United States Litigation for Foreign Companies: How an American Lawsuit Works
A Chinese state-owned company once came to us about a debt of more than $10 million owed by an American debtor. It had a written contract, and the debtor had never disputed owing the money. On paper it was as strong a collection case as we ever see. Then we looked at the dates. The debt was eleven years old, the Chinese company had spent those years trying to work things out, and its time to sue had run out long before it called us. Nothing about the merits had changed. I have seen foreign companies lose claims that way, on rules and timing nobody at headquarters knew to ask about.
Many foreign companies come into U.S. litigation thinking it is simply a more expensive version of litigation at home. It is a different system, and the differences start to matter the day a complaint arrives. Discovery reaches internal emails, WeChat threads, and the text messages on the CEO's personal phone. Executives can be questioned under oath for a full day before any trial. Each side usually pays its own lawyers, win or lose, and ordinary citizens sitting as jurors decide multimillion-dollar commercial disputes. A case can become ruinously expensive long before anyone sets foot in a courtroom.
The first damage often occurs before U.S. litigation counsel has even been hired. The complaint gets forwarded around headquarters. Management spends a week debating whether the claims are ridiculous while businesspeople email one another about who caused the problem, some of them in vivid terms, and nobody tells anyone to stop deleting anything. Some of that cannot be undone.
What follows is roughly how a U.S. commercial lawsuit unfolds, with emphasis on the places foreign companies most often get into trouble. It is written mainly for defendants, but a foreign company thinking about suing here should read it too, because nearly everything that makes U.S. litigation hard on defendants applies to the plaintiff that starts it. China gets its own section near the end because it complicates nearly every stage of a U.S. case.
There is no single U.S. litigation system. We have a federal court system and fifty state systems, each with its own rules, and judges in the same courthouse run their cases differently, so this is the general shape of a commercial case and not a substitute for the rules governing yours.
You Have Been Sued: The First Two Weeks
Start with the papers, not the merits, and find out when your response is due and whether the plaintiff wants emergency relief. In federal court, a defendant served with a summons usually has 21 days to respond. A defendant that agrees to waive formal service gets 60 days from the date the waiver request was sent, or 90 days if the request went to a defendant outside the United States. State deadlines vary, so do not assume you have 30 days because that is the norm somewhere else, and do not count on an extension after the deadline has passed. Miss it and you invite a default judgment.
Over the years, a number of foreign companies have come to us after a default has been entered against them, believing that getting it set aside would be routine. Setting aside a default is not automatic. Sometimes we have persuaded the other side to stipulate to vacating the default. Sometimes the other side has agreed only if our client paid what it cost them to obtain the default in the first place. Other times we have had to file and fight an expensive motion to set the default aside, and even when we have won, the court has required our client to pay the fees the other side incurred because of the default.
That is why we push to respond to a complaint quickly, so the company is never beholden to the other side. A defendant that needs an extension usually has to ask its adversary for one, and a defendant that needs a stipulation lifting a default always does. The price of that favor can be a concession, such as accepting service the company could otherwise have contested. Speed cannot come at the expense of the jurisdiction and service defenses that must be raised in that first response, discussed below.
A corporation or other business entity generally cannot represent itself in an American court and must appear through licensed counsel. A letter from the general manager explaining to the judge why the lawsuit is baseless is not a response, however persuasive it may seem in the original language. Courts enter defaults against companies that send those letters instead of hiring lawyers, and anything the letter says can be used against the company.
Meanwhile, other deadlines are already running. A defendant sued in state court that wants to move the case to federal court generally has 30 days from service to remove it. In federal court and in states that follow the federal rules, defenses based on lack of personal jurisdiction, improper venue, and defective service must be raised in the first response or they are gone. An arbitration clause invoked too late can be waived. None of these deadlines waits for management to finish deciding whether the plaintiff is lying.
Once litigation is reasonably anticipated, which can be well before a complaint is filed, relevant information can no longer disappear under ordinary deletion policies, and that duty covers phones and messaging apps as fully as it covers email. At a minimum, the litigation hold needs to identify the people and systems that matter, tell those people what to preserve, and shut off automatic deletion. Messaging apps need the most attention, WeChat above all. An employee who "cleans up" old messages after hearing about the lawsuit may think he is helping the company, when in fact he is handing the plaintiff a spoliation motion.
When litigation hits, people want to explain and accuse in writing, and those writings are usually discoverable. "We all knew this product had problems" reads very differently when opposing counsel reads it aloud at a deposition and asks the author what he meant. Tell employees not to discuss the case in email or chat except with counsel. The same caution applies to calls with the plaintiff to "sort this out," which can produce admissions and should wait until you have a strategy.
Check your insurance immediately. I have seen companies spend heavily on defense before anyone asked whether an insurer should have been notified. I cannot tell you how many times our insisting that our client let us look at their policy before just giving up on coverage has gotten them at least some coverage. Coverage may sit under a general liability or D&O policy, among others, and many policies make prompt notice a condition of coverage. Some also let the insurer choose defense counsel, which you want to know before you hire anyone. Importers should also see our post on product liability insurance for companies importing from China.
The complaint is also usually public, and in federal court it is typically online the day it is filed. Journalists and competitors read new complaints, and so do plaintiffs' lawyers looking for their next case. If yours is likely to draw attention, decide early who speaks for the company and what, if anything, that person will say.
