Experienced Advice

RUDOLPH HOUCK – ATTORNEY

If you are looking at this website, you probably know one of my clients, colleagues or friends. Welcome. Some of the topics covered below are Language (German in my case), Expertise, Examples, Using a Sole Practitioner, Articles and Fees. Please note the LONG list of articles I have written – mainly for foreign business managers and lawyers – and links to the full articles. Of greatest importance – statute of limitations in M&A, measure of damages, rights of first refusal and sandbagging. But the care and feeding of US corporations, selling your company and other topics are covered. To go to the articles, here are two links.

Law related articles

Conferences and Travel

INTRODUCTION – I am a general commercial lawyer, but since 1979 I have specialized in helping mid-sized German/Austrian/Swiss companies buy other companies in the United States and one time in Brazil. I have also advised companies based in Italy, The Netherlands and South Africa. Recently, I have done more work for “normal” American clients. When I write “German” below, please think “German-Austrian-Swiss.”

After over 40 years of law practice with law firms big (about 800 lawyers) and small (about 20), I became a sole practitioner/Einzelkampfer in 2017. I also moved my office from Park Avenue, New York, to my study in Pittsburgh, Pennsylvania, the city where I began my legal career in 1972.

As a sole practitioner with over 40 years of experience, I know what I can do and what I cannot.

I can analyze, negotiate and draft most commercial contracts, such as acquisition agreements (stock or asset), technology license agreements, confidentiality agreements and all but the most sophisticated employment agreements. I cannot help with publicly traded stock companies or raising capital for startups. I cannot advise on tax, employee benefits, environmental regulations, patents, immigration or going public. As noted, I am based in Pittsburgh, but I have done transactions all over the United States, including:

California                              Kansas                                 Ohio

Connecticut                          Massachusetts                    Rhode Island

Delaware                              Missouri                               Texas

Illinois                                    New York                             Washington, DC

When I began working for European companies, being based in New York City was an advantage because that’s where planes from Europe landed, and where sophisticated bankers, accountants and advertising agencies had their offices. Today, flights from Frankfurt, Vienna and Zurich land all over the United States. I have done deals without any New York meeting in Wichita, Kansas and Chicago, Illinois – meeting the client there and avoiding the costs of Manhattan hotels. Indeed, I have recently done transactions without ever meeting either the client or the other side.

LANGUAGE – I speak German well. I first learned German in 1962, in high school in Dallas. Frau Webb was a war bride who drove a Mercedes Benz. Learning German is a never-ending project. I studied in Bonn, Munich and Frankfurt. I regularly attend language schools – in Cologne, Munich, Vienna. When I began working with Germans in 1979, my language ability was a big help. Today, I think it is still a big help but German give it less importance. Why? Two reasons: First, they think they speak English well enough that they do not need the help of a German speaker. Sometimes they are right, but often misunderstandings arise which can spell the end of a deal. How can this happen? The American side thinks the Germans understand every word and so INTENTIONALLY “misunderstand” some negotiated point. When I double check – auf Deutsch – what the Germans have agreed to, they sometimes say, “Ach NEIN, Herr Houck. We would NEVER agree to THAT!” So then I have to try to undo the damage. Second. many cities around the USA now have German lawyers admitted to practice law. Some of these transplanted Germans are indeed very good. Some, however, remain essentially German lawyers in their way of thinking. This leads to unexpected results.

My accent is better than that of most of the Americans who speak German as a second language. (I learned in part from Germans who teach opera singers – so pronunciation is important.) Unless a native German speaker has studied commercial law or accounting in Germany, my vocabular in these areas is better. I spend two weeks in Schweinfurt at a ball bearing factory and developed a technical dictionary.

AREAS OF EXPERTISE – I have worked mainly for family-owned chemical companies, including pharmaceuticals and pigments. Other clients have made computer chips, glass coatings, lenses, electrical equipment, drink dispensers, auto assemblers and testing services, cosmetics, dental implants, packaging, spices, plastic extruders, watch bands, measuring devices, eyeglass frames, concert organizers, building components (to keep skyscrapers from “pancaking”, monumental bronze sculptures, candy, clothing, travel software, fiber optic cable, magazines, puzzles and foundations for solar panels.

I handled the purchase of a series of Texas shopping centers, each with a German-owned “anchor” grocery tenant. A South African client made uranium enriching devices. I advised the Frankfurt airport when Pan American Airlines failed.

