Toronto, Ontario – May 25, 2021
By Andrew Rogerson
For high and ultra-high-net-worth individuals, cross-border litigation presents a host of challenges that are best confronted head-on through proactive legal risk assessment. Clients with internationally sourced net worth can encounter a wide range of cross-border litigation cases pertaining to their assets, reputations, and liberties. At best, these cases can result in minor civil and commercial litigation, while at worst, clients can incur outright forfeiture and indictment from both domestic and foreign governments. The team at Rogerson Law Group (RLG) understand the seriousness of these risks. Through the following litigation scenario, we illustrate five key points that every high net worth individual needs to know.
Our fictional client – let’s call her Mrs. Smith – has restructured her late husband’s large estate to favor herself and one of her children at the expense of her other child. The newly estranged child has now leaked claims to the media that Mrs. Smith’s restructured trusts are illegitimate. Meanwhile, Mrs. Smith’s company faces a large contract dispute claim from its host country related to an allegedly unfulfilled infrastructure contract, with the host country set to seek damages of approximately $250 million. Without the right legal defense team, Mrs. Smith can face critical losses during the litigation that follows.
- Cross-border disputes can arise unexpectedly, target high net worth individuals on several fronts, and inflict huge damage in a short period of time. A month ago, the company’s reputation and family relationships were intact, and the host country had yet to formally announce legal claims. Over the course of just a few weeks, however, Mrs. Smith can encounter two full-blown crises that are each sufficiently powerful to topple her firm.
- The single best way to combat cross-border litigation is to prepare a robust legal defense for all scenarios far in advance. The lawyers at RLG can provide expert guidance and crisis management expertise for Mrs. Smith and her firm today, but the job would prove much more manageable if Mrs. Smith had approached them even one month prior. For example, given Mrs. Smith’s plans for a corporate restructuring agreement, the lawyers at RLG could have prepared a defense for the family fallout that may have resulted. An overly cautious defense is the number one way to mitigate risk.
- It is critical to constantly measure the strength of your assets. The primary form this takes is through an asset stress test, where a team of lawyers conducts a thorough review of your assets in various jurisdictions to uncover any potential for future litigation. Furthermore, an external analysis can go a long way in satisfying investigations and media allegations.
- A damaged reputation can hurt as much as, if not more than, the litigation itself. For our client, a murky international infrastructure dispute combined with a very public family dispute is a recipe for a public relations disaster. If Mrs. Smith cannot adequately counter these claims with a tough media strategy in record time, the media narrative can effectively override the truth of the claims, no matter whether they have merit or not.
- Finally, individuals in critical danger of indictment, sanctions, or extradition must protect their liberties at all cost. A prepared legal team can assist by defending against extradition, working with prosecutors to proactively answer any questions, and by mounting advocacy campaigns against asset seizure. In such advanced cases as these, our client might require emergency travel plans in addition to their substantive defense.
No matter how much legal risk individuals think they might face, it is essential to prepare for the worst in advance. Mrs. Smith faced catastrophic legal exposure on multiple fronts as well as a pending media nightmare, and such obstacles can only be overcome when the client and their lawyers prepare themselves well beforehand. Individuals must be constantly on the lookout for ways to improve their image in the case that their assets come under suspicion for any reason.
Not any legal team can handle litigation of this kind. Lawyers must be particularly well-versed in cross-border cases, which are unique in their nature and magnitude. The lawyers at RLG know the challenges and are equipped with the right expertise to handle any cross-border litigation you encounter as a high-net worth individual.
This article originally appeared in The Lawyers’ Daily on June 02, 2021. You can find it here: https://www.thelawyersdaily.ca/articles/27190/five-things-to-consider-in-a-cross-border-tax-dispute