When the Plaintiff Wants Relief Now
Most commercial cases move slowly. A case that opens with a motion for a temporary restraining order does not, and the court may rule within days, sometimes before the defendant has been heard. Requests for TROs and preliminary injunctions are common in intellectual property cases and fights over terminated distribution agreements, and the resulting orders can freeze funds or block shipments. When a complaint arrives with a motion for emergency relief, everything else in this guide gets compressed into days. Chinese e-commerce sellers face a mass-produced version of this, discussed in the China section below.
Service of Process on a Foreign Defendant Can Become a Case of Its Own
Other litigators often bring me into their cases behind the scenes on two problems in particular, serving foreign defendants and collecting judgments against them, and the first problem usually shapes the second. When the defendant is abroad, service can implicate a treaty and foreign law as well as U.S. rules. For defendants in most of the countries where our clients do business, the Hague Service Convention controls. Depending on the destination country, Central Authority service may require translations and can take months. The U.S. Supreme Court has held that the Convention does not prohibit service by mail where the destination country has not objected and other applicable law allows it. China, Germany, Japan, and a number of other countries have objected to service by mail under Article 10(a), so mailing a complaint to a company in Shenzhen or Stuttgart is not valid service.
Some foreign defendants hear this and decide to ignore a U.S. lawsuit until someone hands the papers to the CEO in person. That is a mistake. A service defense is far more useful before a default is entered than after one, and U.S. courts have tools for defendants who appear to be dodging service, including, where no treaty prohibits it, court-ordered alternatives such as email. A defendant can also be asked to waive formal service, which gives up the delay and expense that Hague service imposes on the plaintiff in exchange for more time to respond. Unlike a U.S. defendant, a foreign defendant pays no penalty for refusing, so whether to waive is purely a strategic call.
Plaintiffs get service wrong too, usually by thinking only about the U.S. court. A U.S. judgment is only as good as your ability to enforce it, and if the defendant's assets are abroad, the foreign court asked to enforce the judgment will look closely at how the defendant was served. Some contracts try to solve this by having the parties waive Hague service in advance. Whether the court asked to enforce the judgment would honor that waiver depends on its own law, and in China and many other countries the answer is unclear. Looking only at U.S. law does not answer the question. That is why we virtually always serve through the Hague Convention when foreign assets may matter, even when faster methods are available, so service is not the weak point when we try to enforce the judgment.
Before the Merits: Jurisdiction, Venue, and Arbitration
Foreign executives want to start with the merits: Did we breach the contract? Who owes whom? An American court may start somewhere else entirely, by asking whether it has power over the defendant and whether the parties agreed to resolve their dispute somewhere else. Those issues can determine where the case is fought and sometimes whether it proceeds at all. It is not uncommon for the first few months to focus almost entirely on these issues.
Personal jurisdiction over a foreign company
Doing business with American companies does not make a foreign company subject to suit everywhere in the United States. Absent consent, a court can exercise general jurisdiction, meaning jurisdiction over any claim at all, only where a company is essentially "at home," which usually means where it is incorporated and where it has its principal place of business. A German or Chinese company is almost never at home in any U.S. state. Most cases against foreign companies therefore turn on specific jurisdiction, which asks whether the company deliberately directed its activities at the state and whether the claim arises out of or relates to those activities. Selling through a U.S. distributor and marketing aimed at a particular state both go into that analysis.
Registration itself can create a jurisdiction problem. In 2023, in Mallory v. Norfolk Southern, the Supreme Court upheld Pennsylvania's statute treating registration to do business as consent to be sued there on any claim, so a foreign company registered in Pennsylvania, or in a state with a similar statute, may have given up a jurisdictional defense without knowing it. Federal claims raise a separate issue. When a claim arises under federal law and the foreign defendant is not subject to jurisdiction in any single state, a federal court can look at its contacts with the United States as a whole. Jurisdictional defenses are often strong for foreign companies, but contesting jurisdiction can open the door to discovery into exactly how the company does business here, and that discovery can be intrusive in its own right.
Foreign companies with U.S. subsidiaries face a related problem. Plaintiffs routinely try to reach a foreign parent through its American subsidiary, arguing that the subsidiary's contacts belong to the parent or that the two companies are alter egos and should be treated as one. Whether that works turns on how the companies actually operate. Commingled bank accounts and a subsidiary too thinly capitalized to pay its own debts help the plaintiff, on jurisdiction and on liability. I spent about a decade handling these issues for a Canadian truck manufacturer selling into the United States, and corporate separateness is far easier to maintain than to prove after a lawsuit arrives.
Venue and forum
A court can have jurisdiction and still be the wrong place for the case, or a strategically bad one. Many international contracts contain forum-selection clauses, and U.S. courts generally enforce them, which can get a case transferred or dismissed. Without a clause, a defendant can sometimes show that the witnesses and documents are concentrated elsewhere and seek a transfer, or in some cases dismissal in favor of a foreign court under the doctrine of forum non conveniens. These arguments belong at the start of the case, before a year of discovery has been spent in the wrong place.
Federal court or state court
A defendant sued in state court can often remove the case to federal court. Under diversity jurisdiction, federal courts can hear many disputes between U.S. citizens and foreign companies when more than $75,000 is at stake, though the citizenship of every party matters. They also hear cases arising under federal law. Federal court is not automatically the better choice, and the answer depends heavily on the judges and how fast each court moves. Because removal must happen within 30 days of service, the decision often gets made before anyone fully understands the case.
