A Legal Guide for International Product Sourcing Consultants

The Legal Survival Guide for Product Sourcing Consultants

You have spent months finding the perfect manufacturer for your product buying client. The first shipment arrives, and everything looks great, and your client is thrilled. Then, six months later, your client calls in a panic—their product is being counterfeited and sold worldwide. Who do they blame? YOU.

This scenario is not uncommon. Too many sourcing consultants assume they are just facilitators—until they find themselves on the receiving end of a lawsuit.

As tariffs and geopolitical tensions force companies to shift production away from China and into new and unfamiliar markets, businesses are increasingly turning to sourcing agents to help them find reliable suppliers in new and unfamiliar countries. However, with new opportunities come new risks—especially for product sourcing consultants who fail to protect themselves legally.

This guide is for international product sourcing consultants—those who help companies find the best manufacturers, negotiate terms, and oversee production. While many sourcing consultants are experts in their field, too many overlook a critical aspect of their work: their own legal liability. And that can have devastating consequences.

What Makes a Great Product Sourcing Consultant and What Exposes Them to Risk

Top-tier sourcing consultants consistently excel in four key areas:

1. International Expertise – They deeply understand the complexities of buying products from foreign countries, including regulations, customs, and cultural nuances.
2. Manufacturer Vetting – They know how to distinguish between reliable and unreliable manufacturers, conducting thorough due diligence and assessing production capabilities, financial stability, and ethical practices.
3. Negotiation Skills – They are skilled negotiators, securing favorable terms for their clients while building strong, long-term relationships with manufacturers.
4. Legal Awareness – They understand when to bring in a lawyer to assist, recognizing the legal risks inherent in international sourcing and prioritizing proactive legal protection.

This blog post focuses on legal awareness because it is the area where sourcing consultants are most vulnerable.

The Legal Risks That Threaten Product Sourcing Consultants

Sourcing consultants often underestimate their legal exposure. When problems arise—late deliveries, defective products, intellectual property theft, higher than expected tariffs, unsafe goods—they are frequently the first target for lawsuits.

Here is why.

1. Clients Will Sue the Closest, Most Accessible Target

It is easier and less expensive for clients to sue a consultant in their home country than to pursue a foreign manufacturer.

2. Consultants Are Seen as the Deepest Pocket

Even if a consultant does not have vast resources, they are often a more accessible legal target than an overseas manufacturer.

3. Overpromising Creates More Liability

Marketing yourself as a full-service product sourcing solution without clear liability limits could make you responsible for issues you never intended to cover.

How International Sourcing Projects Go Wrong and Lead to Lawsuits

A standard international product sourcing project often involves the following steps:

1. A company hires a sourcing consultant to find a manufacturer.
2. The consultant sources samples, negotiates terms, and recommends a factory.
3. The consultant earns a commission based on manufacturing costs.
4. The manufacturer begins production.

Here is where things often go wrong:

• Unclear expectations. If best manufacturer is not clearly defined in contracts, clients may claim damages if they find a cheaper option.
• Product defects and delays. If goods arrive late or defective, clients may sue the consultant for negligence.
• Intellectual property theft. Sharing a design without securing non-disclosure agreements could lead to counterfeiting and lawsuits.
• Regulatory issues. If the product fails to meet safety or compliance standards, the consultant could face liability exposure.
• Tariffs and duties. If a consultant provides incorrect advice about tariffs or import duties and the client ends up paying unexpected costs or penalties, the consultant may be held responsible for the financial loss.

These risks are not theoretical. Many sourcing consultants contact us only after they have been sued, wishing they had taken action sooner.

The Number One Mistake That Gets Sourcing Consultants Sued

Playing lawyer. Too many consultants attempt to handle legal issues themselves—only to get burned when things go wrong.

1. The Sourcing Agent’s Intellectual Property Minefield 

Intellectual property is one of the biggest legal risks for sourcing consultants. This typically happens in one of two ways:

a. Promised Protection Without Action

Some sourcing consultants assure clients that their intellectual property will be protected, often relying on

• Relationships with manufacturers
• Verbal assurances from suppliers
• Their own contracts with manufacturers

However, these assurances offer no real legal protection. If the consultant does not implement proper legal safeguards—such as enforceable non-disclosure agreements, non-use agreements, and contracts preventing intellectual property theft—and the manufacturer steals the client’s intellectual property, the consultant could be held liable.

b. Acting Like the Manufacturer Creates Liability

Some sourcing consultants overstep their role and present themselves as more than intermediaries. Instead of clearly identifying themselves as third-party consultants, they

• Act as if they are the manufacturer
• Negotiate directly with factories using their own company name
• Accept responsibility for production quality and intellectual property security

If a consultant positions themselves as the manufacturer—or even as a partner in manufacturing—and the foreign factory steals the client’s designs, the client is likely to sue the consultant, not the factory.

2. Tariff and Duty Advice: The New Legal Minefield

Lately, and not surprisingly, we have seen sourcing agents get into legal trouble for providing advice on tariffs and duties.

For example, we recently spoke with a company that switched its product sourcing from China to Mexico based on its sourcing agent’s assurances that the products would qualify as Made in Mexico and therefore be exempt from China tariffs.

However, U.S. Customs disagreed, and after reviewing the situation, the international trade lawyers at my law firm found no legal basis to challenge Customs’ position. Only after months of working with our international trade lawyers—and reformulating its product based on their guidance—was the company able to convince U.S. Customs that its revised product qualified as Made in Mexico for tariff purposes. In the meantime, the company incurred nearly a million dollars in China tariffs and is  considering legal action against the sourcing agent.

Many sourcing consultants routinely advise clients on the duties they will owe when importing products, but as often as not, this advice is inaccurate.

At our law firm, only our international trade lawyers—who handle these issues daily—provide guidance on tariffs and import duties. Even though I encounter these matters regularly, I never advise clients on them.

Why? Because tariff regulations are constantly changing, highly technical, and extremely complex. If a sourcing agent provides incorrect information, they risk being sued for the financial losses their client incurs as a result.

The safest and smartest approach is for product sourcing consultants to stay out of trade classification, tariffs, and duties altogether and direct clients to an experienced international trade lawyer.

Five Essential Legal Protections for Sourcing Consultants

1. Have Clear, Written Contracts. Clearly define your services, include limitations of liability, and state that you are not providing legal advice.
2. Structure Your Business to Limit Liability. Form a legally protective corporate structure and consider obtaining professional liability insurance.
3. Avoid Overpromising. Be cautious about marketing yourself as a one-stop solution, as courts will hold you accountable for broad promises. Do not let your clients believe that you are the product manufacturer, because when it is lawsuit time, you very well might be deemed to have legally become the manufacturer.
4. Refer Clients to Legal Experts for Contracts, IP, and Tariffs. Do not provide legal advice. If a client asks about contracts, intellectual property, or tariffs, refer them to a law firm with experience in all three of these areas.
5. Document Your Non-Legal Role. Put in writing that you do not provide legal advice and consistently adhere to this policy.

Protect Your International Product Sourcing Business Now

Many sourcing consultants only think about legal protection after a problem arises—but taking proactive steps can relatively easily help to prevent costly disputes down the road.