How to Prepare for Taking Legal Action in China

Lawsuits and arbitrations in China are just as costly and time-consuming as in most countries. Before you can begin making a decision on how to settle disputes with opposing parties, you should have a clear understanding of the possible alternatives.
This could include exploring mediation, negotiation, or other forms of alternative dispute resolution to potentially save time and resources.

Economically speaking, there are other effective ways to settle disputes rather than taking the case to court. For example, Chinese Lawyer Letters are often underestimated but are overwhelmingly successful in solving most commercial disputes before they escalate.

I am going to show you systematically how and what you should do in dealing with potential commercial legal actions in China. Either as an initiative plaintiff or a defendant, before approaching a trial lawyer, do the following:

• Gather documentation of everything that happened from the very beginning of the dispute (if your case is a contract dispute, you ought to at least provide the contract in dispute);
• Ask how much the attorney charges per hour for legal consultation. (Pursuant to Shanghai Bar Assn’s guideline, a licensed Chinese lawyer’s hourly rate ranges from RMB 200 to RMB 3000, and if both agrees, higher!).

Prepare well for the first legal consultation meeting, do the following:

• Provide background information of the case, showing case related documentation for examining;
• Ask if there are alternative resolutions besides taking it to courtrooms, such as if the attorney could issue a Lawyer Letter to the opposing parties to claim rights and/or clear some misunderstandings.
• Ask if the attorney could help to set up negotiation a meeting with the opposing party;
• Ask the possible outcomes of the case if it goes to trial; and
• Request a written legal analysis report that must include the validity of existing evidence, and any new evidence that needs to be discovered or produced etc.

When consulting with an attorney who meets the specified conditions, it is important to inquire about the fee structure. In many cases, commercial litigation fees are based on the amount in dispute rather than an hourly rate. The detailed attorney fee structures are clearly stipulated in a services agreement, e.g., Letter of Engagement.

Once you have decided to retain the counsel, only one responsibility remains: Trust and reveal all significant facts to your counsel. Only by knowing the whole truth can your counsel possibly be of real assistance!