Arbitration
Before accepting that the dispute belongs in court, read the contract. U.S. courts enforce international arbitration clauses vigorously under the Federal Arbitration Act and the New York Convention, and a defendant with a valid clause can usually get the lawsuit stayed while the arbitration proceeds. An international arbitration clause should identify the seat, the rules, the language, and the disputes it covers. Leave any of those unclear and you can end up litigating where the arbitration is supposed to take place before anyone reaches the underlying dispute.
A company that litigates in court for months before invoking arbitration risks waiving it, and since the Supreme Court's 2022 decision in Morgan v. Sundance, the other side no longer has to show it was prejudiced by the delay. Nor is arbitration automatically cheaper than court. We talked one client out of pursuing a $250,000 claim because its contract required three London arbitrators, each a senior barrister billing more than $2,000 an hour.
Read the Complaint Against the Documents
A complaint tells the plaintiff's version of what happened and what it wants from the court. Filing it proves none of those allegations; in federal court, a complaint needs only enough factual detail to make its claims plausible. Test those allegations against the contract, the shipping records, and the people who were there, because the documents are the international deal, and they often decide a case before any witness testifies. We defended a shipping company against a claim for roughly $2 million in damaged cargo. The shipper had declared the goods on its manifest at about $500,000 to reduce its customs costs, and once they were damaged, it wanted the higher figure. The settlement reflected the document and the reality it had created.
Early review should also settle which law governs, because companies are regularly wrong about it. Most contracts choose a governing law, and U.S. courts usually honor the choice. For international sales of goods, however, the United Nations Convention on Contracts for the International Sale of Goods (the CISG) applies automatically between businesses in different contracting states unless the parties exclude it. Those states include the United States, China, Mexico, Germany, Japan, and most other major trading nations, though not the United Kingdom or India. A generic clause choosing "the laws of New York" does not exclude the CISG, because the CISG is part of New York law, so if you want it out, say so expressly. It differs from American contract law in ways that decide cases. The CISG generally requires no writing, though a handful of countries have opted out of that rule. It treats conflicting purchase order and invoice terms differently, and it lets courts consider prior negotiations that the parol evidence rule might exclude under U.S. domestic law. Because the CISG is a treaty, it can also put the case in federal court.
The same review should identify who else belongs in the case. If the defect traces back to your component supplier, or the distributor made the promises the plaintiff is suing over, you may have indemnity rights to invoke or claims to bring against those parties in the same lawsuit, and some contracts require prompt notice before those rights can be used. That is how so many product disputes end up with everyone from the component supplier to the distributor in the same case. If you have been sued alongside your U.S. importer or distributor, do not assume its lawyers are looking out for you. Your interests can diverge sharply, and they usually do once the question becomes who indemnifies whom.
Responding to the Complaint
Your first response is not necessarily just an answer to the complaint. Depending on the case, you may answer, move to dismiss some or all of the claims, assert counterclaims, or do some combination of the three. An answer admits or denies each allegation and asserts your defenses, and affirmative defenses such as the statute of limitations generally must be pleaded or they can be lost. A motion to dismiss attacks the complaint on legal grounds such as lack of jurisdiction, improper service, or the plaintiff's failure to state a legally viable claim.
Clients love motions to dismiss. They picture a judge reading the complaint, recognizing the injustice, and throwing the case out, and that does happen. More often the motion knocks out a claim or two, the court lets the plaintiff amend, and the case continues with a better complaint. A motion that will not end the case can still be worth filing if it narrows the claims or eliminates a theory that would otherwise drive expensive discovery. It can also consume months and substantial fees without changing much.
Counterclaims call for the same discipline. In most business disputes both sides have grievances, and filing first does not make the plaintiff the only party with claims. In federal court, a counterclaim arising out of the same transaction or occurrence generally must be asserted in the lawsuit or it is lost for good. Our firm defended a foreign company against what looked like a simple claim for payment. Its current CEO knew little about the original transaction, and when we dug into it, we found an unresolved dispute that supported counterclaims worth millions. A year of discovery followed, and when the case settled, neither side came away with anything meaningful.
The Case Gets a Schedule
Once the pleadings settle, the court sets the schedule, usually after the lawyers have conferred and proposed a discovery plan. In most federal civil cases, each side must also make initial disclosures identifying likely witnesses and the documents it may use, its damages calculation, and any insurance policy that may cover the claim. At the same time, the parties usually negotiate a protective order that lets the most sensitive material be designated for the lawyers' eyes only and bars any use of discovery outside the lawsuit, and a company worried about a competitor seeing its pricing or customer lists should pay close attention to it. The protective order does not make documents filed with the court secret. American courts presume their records are open to the public, and judges seal filings far less readily than most clients expect.
Then Comes Discovery
Discovery is where most foreign clients finally see how different U.S. litigation is. The other side can require you to produce relevant documents and information, including material that hurts your own case. Companies from civil-law systems are generally not accustomed to discovery this broad, and even common-law systems that require disclosure of harmful documents rarely approach the breadth of American discovery.
Confidentiality does not put a document beyond discovery. Neither does a foreign language, overseas storage, or the fact that the document sits on the CEO's personal phone. In a product liability case I handled, the plaintiffs kept returning to the client's own sales brochure, which boasted of exceptional construction quality, to argue the company should be held to a higher standard.
