4 ways in which International Business Law affects trade

In the global economy that we live in today, everything and everyone is connected and inter-dependent. The demand for companies to grow multi-nationally has grown exponentially since the pandemic started last year. Internet boom in the late ’90s and 2000s had been instrumental in the dramatic rise in international business. Now, it seems to have exploded manifold.  

The scale and scope of business operations are not limited to one country. While the raw material is procured in one country, it is manufactured or assembled in a different country and marketed and sold in yet another. Businesses have crossed boundaries set by a country’s borders. They operate and thrive on foreign land. It is however not the same as operating in the homeland. Before setting foot on the foreign land and expanding, a business must familiarise itself with the land’s laws, legal system, social and economic conditions, political system, and culture. All these factors have a significant impact on the running of the business and its bottom-line.  

Laws affect every business, whether it is being operated as a ‘brick and mortar store or selling goods/services online. Different countries have different legal systems established to protect the country’s economy and trade and preserve their social, economic, cultural, political environment.

National governments have an important relationship with global businesses. Governments tend to control and manage their trade relationships with an array of policies like taxation laws, tariffs, subsidies, currency controls, import-export policies, free-trade zones, and so on. For instance, China is a Communists government, and the government formulates and strictly controls all business sector laws.

On the other hand, India has a democratic government, and business laws are made to protect small businesses and consumers.

There are three types of legal systems: 1. Civil law, 2. Common law and 3. Religious law. Countries like the United States, India, and Australia use common law systems; Germany, France, and Russia use civil law systems and countries like Pakistan, Middle Eastern countries, Saudi Arabia and Iran operate on Islamic laws. Therefore, it is imperative for any business to fully understand the legal system that it is going to operate in and abide by its rules and regulations for conducting a business.  

Here are four ways in which international business law affects trade and things every business must research well before venturing into the country or region to avoid any failures:  

1.   Taxes  

Taxes take a major cut out of a company’s profits. When it comes to taxes, companies should do their homework well. From how much taxes are levied on the goods and services, manufacturing or selling, to how the taxes should be charged, i.e., either include taxes in the sale price or charge extra tax, the businesses must follow the standards set by the law. Companies like to operate in countries that offer attractive tax regimes with low tax rates on income, capital gains, and dividend income. Singapore, for these reasons, has been one of the most popular locations for companies to set up offices in the country and enjoy its lowest corporate tax rates.  

2.   Intellectual property  

Legalities around intellectual property can be complicated and expensive. Trademarks, copyright, and patents are intellectual properties that every business needs to guard and protect. Countries take extra measures to attract international business by establishing stringent IP protection laws and reducing piracy. Governments across the world have established several acts and international conventions to protect international businesses and resolve issues if any arise. The Paris Convention for the protection of Industrial property, the United Nations Convention on contracts for International Sale of Goods, the Foreign Corrupt Practices Act, the Madrid Protocol, the Singapore Treaty, the Nice Agreement, the Patent Law Treaty and the Hague agreement are a few of the many international treaties formed to protect international business and trade.  

3.   Supply Chain and Infrastructure  

Establishing an effective and efficient infrastructure is the backbone of any successful business. Cheap sources of raw material can help companies to have huge profit margins. International business laws exist that regulate international shipping, export and import duties.  

4.   Labour Laws  

While cheap labour attracts foreign investment into a country, labour laws exist to protect human resources from any exploitation. The textile and footwear industry are among the many industries that have shifted their manufacturing operations to Asian countries that offer cheap labour. The Rana Plaza collapse, an incident in a Bangladeshi factory, happened in 2013 but is still fresh in the memory of many who lost their near and dear ones in this event. The plaza collapsed, killing thousands of its workers due to large structural cracks and poor labour protection laws. The incident stirred up an international movement and led to the establishment of International Labour Law (ILO). The ILO is the source of international labour law that is embodied in its Conventions, recommendations and the documents that emanate from the supervisory mechanism responsible for applying those international labour standards.  

These are a few of the things that any organization should take into account before venturing out into international business. If these legalities are correctly taken care of, legal counsels suggest that companies can maximise their bottom lines and enjoy huge revenues and profits. If International business law interests you or you would like to understand it better, join our one-year Online Master of Laws programme specialising in International Business Law. 

5 key skills and attributes for effective Legal Leadership

Leadership is a subjective term. We see and hear about effective leaders leading a department, a company or a country. But it is difficult to really quantify or describe what leadership is. You can recognize good leadership examples when you see them but it’s difficult to define. Some leaders are ‘born leaders’, they are a natural, and excel at what they do, while others learn to become good leaders by cultivating attributes and skills, behaviours,  or sets of competencies, that are practiced and mastered to become an effective leader. 