Larger clients include ones you have heard of, even if you are not German. I have advised several major art collectors, including on claims arising out of the Nazi period. As a non-lawyer, I translated 150 pages of German-language documents related to the 1930’s sale of an object now in a major US museum. I also helped a European family involved in an estate dispute on the US aspect of the estate.

As a lawyer in a law firm that focused on German-speaking clients, I heard stories of the experiences of colleagues and their clients. For example, major litigation turned on a mistranslation of ONE word (unwiderruflich) in a German document. The other side had hired a translator who was not a lawyer.

SIZE – My smallest transaction was a purchase of a business for under $1 million. (I once sold a house for a German for over $12 million, and the house was a “teardown.”) The largest and most complex was for $100 million, with closings I coordinated in 13 time zones. Complex agreements I drafted in 1988 recently played an important (successful) part in a transaction involving over $900 million.

EXAMPLES – Admittedly, these are odd experiences. Most of my work has been “simply” buying a company, usually in an asset purchase. These were cases they do not teach in law school or even in most law firms.

General Partnership – I advised a Nuernberg family on its sale of an interest in a US GENERAL partnership. (General partnerships are very rare unless the partners have limited liability. But these partners were rich individuals.) The German-trained lawyer on the other side conveniently ignored the continuing liability of my client. That lawyer was a partner is a major Chicago law firm. This was either malpractice or fraud.

Indemnity – Based on an unlimited indemnification clause I drafted, I got the selling shareholders of a St. Louis chemical company to pay the class action claims of users of its products YEARS after my client bought the company. I believe the major St. Louis law firm paid part of the claim.

Damages – I developed a sophisticated “damages” provision, intended to give the buyer of a company the compensation any buyer would expect if a representation in the contract was false. I successfully explained it to the lawyer on the other side. Several years later, I did another deal with different lawyers at the same law firm. They assured me that no lawyer would ever accept my provision. I could successfully show them that at least one did.

Stock Pledge – A client loaned money to a company which pledged its stock to secure the loan. When the borrower did not pay, I gave the borrower proper notice that we would keep the stock in lieu of making a claim. I transferred the stock to my client, we elected a new board and officers, changed the bank signatories and took all the money from the account.

Embezzlement – A beneficiary of a trust noticed that the distributions she received had declined despite a booming stock market. I agreed to get her an accounting for a fixed fee of $1,000. We discovered that her uncle, the trustee, had been embezzling from the trust for decades. We froze his house (so he could not sell it) and, when he did sell, we got ALL the money he had stolen and I got a much bigger fee.

Blackmail – A museum curator was accused of holding art owned by a German-Jewish family in the 1930’s. He could show that his piece was not the one in an auction catalogue used by the claimant as “proof.” The claimant’s lawyer, a French woman, threatened to go to my client’s employer and get him fired. I pointed out that under US law this was blackmail. The French lawyer went away.

Iran – During the hostage crisis (1979-81), I was working with a Frankfurt law firm (now part of a UK mega-firm). We represented a Hamburg bank with the unfortunate word “Iranisch” in its name. Its assets were frozen in the United States. I was based in DC when the funds were finally released and I could make sure they went to Hamburg, not Teheran.

Fiduciary Duty – Two major Silicon Valley companies bought into a small Baltic-based Delaware corporation with German shareholders and developers. The company specialized in cyber security. My German clients were creative and wanted to be able to develop products in addition to the ones in which the California companies had invested. I pointed out that – by being on the board – the Germans had a fiduciary duty to share their new inventions with the California investors. I proposed a simple solution but the Californians refused to accept it. So the Germans resigned from the board. I think the Americans had intentionally set a trap.

Management Mechanisms – Most of my clients are US subsidiaries of family-owned businesses. But I recently structured a small company owned by a German – who had the money and the product – so that two American shareholders could handle the US marketing. The German was to own 40% but control major decisions while the Americans owned the rest and ran the company day to day. Also, the German was to get his money out before the Americans got dividends or payments or dissolution. Not simple.

WHY USE A ONE-PERSON LAW FIRM? – The good part of working with a large law firm is that it can do everything. The bad part? It can do everything. But maybe not as well as a specialist in another law firm. Big law firms (I was with only one and it was very good) can do a lot. But they put pressure on their partners to keep all the work within the law firm and to spread the work out, also to lawyer for whom the client is not important. And their fees are high. A good part – which I have never seen personally – is that a big law firm offers “deep pockets” if something goes bad and – if the client has a legal department – the in-house lawyer can say that the US firm has a top reputation. My brother (an in-house lawyer at a French conglomerate) told me he expected to pay 20% more for the “name” of the outside law firm.