There are limits. In federal court, discovery must be relevant to a claim or defense and proportional to the needs of the case, and the rules set default caps of 25 written interrogatories from one party to another and ten depositions per side of no more than seven hours each. Courts can change those caps, and state courts set their own. Even within them the breadth is deliberate, and in the international cases we handle, discovery is often the biggest cost driver.
Electronic Discovery Drives the Cost
Most of the evidence now sits in email, messaging apps, cloud systems, and phones, and that changes the economics of a lawsuit. In a serious case, the lawyers must find the relevant information, collect it properly, and review what comes back for privilege and, often, for translation. Ten employees with several years of email and chat can generate hundreds of thousands of documents. Fifty can generate millions.
Messaging apps are where clients most often go wrong. If your people conduct business on WhatsApp, WeChat, or ordinary text messages, those messages are as discoverable as email. Using a personal phone or an app that feels informal does not take a business conversation off the record. U.S. courts have sanctioned parties whose people kept using disappearing-message features after the duty to preserve arose, and a company that does not know which apps its people use for work, or what those apps delete automatically, is badly positioned the day a lawsuit arrives.
Document requests, interrogatories, and admissions
Document requests ask the other side to produce categories of documents and electronic information. In a distribution dispute, the plaintiff might ask for every communication about sales targets, pricing, and termination, along with the internal discussions about why the relationship ended, and the defendant can make the same kinds of requests. A negotiation usually follows over which employees matter and how far back the search goes. The review that comes afterward is expensive, and translation can multiply that expense several times over.
Interrogatories are written questions answered under oath, and requests for admission ask a party to admit or deny specific facts. Neither tool is glamorous. An interrogatory answer that conflicts with later testimony will be used to impeach the witness, and in federal court a request for admission left unanswered for 30 days is deemed admitted and conclusively established unless the court lets the admission be withdrawn.
Third-Party Discovery
Banks, freight forwarders, and former employees in the United States can all be subpoenaed for documents and testimony. A party convinced that a damaging fact exists only in the other side's files may find it in a bank's wire records or a former employee's personal email, and that cuts both ways. Third parties abroad are much harder to reach. A U.S. subpoena generally cannot reach a foreign nonparty abroad (a narrow statute reaches U.S. nationals and residents living overseas), so evidence from a foreign nonparty usually has to come through the Hague Evidence Convention or a letter rogatory to a foreign court, which can take a year or more and may produce nothing.
Cross-Border Discovery and Foreign Data Laws
Storing data outside the United States does not put it beyond U.S. discovery. A U.S. court can order a party to produce information within its possession, custody, or control wherever that information is stored, and some courts treat documents held by a parent or affiliate as within a party's control. In the 1987 Aérospatiale case, the Supreme Court held that U.S. courts need not send discovery from a foreign party through the Hague Evidence Convention first, and most courts now weigh the foreign country's interests case by case rather than deferring to them.
Foreign law can still restrict what a company may collect, transfer, or disclose. European data protection law governs how personal data can be sent abroad, other countries have blocking statutes and bank secrecy laws, and China imposes its own restrictions on providing data to foreign judicial authorities. A company can end up caught between a U.S. court order to produce and a foreign law forbidding production.
I have seen this mishandled from both directions. U.S. counsel says American discovery rules control and treats foreign law as irrelevant, which can expose the company and its people to liability at home. Local counsel says its country's law forbids production and assumes that ends the U.S. court's inquiry. It does not. In Brooks Sports v. Anta, a trademark case in federal court in Virginia, the Chinese sportswear company withheld WeChat messages from its employees' personal accounts and devices, relying in part on Chinese privacy law. The magistrate judge rejected the privacy argument, found that Anta had misled the court about its employees' WeChat use, and recommended default judgment. The district court adopted it.
Discovery can also run the other way. Under 28 U.S.C. § 1782, a party to a proceeding in a foreign court can ask a U.S. federal court to order people and companies in the United States to produce documents and testimony for use abroad. Foreign companies litigating at home often do not know this tool exists. The Supreme Court held in 2022 that it does not reach private commercial arbitrations.
Privilege Does Not Work the Way Many Companies Think It Does
Copying the general counsel on an email does not make it privileged, and stamping "PRIVILEGED AND CONFIDENTIAL" across the top does not create a privilege that would not otherwise exist. The attorney-client privilege protects confidential communications between a client and its lawyers made to obtain or give legal advice, and the work-product doctrine protects material prepared in anticipation of litigation. A communication mainly about business strategy, with a lawyer copied for good measure, often fails the test. Privileged advice forwarded to people who do not need it can lose its protection, and sharing it with a distributor or supplier usually waives it unless the two companies share a common legal interest.
The cross-border wrinkle is that the privilege rules themselves can differ. Many legal systems treat in-house lawyers differently than the United States does, and a U.S. court can apply foreign privilege law to communications centered abroad. In European Commission competition investigations, for example, communications with in-house lawyers are not privileged. If your company needs an internal investigation once litigation is underway, have U.S. counsel structure it so privilege attaches from the start. Privilege cannot be added after the fact.
Discovery Disputes
One side asks for too much. The other produces too little. Someone withholds documents, and someone else insists that 40 employees need to be searched when five would do. Then the lawyers start fighting about the fight. Judges expect counsel to resolve these disputes without involving the court, and many make their impatience plain. When negotiations fail, motions to compel and motions for protective orders follow, each with its own briefing, hearing, and bill. We try to fight only about discovery that can actually change the case.
