The relationship between nearshore companies and buyers in the US must be clear and transparent regarding legal compliance requirements, and the former must have a strong grasp of the US legal framework to ensure the successful delivery of services.
“Good and long-lasting relationships start with clearly set legal and compliance requirements and expectations,” according to Gabriela Smith, Managing Attorney at The Smith Law Group, where she advises clients on a variety of international contractual and regulatory matters and regularly acts as external general counsel to companies in the outsourcing, technology and professional services industries.
Doing business means nearshore companies and US customers are entering into each other’s legal realms, and compliance is crucial, and which is the subject of Gabriela’s keynote speech at this year’s Nexus event on May 16 in New York City.
“US companies are subject to numerous legal and compliance requirements, and they will ask the nearshore company to comply with certain matters that naturally flow down to service providers,” she says.
“It is therefore healthy for the relationship to be very clear and upfront of the expectations, and nearshore companies must be prepared to respond and comply.”
She has counseled nearshore companies on the need to set up proper internal agreements within their company to meet the non-disclosure and transfer of rights requirements of US buyers, as well as the implementation of internal policies for data security and human resources, in addition to policies to ensure compliance with US anti-corruption laws.
She also advises nearshore companies on the need to be prepared for audits, particularly of data security, and has penned columns on themes such as intellectual property clauses for nearshore clients and the importance of correctly categorizing employees.
“Mature nearshore companies make a great effort to comply, but if they do not have significant experience working with a US company, they may miss the mark,” she says.
One of the main differences between the US and Latin America is the application of the common law system in the US and civil law elsewhere, she explains, and which requires Latin American companies to adapt to the US legal framework.
“Nearshore companies must be prepared to play in the ‘common law’ system.”
“That system allows the law to constantly evolve based on judges’ decisions in cases which create legal precedent. For instance, in US nearshore contracts, we use terms such as ‘best efforts’, ‘professional manner’ and ‘industry standards’, and which have carry a meaning in each US state based on what previous cases determined,” she explains.
But that meaning may change by virtue of a new case giving a new interpretation.