By Matt Kaiser and Amelia Schmidt

Working abroad — and with clients abroad — can be highly rewarding for U.S. lawyers. It also presents some additional legal risks. U.S. sanctions laws may restrict or prohibit your ability to represent certain clients and/or be paid for those services by sanctioned parties. Separately, traveling abroad for work may present challenges to professional ethical obligations to protect client confidential information. If you’re a U.S. lawyer doing business abroad, or thinking about it, below are issues to consider and steps to take to protect yourself and your clients.

OFAC Sanctions and Working with Clients Abroad 

Any U.S. lawyer representing clients around the globe needs to be mindful of the risk of representing someone subject to U.S. sanctions under the Office of Foreign Assets Control (OFAC). A U.S. person can be strictly liable — and subject to substantial fines — for sanctions violations, even a lawyer who didn’t know the client was sanctioned. And knowingly violating U.S. sanctions can be a crime.

What to Know

The International Emergency Economic Powers Act authorizes the President to impose emergency sanctions on foreign individuals and entities. If the President decides to impose sanctions under IEEPA, the President issues an executive order that (1) describes the emergency and (2) directs OFAC, which is part of the Treasury Department, to administer sanctions. OFAC currently administers nearly 40 sanctions programs. That includes:

• Designating individuals and entities under specific sanctions programs;
• Developing regulations about what U.S. persons can and can’t do with sanctioned parties;
• Licensing transactions that would otherwise be sanctioned; and
• Investigating and enforcing violations.

There are a number of sanctions programs, and each one is different. Being subject to U.S. sanctions can mean very different things depending on what sanctions program applies. A few significant sanctions programs effectively embargo trade with entire countries: Iran, North Korea, Cuba and recently Syria. Most other sanctions programs are more targeted. For example, OFAC has a Central African Republic sanctions program, but relatively few people are sanctioned under it. Russian sanctions — which target entire industry sectors, along with specific individuals and companies — fall somewhere in the middle. 

If a person or company is subject to U.S. sanctions, most services and payments are prohibited unless otherwise authorized by OFAC. Transactions with a sanctioned person or entity generally are illegal unless OFAC explicitly licenses a transaction. OFAC does this in one of two ways: through a general or specific license. A general license exempts certain categories of transactions; for example, some humanitarian transactions, or transactions that are necessary for a company to wind-down its contracts with newly sanctioned persons. OFAC publishes general licenses and anyone in the world can rely on these general licenses. Specific licenses require an application and only license specific transactions by specific parties.

If a sanctioned person owns 50% or more of a company, that company is automatically also subject to U.S. sanctions. This is referred to as OFAC’s “50 Percent Rule.”

Legal services — and payments for those services — might be permitted. OFAC does authorize — usually in general licenses — many legal services and payments for those services. For example, a sanctioned person generally can hire and pay a lawyer to challenge OFAC’s decision to sanction him. A sanctioned person also may hire and pay a lawyer to initiate or defend cases in U.S. courts, which might include, for example, matrimonial proceedings. However, what is permitted may vary depending on the sanctions program. Lawyers operating under these authorizations also generally have to comply with various recordkeeping requirements. If it’s unclear whether a representation (or payment for that representation) is authorized under a public general license, the lawyer may have to apply for a specific license from OFAC to represent a sanctioned client and get paid to represent that client.

What to Do

Clients who live and work in the U.S. don’t require sanctions checks. But once your client base gets international, a routine sanctions check system, just like a conflicts check system, becomes much more prudent. It’s also consistent with newly amended ABA Rule 1.16, which requires a lawyer to “inquire into and assess the facts and circumstances of each representation to determine whether the lawyer may accept . . . the representation.” Rule 1.16(a).

OFAC has not issued guidance for how much diligence lawyers must conduct on potential clients. Here are some specific steps U.S. lawyers working with clients abroad can take to comply with OFAC sanctions:

• Stay updated. If your practice is international enough, you should consider signing up for OFAC notifications of new sanctions designations and regulatory updates. If your practice focuses even just one country or region where a particular sanctions program presents a risk, you can sign up for updates targeted to specific sanctions programs.
• When you first talk to a client or a third party payor, if there’s even a hint that either or both is subject to OFAC sanctions, it’s prudent to just ask.
• Check OFAC’s sanctions list for potential clients and payors, including addresses.
  • If you do get a hit on OFAC’s sanctions list, confirm which sanctions program the person is subject to. Then you’ll have to investigate whether you’re authorized under an existing general license to provide legal services and be paid for them, or if you’d have to apply for a specific license from OFAC.
  • If you don’t get any hits, but the potential client and/or third-party payor are companies, or individual owners or leaders of non-U.S. companies, you may need to do more research. Publicly available sources may be sufficient. But, depending on your client base, specialized screening software may be worth considering.
  • Always document your research and, if there were any potential flags, what you did with that information.
• Seek assurances. Consider including in your engagement agreement a certification of sanctions compliance, in which your client – and, if applicable, a third-party payor – certifies that they aren’t subject to U.S. sanctions and they’ll let you know if that changes.

If, after doing that work, you still aren’t sure whether you can take a client, you have three options: First, you can always turn down the work. Second, you can do your best compliance due diligence and move forward, assuming risks. Or you can hire a lawyer to help you evaluate sanctions risk for that client. Working with a lawyer who understands these regulations can be tremendously helpful in both getting it right and showing that you’re taking sanctions compliance seriously.

Professional Ethics and Traveling Abroad with Client Information

What to Know

Lawyers with international clients tend, not surprisingly, to travel internationally. The United States government has taken the position that, under the border search exception to the Fourth Amendment, it has the right to search anything that crosses the border into the United States without a warrant. This doctrine — which was developed in the 18^th century when crossing the border involved a ship coming to port and a customs agent inspecting the contents of the ship — has been applied to electronic devices in a way that is surprising to many travelers.

As a result, the government’s position is that it can search, without a warrant, any device that travels across the border with you as you reenter the United States. And the number of such searches is increasing in the second Trump Administration. Anecdotally, these searches appear to be targeting, in part, lawyers working on politically sensitive cases.

Worse, the protections that exist for privileged documents in such a search are not robust or clear. Of course, under Rule 1.6, you have a duty to protect your clients’ confidences. And if your phone or laptop is searched as you cross the border, you’d likely have a duty under Rule 1.4 to notify your clients that their confidential and privileged information is now in the hands of the United States government while you try to negotiate or litigate protections for that information.

What to Do

Above all, know your rights. If you’re a U.S. citizen, Border patrol will take your device, but you cannot be denied entry into the country if you refuse a search. If you’re not a citizen, refusing to allow a search is grounds for inadmissibility; you won’t be allowed into the country and will have a hard time reentering the U.S. later.

But, really, depending on your work, a simple rule may be the best one: Do not cross the border with client information or client communications on your electronic devices. Travel with a burner phone and burner laptop. Or delete apps on your devices before you cross the border and reinstall them when you are safely in the country.

A full discussion of the technical options available is not possible here, but the Electronic Freedom Foundation has published an excellent pocket guide to border searches. In any event, for a lawyer, the important thing to know is that you have a duty to protect your clients’ confidences and that they are in jeopardy when you cross the border into the United States.