Spoliation: What Happens When Evidence Disappears
Once a duty to preserve arises, destroying relevant evidence can trigger a separate fight over spoliation. In federal court, a party that fails to take reasonable steps to preserve electronic information can be ordered to pay for additional discovery or face other measures to cure the prejudice. A federal court can tell the jury to presume the lost information was unfavorable, or enter judgment outright, only if it finds the party acted with intent to deprive the other side of the evidence. New York courts, for example, have imposed adverse-inference sanctions based on gross negligence alone.
I have no great WeChat story of my own, so I borrowed one from a New York court. In Siras Partners v. Activity Kuafu Hudson Yards, the plaintiffs served discovery requests in May 2015 seeking the defendants' electronic communications, including their WeChat discussions about the development project at the center of the case. A year later, two of the defendants' principals damaged their phones and replaced them without preserving those messages. The court did not need to find that anyone destroyed anything on purpose. It ordered an adverse inference against the defendants on dispositive motions and at trial, and in 2019 the Appellate Division unanimously affirmed, holding that failing to preserve the messages for more than a year after they were requested was gross negligence.
Depositions Are Where the Case Becomes Personal
A deposition is sworn testimony taken before trial. A lawyer for the other side asks the questions, the witness answers under oath, a court reporter records every word, and the session is often videotaped so a jury can later watch the witness hesitate. In federal court, a deposition can run seven hours of actual questioning, which fills a full day. No part of U.S. litigation surprises our foreign clients more, and a senior executive who has negotiated billion-dollar deals can still be a poor witness, because the skills are different. Witnesses get into trouble when they guess, argue, or answer the question they wish had been asked, and one bad deposition can damage an otherwise strong case.
Preparation should cover the facts and the key documents. More important, it should teach the witness how to answer accurately without sounding scripted. It usually takes several sessions, and senior executives resist giving it that much time, even though their deposition may be the most consequential thing they do in the case. In one of our cases, an employee spent a full day preparing with counsel and his company's chief operating officer, who told him again and again to stick to subjects he knew. At his deposition he promptly volunteered engineering theories well outside his expertise, and counsel had to question him on the record to establish that he was not qualified to offer them.
One of our litigators sent me an email suggesting we "cabin" an issue, and I had to look up what he meant. That was two American lawyers writing to each other in English. An executive who conducts business in English every day may still testify more accurately through an interpreter, because questions turn on fine distinctions in wording, the witness will be tired after several hours, and the transcript will outlive everyone's memory of the day. In a significant case, the other side may bring its own interpreter to check the translation in real time. Interpretation roughly doubles the time each question takes, so plan on more than one day.
Senior executives can sometimes resist being deposed. Many courts will limit or postpone the deposition of a top executive who lacks unique personal knowledge of the facts until the other side has tried the employees who actually handled the transaction. The protection is not universal, but it is worth asserting when the other side wants to depose the chairman mainly to apply pressure.
Depositions abroad
American lawyers sometimes assume they can fly abroad, book a hotel conference room, and take testimony. Many countries forbid it. Japan permits depositions of willing witnesses only on U.S. consular premises, presided over by a U.S. consular officer and pursuant to a U.S. court order or commission, and non-Japanese participants generally need special deposition visas. China forbids depositions for foreign courts altogether, as discussed below. Find out before anyone buys airline tickets.
The company itself can be deposed
In federal court, a party can require an organization to designate one or more people to testify on its behalf about specified topics. These Rule 30(b)(6) depositions differ from deposing an executive about what he personally remembers, because the company must prepare its designee to testify about everything known or reasonably available to the organization on each topic. If a topic concerns a transaction from eight years ago, the designee may need to review old files and interview current and former employees, and "I wasn't there" is not an acceptable answer. An unprepared designee can concede points the company never meant to concede. Clients routinely underestimate this preparation, especially when the relevant knowledge is spread across several countries and languages.
Expert Witnesses
Many commercial cases turn on experts in damages, product defects or a myriad of other things. In federal court, a retained expert must prepare a detailed written report disclosing every opinion and its basis, and the judge acts as a gatekeeper who can exclude opinions that do not rest on reliable methods reliably applied. The rule governing expert testimony was amended in 2023 to reinforce that gatekeeping role. When a damages expert gets excluded, the damages case can go with him. Many of our cases require at least two experts, a damages expert and a subject expert and these people are virtually never cheap. $60,000 to $100,000 for each expert on a fairly routine $4 million breach of contract case is most certainly not out of the question.
Cross-border cases often need experts on foreign law or foreign business practice. When a case turns on what Chinese, German, or Mexican law requires, a federal judge decides the question as a matter of law and can rely on declarations and testimony from lawyers and scholars who know that system. I have testified as an expert on China business practices in a Los Angeles lawsuit and on U.S. veil-piercing law in a South Korean one. An expert chosen on price can cost you the case. Identify the need early, because waiting until the expert deadline approaches is a good way to discover that the expert you wanted already works for the other side.
Motions Can End a Case Without a Trial
Many cases end on summary judgment, which lets the court decide claims without a trial when no genuine dispute exists over any material fact. Clients often believe their documents are strong enough to win that way, and sometimes they are, but judges leave genuinely disputed facts and questions of credibility for trial. Losing the motion can hand the other side both settlement leverage and a preview of your trial strategy.
