you like they breached the intellectual property license contract with you, and so on.

2.5. They infringed your intellectual property rights and other commerce-related rights, including trademark, patent or copyright, or commercial secrets, etc.

2.6. You had other disputes with Chinese partners in transnational investment business actions, for example, you have some disputes with joint venture partners, and so on.

2.7. You had other disputes with Chinese companies in international trade business.

< Back to top >

3. What can you claim?

If counter party had breached the agreement between you and them, you may at least claim your payment to their cargos and services, meanwhile, according to PRC Contract Law, in some cases, you may also claim against counter party for the direct loss thus caused by the breaching action of counter party, for example, Profit Loss.

In details, you purchased cargos from counter party with cargo payment of USD20,000, now they breached the agreement, and, for example, failed to deliver you the cargos, meanwhile, you had already sold these cargos to your customer in your country with price of USD40,000, and your profit is USD20,000. So our first claim, is requesting them to refund you the USD20,000, and generally this will not be a problem because they did not deliver the cargos to you at all. For profit loss, it will not be that sure, but we do have the legal ground in Chinese laws. And we will need to organize up some strong evidence to support this profit loss claim.

< Back to top >

4. The statute of limitations on filing a complaint in Chinese Court (“Statute of Limitation of Actions”)

4.1. If you have a dispute with a Chinese company and you want to take legal actions against them, you need to have this concept of Statute of Limitation of Actions in your mind.

4.2. This law concept means, somebody breached the agreement with you, or infringed your rights, you need to raise the litigation / arbitration case in a certain period, this period by standard is two years, for international trade dispute, it could be four years excluding quality dispute (when it is two years as well). Going beyond this period, means Chinese Court and laws will not protect your rights any more, over theory you can still file the litigation/arbitration case in China, but if court /arbitration commission finally find out that the case had gone beyond the limited period, court /arbitration commission will surely reject the case, and refuse to trial/hear it, if so, you will lose your money forever, unless counter party is willing to pay you the money voluntarily.

4.3. Hence it’s recommended to take legal actions ASAP, because your right to sue counter party is not permanent.

< Back to top >

5. The procedure to work with us and standard legal actions available

5.1. Regarding the procedure (steps) to work with us:

5.1.1. First of all, generally we will need the client to offer us the name of counterparty if counter party is in Zhejiang province especially Ningbo, so that we may check whether we are in any interest-conflict if work for the client; and if we are in interest-conflict (like we are the counter party is our standing counselor service client), we will advise client expressly, and generally we cannot work for you anymore;

5.1.2. If we are not in interest-conflict, then we will need to see the raw documents you had with counter party, like the contract you had signed with your China supplier (sales contract, or purchase contract, or other contract-nature documents like proforma invoice, or purchase order, and so on) if it’s a contract dispute, and other important evidence that we need to see. After getting these documents, we will do one evaluation on the feasibility of the case.

5.1.3. If the case is feasible over legal actions, we will negotiate and sign one lawyer engagement agreement (including how we will charge and so on).

5.1.4. After signing the lawyer engagement agreement, we will start below legal actions one by one, or one of them upon our agreement.

5.2. Standard legal actions available are as below:

5.2.2. As the first possible legal action, we will draft and send a lawyer’s letter (claim before legal actions and/or final claim before legal actions) to counter party for and on behalf of client, transferring the legal claims of this party to counterparty, and warning counterparty that we will sue them if they will not compensate this party’s losses and so on; the purpose of a lawyer’s letter is to transfer legal threats and pressures to counter party, and generally the letter will not be used in further legal actions like litigation or arbitration case, and the letter will be sent to counter party via email and facsimile, as long as counterparty can receive and read the letter, this job of transferring the threat and pressures to counterparty is deemed as accomplished. Regarding whether letter works, if counter party is or even the only faulty party over the dispute, then there will be high chance that the letter works; if this party of client of us is also faulty, more or less, generally we will face a lower chance that the letter works; this legal action is low-cost both over time and money, so sometimes it’s worthwhile to have a try, and we do have some cases, that counter party will surrender, after receiving the lawyer’s letter.

5.2.3. After counterparty received the law firm’s letter, we can go on carrying on some negotiations with them, either via telecommunications or face to face; which may finally lead to one out-of-court agreement, resolving both parties’ disputes. In some cases, merely one lawyer’s letter and further negotiations will resolve the dispute; however, negotiations and out-of-court agreement generally means this party needs to give up a part of claims that is coming to one Compromise with counter party, even this party of client has no fault over the dispute at all; considering a litigation / arbitration case will always be costly both over money and time, sometimes one Compromise could be economical solution to a dispute.

