The 8 Biggest Mistakes Foreign Companies Make in U.S. Litigation
A foreign company gets sued in the United States and makes a common mistake: it treats the case like an ordinary business dispute. Management assumes the complaint is mostly leverage. Someone decides to wait before involving counsel. Employees start emailing each other about what really happened. The IT team keeps following its normal deletion schedule. A sales executive tells the U.S. counterparty the case is just noise and will probably go away.
That approach can be costly from day one. In the United States, litigation is not just a process for resolving claims. It is often used to force disclosure, raise costs, disrupt operations, and create settlement leverage. Foreign companies that do not understand that early can find themselves losing ground before they have even decided on a strategy.
1. Treating the Lawsuit Like a Negotiation Instead of a Legal Emergency
This is usually the first mistake, and it often sets up several others. Many foreign companies receive a complaint, demand letter, or credible litigation threat and assume it is part of the usual commercial bargaining process. They think the other side is posturing, escalating for leverage, or trying to strengthen its hand before the real negotiation begins.
Sometimes that is true. But even a weak U.S. case can become dangerous if the response is too slow. Deadlines matter. Defenses can be waived. Insurance issues can be mishandled. Employees can create damaging evidence before counsel has any control over the process.
Consider a Chinese manufacturer sued by a U.S. buyer in California. Management believes the claims are exaggerated and decides to wait a few weeks before spending money on U.S. counsel. During that time, employees exchange internal emails blaming one another for the contract breakdown, no formal document hold is issued, and key facts remain scattered across multiple business units. By the time counsel is brought in, the company is already reacting from a weaker position than it realizes.
A serious U.S. dispute should trigger an immediate internal response, the retention of qualified litigation counsel, and prompt notification to any applicable insurers. Many policies require notice within a specific window of a claim or threatened claim. A company that waits until the case is further along can find that coverage has been reduced or voided entirely.
2. Missing Early Opportunities to Challenge Jurisdiction, Venue, Service, or Arbitration
Once a foreign company understands that the dispute is real, the next question should be straightforward: should this case even be in this court?
A foreign company sued in the United States may have serious threshold defenses. The court may lack personal jurisdiction. Service may be defective. The plaintiff may have sued in the wrong forum. The contract may require arbitration. The parties may have agreed to litigate somewhere else. Many of these arguments are time-sensitive, and some can be weakened or even waived if they are not handled correctly at the outset.
Foreign defendants routinely lose leverage by spending their first weeks rebutting the merits before asking the more important threshold questions. Is this the right court? Was service valid? Does the contract require arbitration or a different forum? By the time the company focuses on those issues, it may already have taken steps that complicate defenses that should have been asserted immediately.
Foreign defendants also get tripped up by service issues. Hague Convention service is often slow, formal, and highly technical. Companies that do not understand that sometimes respond informally, make the wrong procedural moves, or assume service defects will sort themselves out later. They can end up giving away arguments they should have preserved.
Every foreign company should evaluate those issues immediately. A case that should be dismissed, transferred, or sent to arbitration should not drift into full discovery because management assumed those defenses could wait until later.
3. Hiring U.S. Litigation Counsel for Prestige Instead of Fit
A foreign company facing U.S. litigation often assumes the safest move is to hire the biggest law firm it can find. Sometimes that is the right call. Sometimes it is just the fastest way to generate very large bills.
The right U.S. litigation counsel for a foreign company is not simply a technically strong litigator. The right counsel understands cross-border evidence collection, witness preparation for non-U.S. employees, coordination with foreign lawyers, and the internal pressures foreign management teams face when dealing with an unfamiliar legal system. Good counsel should know when to fight, when to narrow the dispute, and when to stop burning the client’s money on activity that does not improve the outcome.
Prestige is not strategy. A foreign company does not need the largest possible firm. It needs counsel that understands cross-border evidence collection, witness preparation for non-U.S. employees, coordination with foreign lawyers, and the practical pressures management faces when dealing with an unfamiliar legal system. The right firm knows when to fight, when to narrow the dispute, and when to stop burning the client’s money on activity that does not improve the outcome.
Foreign companies need counsel that fits the case, the court, the industry, and the client. The firm needs to understand not just American litigation, but how foreign companies actually get trapped by it. Choose litigation counsel with deep cross-border litigation experience.
4. Failing to Preserve Documents as Soon as Litigation Is Reasonably Foreseeable
This is where many foreign companies do serious and unnecessary damage. In U.S. litigation, the duty to preserve evidence can arise before a lawsuit is filed. Once litigation is reasonably anticipated, the company may need to preserve emails, text messages, messaging-app communications, spreadsheets, purchase orders, engineering files, meeting notes, financial records, and other electronically stored information.
Foreign companies often underestimate how broad this obligation can be. They also assume their ordinary retention practices will excuse later gaps in the record. U.S. courts are often unimpressed by that argument.