Most Cases End Before Trial
Few civil cases reach a verdict, and settlement can happen at any point. I have seen cases settle before filing, after a motion to dismiss, halfway through discovery, after a disastrous deposition, after summary judgment, during mediation, and on the eve of trial. A case can be worth something very different after a key deposition or after an ugly document surfaces, so settlement should be reassessed at every major turn. The useful question is at what number, on what terms, and at what stage a settlement beats the expected value of continuing. Counsel can frame the odds and the fees still to come. Management has to decide whether continuing is worth it.
The federal rules give defendants a formal way to shift some of that risk. A defendant can serve an offer of judgment, and if the plaintiff rejects it and the judgment the plaintiff finally obtains is no better than the offer, the plaintiff must pay the costs incurred after the offer. Those costs usually do not include attorneys' fees, though they can when the statute underlying the claim defines attorneys' fees as part of costs. The tool has far less bite than an English Part 36 offer, but it can change the conversation.
Do not spend all your time negotiating the number. If the defendant will pay over time, the plaintiff should insist on security, such as a stipulated judgment that can be entered immediately upon default, so a missed payment does not mean starting a new lawsuit. The scope of the releases and any confidentiality terms need to be resolved in writing, and some terms call for a specialist. When a settlement I was negotiating raised insurance issues outside my expertise, I brought in a coverage lawyer to help revise it, and the proceedings that followed produced an additional recovery for my client approaching six figures.
Mediation
Many courts require commercial litigants to mediate, and mediation is where a great many cases end. The mediator cannot impose a result. Much of the day is spent with the parties in separate rooms while the mediator carries offers back and forth and tells each side, privately, where its case is weaker than it thinks. I have been on the receiving end of that. I once went into a mediation feeling rather pleased with myself, because we had just won a favorable ruling and I thought the appeal looked manageable. The mediator, a retired judge, focused on what a reversal would mean for my client, which was years more of litigation. We settled that evening at around eight.
International disputes are particularly well suited to mediation because the parties can agree to outcomes no court could order, such as a payment plan or a single deal resolving disputes in several countries at once. A court judgment is blunter. Someone wins, someone loses, and someone owes money. Mediation does not even require a lawsuit. I represented Haiti in a matter that settled for nearly $35 million after roughly two years of private mediation, with no suit ever filed. The companies that do best at mediation prepare for it carefully and send a decision-maker with authority to settle, not someone who has to wake up headquarters before accepting anything.
Trial
If the case survives discovery and motions and does not settle, it goes to trial before a judge or a jury. The jury is one of the biggest cultural surprises for foreign companies, since ordinary citizens with no business or legal training decide complex commercial disputes, sometimes for enormous sums. Either side can usually demand a jury, but the demand must be made on time or it is waived. Some contracts include jury waivers, and most U.S. courts enforce them when they are knowing and voluntary, though a few states, including California, Georgia, and North Carolina, generally refuse to enforce waivers signed before a dispute arises, at least in their own courts.
A jury changes how a case must be tried. A winning legal theory is often not enough; the story has to make sense to people hearing it for the first time after days of testimony. Jurors bring their own assumptions about foreign companies into the jury box, and a company that seems remote or unwilling to send its people to testify pays for it. Witnesses who live abroad may need visas and weeks away from their jobs, and their absence from the courtroom can speak loudly.
The plaintiff must prove its claims by a preponderance of the evidence, which means roughly more likely than not, a far lower bar than the criminal standard of proof beyond a reasonable doubt. Damages can produce another surprise. Contract claims are generally limited to compensatory damages, but plaintiffs often add fraud or other tort claims that can support punitive damages, and some state statutes allow double or triple damages plus attorneys' fees. Strong witnesses have bad days, and jurors see conduct differently from the executives who lived through it. Any lawyer who promises you a trial result is promising something he does not control.
Appeals
Losing at trial is not necessarily the end, but an appeal is narrower than many foreign clients expect. In federal court, the notice of appeal generally must be filed within 30 days after judgment, and most appeals must wait until the whole case is over. The appellate court reviews the record for legal error without holding a new trial, and it rarely disturbs a jury's view of the facts. An appeal can easily add another year or more.
An appeal does not by itself stop the winner from collecting. In federal court, enforcement is automatically stayed for only 30 days after judgment, and to keep it stayed while the appeal is pending, the losing party typically must provide a bond or other security, often for more than the judgment to cover interest and costs. A foreign company without U.S. assets or a U.S. banking relationship can find a bond hard and expensive to arrange. Without one, the plaintiff can start collecting, in the United States and abroad, while the appeal is still being briefed.
Winning Is Not the Same as Collecting
This gets ignored far too often. A judgment is worth only what you can collect on it, so before spending heavily to obtain one, find out what the defendant owns and where. An American toy company came to us after paying $2 million to what it believed was a Vietnamese manufacturer and receiving nothing. Our investigation found that the "manufacturer" was a consultant working out of a Hong Kong co-working space. The client decided not to sue, because collecting a judgment against the consultant was so uncertain. Losing $2 million did not make the collection problem go away.
When the defendant is foreign, the next question is where its assets sit. A U.S. judgment does not automatically turn into money in another country, and recognition depends on the law where the assets are and often on how the U.S. case was conducted. Assets abroad can be reached. Our firm has obtained an order in South Korea freezing nearly $100 million in assets for U.S. creditors, and we recovered helicopters in Papua New Guinea through the threat of enforcement. A freeze preserves the chance to collect without putting money in the client's account, which is why I want to talk about assets at the first meeting, not after the verdict. In international cases, winning the lawsuit is often the easy part.
