Consulting Corporation Advice on International Joint Ventures And Other Types of Business Deals.

I am writing in response to your letters of October 7, 1992 and November 25, 1992, requesting an Unauthorized Practice of Law advisory opinion dealing with a non-law firm consulting corporation providing advice to American and international customers in the formation of international joint ventures and other types of business deals.

The Committee considered your inquiry at its January 7 and February 11, 1993 meetings and has directed me to transmit its conclusions to you.

You have indicated that the consulting company in question would be retained to provide advice on business deals including helping to find investment opportunities and partners, do preliminary research, and would accompany its customers to negotiation sessions, many of which would take place overseas. You further indicate that the corporation would not draft incorporation documents or other forms necessary to actually form the joint venture/investment, or contractual agreements such as joint venture agreements, financing agreements and the like.

For purposes of the committee's opining, you have posed a hypothetical in which an American company (the “client???) comes to the consulting corporation and requests its assistance in establishing operations in, for example, Hungary. The client is very vague about what it wants to do beyond the fact that it wants to take advantage of the business opportunities opening up in Hungary and asks the consulting corporation to assist it in finding the best method to invest there. You indicate that possible areas of investment would include: the direct purchase of all or part of an existing Hungarian company through the privatization program of that formerly Communist nation; the establishment of a new joint venture with an existing Hungarian company; and/or the sale of a particular product in Hungary. Should the client wish to pursue one or more of these alternatives, the consulting corporation might address such issues as: the amount of the investment, the Hungarian regulatory climate, the Hungarian laws which are designed to encourage certain types of investments, the size and financial status of the potential joint venture partner, the Hungarian political climate, and the general status of privatization in Hungary. In all three areas of investment, the consulting corporation would access its many personal contacts with governmental ministries and others which the members of the corporation have developed over the years.

Finally, you indicate that the consulting corporation would work with the client to help it decide which one or more of these routes it would like to pursue. In doing so, the consulting corporation would assist and represent the client in finding a suitable Hungarian partner, company or distributor; would travel with the client to Hungary to assist with any negotiations; and would advise the company throughout the course of the negotiations until the final documents were signed. In all cases, the consulting corporation would work closely with Hungarian attorneys and the Hungarian Government to comply with all local rules and regulations and to obtain all necessary governmental clearances. The consulting corporation, if necessary, would also work with or recommend to the client local Hungarian accounting, public relations and similar types of firms. If financing were necessary, the consulting corporation would assist the client in finding financing either through American investors or investment banks or through local Hungarian investors or investment banks.

The practice of law, as defined in Virginia, involves a non-lawyerís engaging in any one of three activities:

1) advising another, not one's regular employer, for direct or indirect compensation, in any matter involving the application of legal principles to facts or purposes or desires;

2) preparing for another, with or without compensation, legal instruments of any character; or

3) representing the interest of another before any tribunal, with or without compensation.

Part Six: Section I: Rules of the Virginia Supreme Court.

The Committee has earlier opined that it would constitute the unauthorized practice of law for a non-Virginia licensed attorney to render legal advice in Virginia: either on Virginia law or the law of his home jurisdiction. UPL Opinion 107.

The Committee is of the opinion that a non-lawyer’s provision of research or rendering of advice relative to general business operations, political or regulatory climates, methods of investment, and evaluations of the financial status of potential partners would not constitute the practice of law. However, the Committee is of the further view that, in certain circumstances, specific business advice as to the laws of another jurisdiction might constitute the unauthorized practice of law if provided by a non-lawyer in Virginia. Id.

The Committee would be pleased to consider the matter further if you are able to provide more specific information about the types of legal advice related to foreign laws which might be delivered by a non-lawyer in Virginia.

Committee Opinion
February 22, 1993
Updated: Aug 28, 2006