I have talked in the past about Sustainable Leadership in our blog – what it is, and what its principles are. There could be several styles and types of leadership, and areas where leadership is required. One such areas is law and that is called legal leadership. Legal leadership particularly identifies how leaders behave, and how they govern others directly and indirectly, by controlling organizational structures and processes in a legal department or a law firm. 

Douglas B. Richardson says, “All great leaders do five things well, Imagine, Invent, Inspire, Inform, and Influence”. Though all leadership is fundamentally the same, legal leadership can take many forms, involve distinct roles and have different objectives. In a legal department, leadership has many faces: the chief legal officer (CLO), the managing attorneys, the servicing lawyers who work each day with the clients, and all of them should be leaders. Therefore, a legal leader is faced by a unique challenge of leading leaders as more often than not they end up leading other lawyers who are independent identities, individual contributors, pretty much people who do not follow anyone, do not like to be led, trust their own gut, and do not collaborate easily.  

Phew! Legal leaders have to be one hell of a leader!! 

Legal leadership can take many forms

Being a leader in a legal environment is challenging and may not be everyone’s cup of tea. So, what is required to be an effective legal leader? Law firms and corporate legal departments have identified some basic qualities and attributes that a leader should possess. Here are the five skills and attributes that are important for effective legal leadership: 

1. Collaborative skills 

Legal leaders usually find themselves managing large teams and complex cases. They usually have different and difficult sets of people at both ends of their stick. On one end are their own team members. And at the other end are the clients from diverse backgrounds, personalities, education levels, experience levels and requirements. The legal leader plays a key role in coordinating all the aspects, and people in bringing out the desired legal outcome. 

Exercise collaboration with effective communication.

A good legal leader should hit the ground running through effective and early communication amongst the team members, and letting everyone know their tasks after a brainstorming session. Follow up and make sure to listen to their colleagues’ ideas or the issues they are facing, and help them overcome their obstacles and provide the resources if required.  

A legal professional must weigh in everything, facts of the case, potential risks and their consequences

2. Good Judgement 

Success in any profession is highly dependent on good judgement, and this is especially true for the legal profession! It is one the most critical attributes that a legal leader must possess – to apply good judgement and make sound decisions. Legal professionals are faced by situations every day where they must make complex decisions by weighing in the facts of the case, evaluating potential risks and their consequences on the case and on the firm/organization.

Good judgement also requires excellent problem-solving skills. A good legal leader must be able to pre-empt the issues, and must have ideas and many solutions to a problem.  

However, the leaders must not isolate themselves or feel solely responsible for a decision. Though they are leaders, they are still a part of the team, and must seek input of their peers and other experienced legal professionals on critical matters.  

Self-awareness is an important quality of an effective legal leader

3. Self-awareness 

While most of the legal professionals, lawyers, and para-legals would call themselves lone-wolves and individual contributors, they are still part of a legal team. As they become leaders, most lawyers face a hurdle what’s called ‘expert identity trap’.  This means they identify themselves as subject matter experts but do not necessarily see themselves as a leader. Though several attributes are required to be a good legal leader, self-awareness is one of the key qualities of an effective one.  

All legal professionals are bound by the model rules of professional conduct

4. High ethical standards 

The legal profession is heavily based on trust, and each member’s ability to demonstrate highly ethical behaviour. Failure to do so will have many adverse outcomes such as not being able to gain the trust of their client and/or colleagues, and even more critical, being disbarred or legally charged and disciplined for misconduct. All legal professionals are bound by the model rules of professional conduct and they must understand their responsibility as the stakes involved are high! 

5. Diplomacy 

Diplomacy is one of the skills that a legal leader must have to climb the ladder of their legal career. A good leader must exercise diplomacy in handling clients, project the professional image of the firm, and must be respectful of their colleagues. The legal profession is an intensive and demanding career. It is critical for leaders therefore to keep calm and show virtues such as understanding, compassion, and integrity. Diplomacy is not something that one can learn overnight, it is a gradual, self-grooming process that can be effectively used to resolve any conflicts, and manage differences and disagreements. 

To be the best legal leader, it takes lot more than just being book-smart too; one needs to be street smart. Our MBA Legal Leadership prepares you just for that by providing a deep understanding of the key concepts and theories of leadership and their application in a law-oriented organization. Talk to our advisors today to learn more about the programme.