Foreign defendants should run the same analysis in reverse. A company that ignores a U.S. lawsuit because it has no assets in the United States usually has more U.S. exposure than it realizes. Receivables owed by American customers, inventory in a U.S. warehouse or an Amazon fulfillment center, and marketplace account balances can all be reached to satisfy a default judgment, and that judgment can follow the company into other countries that recognize U.S. judgments.
Who Pays the Lawyers?
Clients from loser-pays systems are often surprised to learn that, in the United States, the loser usually does not pay the winner's legal fees. Under the American rule, each side pays its own lawyers unless a contract, statute, or court rule says otherwise, and the "costs" a prevailing party can recover are limited items such as filing fees and transcript charges. Fee-shifting does exist, most commonly through contract clauses awarding fees to the prevailing party. Absent a contract, statute, or other fee-shifting basis, the winner usually pays its own lawyers.
That can make even a strong claim economically unattractive. Suppose a company has a $500,000 claim that will cost $300,000 to take through trial. With fees unrecoverable and collection uncertain, being right may not be enough to make the case worth bringing. The math works the same on defense. Sometimes a company should spend more defending a claim than the claim is worth, because of precedent or the signal it sends to the next plaintiff, but that should be a deliberate decision and not something the company drifts into.
Plaintiffs, meanwhile, can often sue without paying full hourly fees. Some U.S. lawyers will take strong commercial cases on a contingent fee, collecting a percentage of any recovery instead of hourly fees, and litigation funders will finance promising claims in exchange for a share of the proceeds. There is no general U.S. rule requiring a foreign plaintiff to post security for the defendant's costs, though some states and federal courts allow it. A plaintiff here can pursue a case with far less money up front and far less downside than in a loser-pays system.
How Much Will It Cost?
No honest lawyer can give a universal answer. A straightforward case that settles early can be relatively inexpensive, while a hard-fought international case with heavy discovery and a trial can cost hundreds of thousands or millions of dollars. We can usually predict the big cost drivers. The volume of data matters most, followed by the number of depositions and the number of countries where evidence and witnesses sit. The big unknown is usually how hard the other side will fight. If it is a case involving a numbre of hard faught motions, the fees will be considerably higher than those cases where the lawyers do very little. Translation surprises nearly every foreign client, because thousands of documents may need machine or rough translation for review, and the documents used in court usually need professional translation.
The amount at stake and the cost of litigating are not proportional. A $400,000 dispute can generate $400,000 in legal fees if both sides fight every issue, which is rarely rational, and small drafting problems can produce large bills. A client of ours spent two years and about $150,000 in legal fees on a damaged-goods dispute because its purchase order said EXW and the invoice said CIF. A competent U.S. litigation team should give you a phased budget and tell you when the next big expense is coming, so you can decide whether it is worth incurring.
How Long Will It Take?
Do not build a business plan around a lawsuit producing cash quickly. A substantial commercial case that goes the distance can take years. Many take two or three years or more to reach trial, especially when discovery is extensive or the evidence and witnesses are spread across several countries, and an appeal adds more. Even an excellent case moves at the pace of the court's docket, and some courts are far busier than others.
What Changes When China Is Involved
China complicates nearly every stage of a U.S. lawsuit, whether the Chinese company is the defendant, the plaintiff, or simply the place where the evidence and witnesses sit. The recurring issue is judicial sovereignty: China treats service of court papers and the gathering of evidence on its soil as matters for the Chinese judicial system, and it backs that view with laws that carry real penalties.
Service is the first hurdle. If a Chinese company must be served in China, the route we trust is service through China's Central Authority under the Hague Convention, with a Chinese translation of every document. China's official Hague profile now estimates about six months for execution, and in our experience it often takes longer. Service by mail does not work, private service does not work, and the company must be named and served under its Chinese-language legal name rather than the English name on its invoices or website. Some U.S. courts have authorized email service on Chinese defendants when Hague service stalls. In our view, email service conflicts with the Convention, and I would not want to take a judgment resting on email service into a Chinese court and ask that court to enforce it. Because Hague service in China is slow and expensive, the first question we ask when hired to serve a Chinese company is whether the case justifies it. We have written more about how to serve a Chinese defendant and about how service affects enforcement of the judgment in China.
Testimony from China is harder still. China does not permit lawyers to take depositions there for use in foreign courts, and participants risk arrest, detention, or deportation. Putting the witness on Zoom does not solve the problem, because the witness is still giving testimony for a foreign court while physically in China. Witnesses usually travel to Hong Kong, Macau, or a third country to testify, an option we discuss in our post on taking depositions in China. Hong Kong requires advance permission to depose anyone who is not a U.S. citizen, but it works: in one of our cases, five witnesses were deposed there. In another, we flew a key witness to the United States. A witness in China who will not travel is very hard to reach. In a case we defended, the plaintiff depended on two witnesses in China who would not leave the country to be deposed or to testify at trial. The plaintiff's lawyer could not find a way to get their testimony, and the case settled for nuisance value.
Documents raise their own conflict. China's Data Security Law bars organizations and individuals in China from providing data stored there directly to a foreign judicial or law-enforcement body without approval from the competent Chinese authorities, and the Personal Information Protection Law contains a parallel restriction for personal information. China's state secrets laws are broad enough that companies often cannot tell where they end. A Chinese company ordered by a U.S. court to produce documents from China is caught squarely between two sovereigns, and it needs a strategy for that conflict well before anyone files a motion to compel.