5.2.4. If counter party simply refuses to negotiate with this party, or both parties negotiated but it finally leads to no out-of-court agreement, or if client decide to sue counter party without the lawyer’s letter or negotiation, then this party may sue counterparty to a court or raise one arbitration case against them, which generally is the final remedy after all possible other remedies exhausted, and generally a litigation or arbitration case will be costly both over time and money, when comparing with a lawyer’s letter and negotiations (Compromise). As a client you are surely entitled to decide to start a litigation or arbitration case officially and directly without lawyer’s letter or negotiations, and sometimes this could be a tactic to avoid the situation that counterparty may become alert and make full preparations to the litigation / arbitration, when this party will face a harder situation to win the case.

< Back to top >

6. Charge of this law firm

First of all, we do not charge clients until both parties’ Coming To (instead of signing) the engagement agreement, so you may ask questions before making the decision to hire us, meanwhile, we believe in it that all clients are honorable, hence they will not abuse their this right. We have three charge methods, which both parties of client and our law firm may choose one of them simply or more than one of them in complex. In some situations (nine types of cases), if this party win the case, counter party will pay this party’s lawyer’s charge, except for that nine types of cases, this party generally cannot let counterparty to pay the lawyer’s charge of this party, this might not be reasonable but this is what Chinese laws prescribed. Three ways are as follows:

6.1. Charge by working hours

Charge of this lawyer Sun Jin is USD160 each working hour, and charge of paralegals of this lawyer are USD80 each working hour; for missions of lawyer’s letters and negotiations, we generally adopt this method; and generally we will need you to pay three or five or ten working hours to start up the work, however, if you only need one lawyer’s letter, and do not need us to negotiate with counter party for you, our charge of merely a lawyer’s letter (bilingual versions of English and Chinese) is USD400.

6.2. Charge by flat fee (a fixed and prepay rate generally a percentage of claims)

Generally our flat fee charge percentage will be 3%-15% of claims (and generally we will not consider working hours any more); and generally the higher the claim is, the lower percentage will be. Paying the charge in two or three installments is negotiable, but generally they should be remained to be Prepay, that is last installment should be paid before judgement. This charge method is the traditional one in Chinese lawyers practice; generally this sort of charge does not include expenses in section 7, but to make it simple, both parties of client and law firm may negotiate a percentage covering both lawyer’s charge and expenses;

6.3. Contingency charge, i.e., No Win No Charge (fee)

when our charge percentage will be 15% -- 30% of won and collected sum (and generally we will not consider working hours any more, either); meanwhile, generally speaking, this charge method means only lawyer’s charge is contingent, and the client still need to pay expenses in section 7; generally speaking, we do not accept “Entire contingency charge”(or “Pure Contingency charge“) method when expenses are also contingent to the law firm, unless we have a really strong case. If we adopt “Entire contingency charge”, our charge rate will be 20% -- 50% of won and collected sum, depending on agreement of client and us.

< Back to top >

7. Expenses

Expenses shall include expenses of travelling and traffic, hotel, documents copying and translation (if applicable), as well as court fees; if merely a lawyer’s letter, generally we will not have such expenses at all, of course; for negotiations, we may have expenses of travelling and traffic, and even hotel, if need to meet counter party face to face; for big and official legal actions like a litigation case or an arbitration case, we will face all these expenses when our lawyers are handling case, and expenses to other parties like a translation company, and a Chinese Court;

7.1. If the counterparty is in Ningbo, a same city to ours, generally expenses of travelling and traffic, documents copying, translation fee, investigation fee and courier fee will not be more than USD1000 all in, unless we have lots of documents to be translated;

7.2. Court fee shall include court filing and hearing fee, court fee of enforcement of judgement, surety of saving counterparty’s properties; among above, only court filing and hearing fee is a must for a litigation; this party will prepay these court fees and/or surety to start-up the procedure, and in case that this party wins the case, the court will judge it that counter party pays these fees, and this party will be able to get what this party paid to the court back;

7.2.1. Generally court filing and hearing fee will be 0.5%-2% of claiming sum, depending on the exact sum of claims;

7.2.2. Enforcement fee of court is generally 0.5% -2% of court-confirmed debt sum, enforcement fee only applies when counterparty lose the case but refuse to follow the court judgement or arbitration award, when we will apply a court to enforce the judgement, so it’s not a must; and some courts do not need us to prepay this fee and they will start the procedure of enforcement, and collect the enforcement fee from counter party who lost the case;

7.2.3. In case that we will or need to save and freeze counter party’s properties in advance of judgement, which is a wise choice in some situations, we will need to pay court 10%-50% of property generally money sum of counterparty to be saved and frozen as surety, when we win the case, we will be able to get this surety back, and we will be able to get our claimed sum (which be supported by court) from the frozen and saved properties directly and very soon. As the client you are entitled to make the final decision whether take this legal action.