Imagine a Chinese company in a product-defect dispute with a U.S. customer. After receiving a detailed demand letter, the company continues its normal 30-day deletion cycle for internal chats. Engineers replace phones. A manager cleans out old emails before leaving the company. Months later, the plaintiff learns during discovery that relevant records were not preserved after the dispute was plainly foreseeable. The case is no longer just about the product. It is now about missing evidence, sanctions, and whether the jury should be told to assume the missing records would have been damaging.
In some cases, the consequences go beyond evidentiary damage. Discovery misconduct, spoliation, and other abusive litigation behavior can also lead to sanctions and fee-shifting orders that increase the company’s exposure beyond the merits of the underlying dispute.
When a real U.S. dispute appears, the company needs a real litigation hold. It needs to reach the right people, suspend ordinary deletion, cover the right systems and devices, and be monitored. A vague instruction to save important documents will not do the job.
5. Writing Internal Emails That Become the Other Side’s Best Evidence
Many cases involving foreign company defendants are damaged by internal communications written in the first few weeks of a dispute. People speculate. They assign blame. They try to sound decisive. They write things like, “We knew this might happen,” or, “Do not put that in the formal response,” or, “Let’s keep this off email.” These messages may feel casual inside the company. In a U.S. case, they can become devastating exhibits.
Foreign companies are especially vulnerable here because they often assume internal business communications will stay internal, or that privilege rules work the same way they do in their home jurisdiction. They do not.
U.S. courts do not uniformly extend attorney-client privilege to communications with foreign in-house counsel. Whether those communications are protected depends on the attorney’s role, jurisdiction, bar admission, and whether the communication was made primarily for legal rather than business purposes. A company that routes sensitive analysis through its in-house legal team expecting U.S. privilege protection may find those communications fully discoverable. Foreign outside counsel faces similar scrutiny. Management should assume nothing and ask counsel to assess privilege rules before sensitive communications are created.
This problem gets ugly fast in discovery. A sales executive tries to smooth over a technical issue in writing. Someone else suggests leaving certain concerns out of the formal response. What felt like messy internal chatter at the time later becomes the plaintiff’s theory of intent. Even when the company has substantial defenses, those emails can shape depositions, settlement leverage, and the court’s overall view of the case.
Once litigation is on the horizon, internal communications need to tighten up immediately. Facts should be gathered carefully. Legal analysis should be routed properly. Speculation and blame-shifting should stop before they create a second set of problems.
6. Assuming U.S. Discovery Will Be Narrow, Proportionate, and Easy to Manage
Foreign companies that have never been through American discovery almost always underestimate it. In many countries, document production is narrower, judges control the process more tightly, and witness examination is more constrained. U.S. litigation is different. Discovery can be broad, invasive, technical, and expensive. Your opponent may demand years of internal communications, customer records, quality-control files, financial data, compliance materials, drafts, notes, and messages from employees you did not realize would matter.
Then come depositions. For many foreign executives, the deposition is the moment they realize they are in unfamiliar territory. A deposition is sworn testimony. It can last a full day or longer. Opposing counsel may be aggressive, repetitive, and highly strategic. A bad answer can show up later in motion papers, mediation briefs, expert reports, or at trial.
Many foreign companies are especially alarmed by the Rule 30(b)(6) corporate representative deposition. In that setting, the company itself must designate one or more witnesses to testify on specified topics on behalf of the entity. The witness is not testifying only from personal recollection. The witness is expected to be educated on the company’s knowledge. For many foreign businesses, that feels less like witness testimony and more like compelled institutional exposure.
Take a Mexican manufacturer sued in California over alleged misrepresentations during a supply relationship. The company assumes the dispute will turn on the contract and a limited set of quality-control records. Instead, the plaintiff demands internal sales emails, engineering change records, prior customer complaints, executive presentations, and communications about warranty exposure. Then the plaintiff notices depositions of the sales manager, product engineer, regional director, and a Rule 30(b)(6) witness to speak for the company on product testing, complaints, and internal decision-making. The company suddenly realizes the case is no longer about one transaction. It is about the inner workings of the business.
For European companies, discovery can create a second problem: data privacy law. A Spanish company or other EU-based business may face broad U.S. demands for employee emails and internal communications while also dealing with GDPR restrictions on collecting, reviewing, transferring, and producing personal data. That conflict does not make U.S. discovery disappear, but it can slow the process, raise costs, and create legal risk on both sides.
Foreign companies also routinely underestimate the cost and risk of language. Translating documents for review, explaining technical terms across languages, and preparing witnesses for interpreted depositions can add enormous expense and create real substantive risk when nuance is lost or mistranslated. By the time a foreign defendant realizes how much meaning can shift through translation, the discovery budget may already be badly distorted.
The companies that handle discovery best do not assume it will stay small. They identify custodians early, map data sources, prepare witnesses thoroughly, and plan from the beginning for the possibility that the other side will use discovery as a business weapon.
7. Underestimating How Much the Lawsuit Will Distract the Business
Many companies budget for legal fees. Far fewer budget for disruption, even though U.S. litigation consumes management attention at a punishing rate. Executives have to review documents, reconstruct events, prepare for testimony, coordinate with counsel, discuss insurance, and respond to a constant stream of factual questions. Engineers, finance staff, salespeople, compliance personnel, and IT teams may all be pulled into the case. The business pays that cost whether or not the matter ever reaches trial.”