Chinese companies should also expect less privilege protection than they assume. In Wultz v. Bank of China, a federal court applied Chinese law to China-centered communications with the bank's in-house legal staff and found no privilege comparable to the American one, and some Chinese companies staff their legal departments with people who are not licensed lawyers. And because so much Chinese business runs on WeChat, where relevant chat history often resides on employees' devices, a litigation hold that does not reach those phones preserves very little. That was the problem in Siras: two principals replaced damaged phones without preserving their WeChat histories.
Chinese e-commerce sellers face a form of U.S. litigation few other foreign companies ever see. In the typical Schedule A case, a brand owner sues dozens or hundreds of online sellers at once, identifies them only by store names listed on a schedule attached to the complaint, obtains an order freezing their marketplace accounts, and serves them by email. Many sellers first learn they have been sued when Amazon or Walmart freezes their funds. These cases were long concentrated in federal court in Chicago, where some judges have pushed back hard on how they are joined, served, and resolved, and they have increasingly appeared elsewhere, including in federal courts in New York and Florida. Sellers who ignore them usually end up with default judgments and forfeited balances.
Finally, a U.S. judgment against a Chinese company with nothing in the United States is only as good as its prospects in a Chinese court. Those prospects have improved. A Wuhan court recognized a California judgment in 2017, and China's 2023 amendments to its Civil Procedure Law set clearer standards for recognizing foreign judgments. Service is still critical. Article 300 of the amended law requires a Chinese court to refuse recognition where the defendant was not lawfully summoned or, though summoned, was not given a reasonable opportunity to present its case. That is why anyone suing a Chinese company in the United States should plan for enforcement in China before filing the complaint. Our post on enforcing U.S. judgments in China covers what Chinese courts look for, and our guides to suing a Chinese company and suing Chinese manufacturers for product liability cover the strategy from the plaintiff's side.
Foreign Plaintiffs Need to Think About Discovery Too
A foreign company thinking about suing here often focuses on the leverage American discovery provides and forgets that discovery runs both ways. If you sue, the defendant can seek your documents and internal discussions, depose your executives, and make your own conduct part of the case, along with counterclaims you would rather not defend. Plaintiffs get sanctioned too. In Shanghai Weiyi International Trade v. Focus 2000, a Chinese garment company that sued in federal court in New York repeatedly failed to comply with discovery orders, and the court imposed sanctions that included restricting the evidence it could use.
Your own documents can also end a case before it starts. A Russian company asked us to sue an American buyer for $6 million it said it was owed for an airplane. When we read the transaction documents, they stated a lower price, deliberately, to reduce taxes. We declined the case.
Before filing, ask whether the defendant is subject to jurisdiction where you want to sue, whether your contract requires arbitration or another forum, and how much time remains under the statute of limitations, the question the state-owned company at the top of this post asked years too late. Then ask what your own documents will show and what winning will actually get you. Sometimes the right answer is a demand letter, an arbitration, or a lawsuit in another country.
Your Lawyers Cannot Run the Case Without You
Clients sometimes treat litigation as something they hand to outside counsel and check on occasionally. That works poorly. Your lawyers do not know who really made a decision, which employee remembers the transaction, or why the company changed course halfway through the deal. Someone inside the company needs to own the case, with enough authority to gather information and make decisions. A lawsuit gets much more expensive when every decision has to make a three-week trip through headquarters. Your lawyers, in turn, should be telling you what matters. You should understand where your case is strong and where it is weak, what will drive the cost, and what settlement looks like today. If all you hear is that you have a strong case, you are not getting enough information.
At the outset, I would want U.S. litigation counsel to answer these questions in plain language. What is our best argument, and what is the other side's best argument? Which fact worries you most? Can we end or narrow any part of the case early? What will make this case expensive, and who is likely to be deposed? What does settlement look like now, and what would make it more or less attractive six months from now? If we win, can we collect? And what should management absolutely not do? The answers will tell you more than a fifty-page litigation budget.
Preparing for the Lawsuit You Do Not Have Yet
The cheapest time to improve your position in a U.S. lawsuit is before anyone files one. Contracts with American counterparties should be drafted with the dispute in mind, which means a clear forum-selection or arbitration clause, a governing-law clause that addresses the CISG, consistent delivery terms across your purchase orders and invoices, and a prevailing-party fee provision if you want the loser to pay. A U.S. subsidiary should operate as a genuinely separate company, with its own capital and its own decision-making. If employees use WeChat or other messaging apps for business, make sure the company can preserve those communications rather than leaving the only copy on personal devices. Calendar your limitation periods on every unpaid receivable. And choose the U.S. litigation counsel you would call before you need one, so the first week of a lawsuit is not spent looking.
Do Not Learn This System After You Have Been Sued
The biggest mistake foreign companies make in U.S. litigation is assuming an American lawsuit will behave roughly the way a lawsuit behaves at home. That assumption is how a state-owned company holding a written contract and an undisputed eight-figure debt ended up with nothing. The events that matter most usually happen long before trial, in the first weeks of deadlines and preservation and in the fights over forum and service. Companies that get those things right start with an advantage. The expensive way to learn them is during the first six months of your own case.
Our international dispute resolution lawyers represent foreign companies in U.S. courts and handle cross-border disputes in both directions. The earlier we are involved, the more options you still have. If your company has been sued here or is weighing a lawsuit, call us before the first deadline passes.
