With the continuing growth of the multinational client market, increasing number of law firms are considering expanding the reach of their practice to global jurisdictions and locations. The advantages include the ability to service international clients locally, capture new global clients, and reduce the cost of servicing those clients.

However, these initiatives are not without risks. Both the transplanting of firm structures overseas as well as foreign tax implications must be considered. In this article, we discuss what is involved in ‘Going Global’.

Home Country-Host Country Structuring

The organizational structure of your firm, whether as a PLLC, General Partnership, or Professional Corporation, your choice of entity was most likely dictated by tax regime concerns. However, what makes sense for a U.S. firm might not necessarily serve your best interests in an overseas host country. Before making a move overseas, it is critical that you employ the services of a tax specialist who can advise you as to what tax ramifications your current U.S.-based structure might expose you to overseas and how your overseas operations might impact your U.S. tax obligations. Ideally, you will be able to meld the best of both worlds into organizational structuring that maximizes your tax benefits.

‘Branch Office’ Considerations

By way of cautionary example, Australia regards a U.S. LLP as a corporation for tax purposes and claims the right to tax an LLP’s global income. One solution—that you should verify with your tax specialist–is to form an Australian LLP separate and apart from your U.S. entity that is limited to Australian-only operations, with no participation by your U.S. LLP. Similarly, Italy requires that a branch office of a foreign firm must be incorporated locally and be controlled by locally barred lawyers. The income of such a firm is taxed to the Italian-barred lawyers. However, from the other side of the pond, if any global control and profit-sharing arrangements exist, then the IRS will claim that the U.S. firm and the Italian firm should be treated as one global entity regardless of the Italian tax imposition.

Controlled Foreign Corporation (CFC)

In December 2017, Congress passed the Tax Cuts and Jobs Act (TCJA), which created major tax implications for U.S. individuals and businesses and included provisions effecting U.S. law firms doing business overseas. In particular, the Global Intangible Low-Taxed Income (GILTI) rules apply to law firms structured as foreign corporations. Under GILTI, a controlled foreign corporation (CFC) becomes subject to a U.S. tax on income earned overseas. The rules are quite complex for U.S. corporations and partnerships that operate a CFC, and will generally require a ‘GILTI inclusion’ to be included with U.S. tax filings. A miscalculation here can have serious adverse tax ramifications.

Practical Business Development Considerations

Despite the organizational and tax obstacles that need to be overcome, an increasing number of lawyers nevertheless appreciate that expanding one’s practice overseas presents remarkable business opportunities that are not to be overlooked. In keeping with this trend, business development specialists who are well-versed in overseas expansion procedures are being recruited by law firms in an effort to make the process go as smoothly as possible. Notably, what might otherwise be considered a function of marketing or business development is now being recognized as a separate and distinct department within a law firm. In fact, many firms have taken global business development matters out of the hands of their marketing management staff altogether.

Global business development necessitates not only relocation and physical expansion considerations, but also the understanding of how to market to a different culture, with different social as well as business nuances and ‘norms’ that may appear to be quite contrary to the American way of doing things. The all-important task of building relationships under those circumstances will call for skill sets that are unique to the locale in which you wish to expand.

Practice Focus versus Client Focus

There are two perspectives as to what should be the emphasis when venturing out to a new market and seeking new opportunities. One school of thought holds that determining the needs of the overseas market is paramount to all other concerns. If, for example, Asia is opening up to increasing IP needs in order to comply with U.S. patent requirements as part of market penetration in America, then logically, the expanding law firm would want to present themselves as the go-to practice for that field but with boots on the ground in both the U.S. and in the client country.

However, in a crowded field of IP lawyers all competing in the same Asian market, an emphasis on the niche of a particular client or industry, i.e., being client-focused, might be more advisable. Ideally, a combination of offering practice specialization and being strategically focused on your clients’ particular niches would cover both aspects of meeting their needs.

Know Your Reasons for Expansion

Overseas expansion is definitely risky and complex, yet it can also be quite rewarding. But before you take such a step, make sure you are doing it for the right reasons. If expansion is for the sake of saying ‘we have overseas offices’, then such a move is vanity more than practicality. However, a realistic examination of both your firm’s needs and your clients’ needs is indispensable to making the right decision when Going Global.

Executive Summary

The Issue

How to properly appraise the pluses and minuses of expanding your firm’s presence to an overseas location.

The Gravamen

The best interests of your firm and the needs of your clients must be carefully weighed before making the decision to develop an international practice.

The Path Forward

Learn the tax ramifications in both your home country as well as the host country before taking your practice global.


1. Trend Analysis

Trends are dynamic, and what appears to be a trend one year might not be applicable in the next. Try to gauge the long-term outlook before taking on the enormous expense and risk of opening a foreign office.

2. Market Assessment:

Is your area of expertise transferable overseas? Or is your niche best suited to a domestic practice? From a business perspective, what works in the U.S. might not translate to a foreign jurisdiction.

3. Client-Cost Analysis

Don’t hesitate to raise the issue of possible overseas expansion with an existing overseas client. Such a preliminary inquiry might indeed serve to highly impress the client and benefit you both with the client’s insight as well as on-site assistance.

4. Structuring

Once you have made the decision to proceed with overseas expansion, a professional consultation as to compatible U.S.-foreign structuring an tax implications under various organizational scenarios is in order.

Further Reading

  1. https://www.lawjournalnewsletters.com/sites/lawjournalnewsletters/2004/09/02
  2. https://www.bakertilly.com/insights/considerations-when-expanding-your-law-firm-
  3. https://www.ibanet.org/article/eb1b5430-0378-4b2e-a61d-076104ba7b77
  4. https://www.wolterskluwer.com/en/expert-insights/how-law-firms-can-scale-to-take-on-
  5. https://www.lawpracticetoday.org/article/the-global-market-for-legal-services-is-staying- out-an-option/

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