< Back to top >

8. Whether and when we will need to sign one official engagement agreement?

8.1. For missions of lawyer’s letter and negotiations, to save the time of clients and lawyers, we generally do not sign any official engagement agreement (unless client is ready to carry on a litigation or arbitration), and client will come to engagement agreement with us and give the law firm authorization via emails. Chinese lawyers are bound by very strict practice disciplines including secrecy-keeping obligations of the law firm even we come to one very simple engagement via emails; but if client insists on it, we will sign one official engagement agreement with client;

8.2. For missions of litigation or arbitration cases, we will need to sign one official engagement agreement with clients before we proceed officially.

< Back to top >

9. Guide of litigation and arbitration cases

First of all regarding the difference between a litigation case and an arbitration case especially an arbitration case of CEITAC, please refer to one article we wrote before with web address: http://www.lawyerview.cn/news_48/48389.html

9.1. Regarding time needed for litigation cases, PRC Civil Procedure Law requires that by standard the Court should make the judgement within 6 months after the case is filed, as exceptions if the case is very complicated, the Court is entitled to prolong this period, so generally we can expect that we can get a court judgement or arbitration award within six months after filing the case;

9.2. Regarding preparations of litigation, we need to organize up a detailed and precise evidence network to support our claim, and this is the first core and vital job which will decide the result of litigation directly, hence we need to do this job very carefully, and it’s also one time-consuming job; our lawyers shall expect clients’ full cooperation on this.

< Back to top >

10. Authentication of documents

10.1. According to PRC Civil Procedure Law, some documents to be used in Chinese Court, need to be firstly authenticated. But for international arbitration cases in China, no such requirement.

10.2. According to PRC laws, all evidential paperwork as well as Power of Attorney that came into being out-side-of-border-of-PRC must be authenticated by a China consulate (in a China embassy or general consulate) before they could be used as legal documents on a Chinese court, hence this will also need some time and money, generally the authentication procedure will be: firstly you need to notarize the documents(may includes printed emails), and the notary will put his/her name and signature as well as their stamps on the documents, and your public notary in your country will have their method to notarize the documents including printed emails, after this, you will send the documents to your ministry of foreign affairs(or a similar organization, like in USA, it's state government), an officer in this organization will remark on the documents, saying the signature of the notary and the mission is real and true, and sign (may stamp as well) on the documents, and then you will send the whole sets of documents to China embassy or a general consulate, and a Chinese consulate will put one China Authentication Label on the documents, the content of the label is saying the signature of the officer is real and true. Having this label, means the documents are authenticated, and could be used as legal documents in Chinese Court. This is a quite complicated procedure, however, authenticated documents, if no counter reasons, will generally be accepted by Courts as facts, and this is good to establishing of our claims, that is winning the case.

< Back to top >

11. Hire a lawyer in advance of disputes -- Early prevention is always better than legal actions after disputes rise (Standing counselor services and more)

If after reading above contents, you feel some sort of headache, maybe you need to consider hiring a Chinese lawyer including one in our firm to work for you in advance of any disputes, just like hire a health-care doctor to keep you healthy. This job could be long-term relationship by annual standing counselor agreement. It’s a standing counselor’s job to help you to avoid your potential troubles before they become troubles, or put you in a better position when face some inevitable troubles in advance.

Or, at least before deals, you may hire a Chinese lawyer who practices international trade law to offer you some simple help, like investigating the background of your Chinese suppliers, or help you draft a good agreement to protect your legal rights. In many of our cases, if the foreign importers ever hired a Chinese lawyer to do above simple jobs, it may help them to avoid losses of tens of thousands of USD or much more. The real problem is, these losses in some cases, the victim importers may face the risks of losing them forever even they hire a Chinese lawyer to raise litigation or arbitration cases, or even criminal cases. So, try to prevent it from happening in advance of the deal will be much better than remedies after the dispute, when actually some losses are un-recover-able at all.

Sincerely,

Zhejiang X & M Law Firm

< Back to top >