This is one reason foreign companies often misjudge settlement strategy. They look only at legal liability and fail to price the ongoing cost of internal disruption, slowed decision-making, and lost commercial focus. Those costs are not secondary. They are part of the case.
8. Treating Settlement Like Surrender
This mistake is usually driven by some mix of pride, frustration, and misplaced principle. Management convinces itself that discussing settlement would signal weakness, reward bad behavior, or amount to admitting fault. In U.S. litigation, that is the wrong frame.
Settlement of a U.S. lawsuit is not surrender and it is not a confession. It is a business decision made under uncertainty. Cases settle because discovery is expensive, judges are unpredictable, juries are unpredictable, management is distracted, evidence is messy, and even a strong case can cost more to win than it is worth
The best settlement decisions come from information and timing. You want enough control of the facts and the law to know whether early resolution makes sense, whether mediation is worth trying, and whether trial risk is acceptable. What you do not want is a management team treating settlement as an emotional referendum on who was right.
What Foreign Companies Should Do Instead
When we represent foreign companies facing U.S. disputes, we usually begin by moving immediately to preserve documents and suspend routine deletion. We identify the key facts, contracts, custodians, and witnesses. We assess threshold defenses such as jurisdiction, venue, service, and arbitration. We review insurance, indemnity, and other risk-transfer rights. We centralize communications so the client has one disciplined internal process instead of ten people reacting at once.
None of this is complicated in concept. But companies that do not act quickly and lawyers who do not impose discipline early are the ones that usually create avoidable damage.
Foreign companies do better in U.S. litigation when they get organized early, stay disciplined, and stop assuming the process will become more reasonable later. Usually it will not. If the other side can use your delay, your missing records, your loose emails, or your unprepared witness to create pressure, it will. The sooner management understands that, the better the company’s chances of controlling cost, preserving leverage, and reaching a business outcome it can live with.
Conclusion
Most foreign companies do not get hurt in U.S. litigation because they are dishonest. They get hurt because they are unfamiliar with how aggressive the process can be and how quickly ordinary mistakes compound.
At Harris Sliwoski, we help foreign companies take control early so delay, missing records, loose internal communications, and unprepared witnesses do not turn a manageable dispute into an expensive one.”
Foreign Company in United States Litigation FAQ
What is the biggest mistake foreign companies make in U.S. litigation?
Delay. A foreign company that waits too long to preserve documents, assess procedural defenses, and organize its response can do serious damage before the case is fully underway.
Do foreign companies have to comply with U.S. discovery rules?
Often yes. If the company is properly before a U.S. court or tribunal, it may face broad discovery obligations, including document production, depositions, and corporate representative testimony.
What is a Rule 30(b)(6) deposition, and why does it matter?
It is a deposition in which a company must designate one or more witnesses to testify on specified topics on behalf of the entity itself. It matters because the testimony is treated as the company’s testimony, not just the individual witness’s personal recollection.
Can a foreign company’s data-privacy laws limit what it has to produce in U.S. discovery?
Sometimes, but not in a simple way. Laws such as the GDPR can complicate how data is collected, reviewed, transferred, and produced. They may justify protective measures, narrower procedures, redactions, or staged production, but they usually do not make U.S. discovery obligations disappear.
Can a foreign company be forced to pay the other side’s fees in U.S. litigation?
Sometimes. The general rule in the United States is that each side pays its own legal fees, but sanctions, discovery abuse, spoliation, Rule 11 violations, contractual fee provisions, and certain statutes can shift costs in important ways.
Can a foreign company challenge a U.S. court’s jurisdiction?
Sometimes. Personal jurisdiction, venue, service defects, forum selection clauses, arbitration provisions, and Hague Convention service issues may all provide early defenses. These issues should be evaluated immediately because some can be waived.
What happens if a foreign company ignores a U.S. lawsuit entirely?
Usually nothing good. A foreign company that ignores a properly served U.S. lawsuit can face default judgment, and undoing that later is often far more expensive and difficult than dealing with the case correctly at the outset.
Why are internal emails so dangerous in U.S. litigation?
Because they are often discoverable, easy to misread, and highly useful to the other side. Employees under stress tend to speculate, exaggerate, and assign blame in writing. That can badly damage the defense.
How long does U.S. litigation typically take?
It depends on the court, the judge, and the complexity of the case, but most business disputes take anywhere from one to two years, and complex cases often take longer. Foreign companies are often surprised by how much time discovery, motion practice, and scheduling issues can add.
Is settlement a sign the foreign company did something wrong?
No. Settlement is usually a business decision, not a moral one. Many companies settle because the cost, disruption, and uncertainty of continued litigation make further fighting irrational.
What should a foreign company do in the first week of a serious U.S. dispute?
Preserve documents, stop routine deletion, gather the key contracts and facts, assess threshold defenses, review insurance and indemnity rights, centralize communications, and get U.S. counsel experienced in cross-border disputes involved immediately.