While working in a firm without environmental expertise, I had to find an environmental specialist. I asked my old colleagues, whom I knew to be good. They were all too expensive. Then I went to an environmental boutique. On the subject of hourly rates, the lawyer quoted a number about 50% higher than mine. I told him it was too high. He asked what I would bill. I told him and he immediately dropped his rate to mine. And he did a fine job.

A famous German contract

LIABILITY and PERSONAL RELATIONSHIPS – As to liability, I have never worried about a client turning on me. My relationships have always been with either the owner of the business or the head of the legal department. I continue to practice in large part due to the personal relationships.

FAMILY NAME – Bartholomew Hauck immigrated from Heidingsfeld, near Wuerzburg, about 1830. He published German-language newspapers in southern Illinois. He married Anna Senn Deppler, a Swiss widow. The name spelling changed to Houck to distinguish the family from a Hauck family with a bad reputation in the area. So now, my German-speaking clients assume I am Dutch. This is not an advantage.

PITTSBURGH – After 36 years of living in a New York City suburb and commuting 5 days a week into Manhattan, we moved to Pittsburgh, where I began my legal career in 1972. In many ways, Pittsburgh is like Germany. Everyone knows everyone. It was the center of American industry for almost two centuries. It is the first non-coastal American city – moving from east to west – with a waterway permitting access to Europe and the world, by way of the Ohio River, the Mississippi River and then the Gulf of Mexico. This plus coal, needed for steel production, made Pittsburgh a dirty, smoke filled city – one famous for having its street lights on at noon. Pittsburgh steel was used in the Empire State Building, the Golden Gate Bridge, the Panama Canal and the Trans Siberian Railroad. The richest people in the USA lived or had homes in Pittsburgh. The art they collected is now in major museums in New York and Washington, DC. Famous names include Mellon, Carnegie, Heinz and Frick. Company names include US Steel, Alcoa, Gulf Oil, Fisher Scientific, H.J. Heinz. Money from these companies and families helped Pittsburgh transition from heavy metal to the digital economy.

Now spelled with an H

The city is now a center of health care and medical research, for the digital economy and for university study. With a reduced population in the city boundaries of only about 350,000, about 80,000 of them are college students. Perhaps 150 German, Austrian and Swiss companies are located in Western Pennsylvania. The director of the Pittsburgh Symphony (Manfred Honeck) is Austrian. The orchestra regularly tours European cities.

BASIC CREDENTIALS – I was born in Scranton, Pennsylvania, about a 10 minute walk from President Biden’s home. The family moved to Dallas, Texas in 1950, where I attended public schools. Tuition to The University of Texas in Austin was essentially free for Texas residents, so I went there and graduated in 1969 from the honors program. I spent summer of my first year at a language school in Bonn and my 3rd year at the University of Munich.

Thanks to a Texas professor, I applied for and won a full scholarship to The University of Chicago Law School. I graduated and passed the Pennsylvania bar exam in 1972. I joined a mid-sized, regional law firm where I learned my basic legal skills, also working mainly for family-owned businesses.

In 1979, I applied for an won a scholarship sponsored by Georgetown University (Washington, DC) and received an LLM (Masters of Law) in 1981. The program took me to Frankfurt, Germany, where I was permitted to work with two excellent law firms.

I was admitted to the New York Bar and recently reactivated my Pennsylvania admission.    

ARTICLES AND REPORTS – When I joined a German-focused law firm in 1981, my partners somehow assumed that I knew how to do business acquisitions. I did not. Little by little I taught myself, using models. American contracts are much longer than German ones, largely because German law is codified. My job was often to distill a US contract to half its original length by cutting out repetition, but without increasing the risk to the client. Later, during slow periods, I would research the “standard” language of US contracts. Sometimes I discovered that they did not work or make sense, so I would revise them and then write an article about the subject.

Germans doing their first US acquisitions would ask the same questions. Finally, I made a catalogue of the questions and answered them all at once, in an article. In the process, I learned how Germans (and Swiss and Austrians) ASSUMED US law worked. They did not ask questions about these assumptions. So I addressed them. Those unasked questions were more dangerous than the asked ones.

An advantage for a lawyer working with a European company in the United States is that the client has already achieved success in its home market. The owner has business and some legal experience.

Besides substantive law articles, I have written reports of travel – no so much where to eat or museum to see – but rather topics discussed with lawyers. I have attended tens of conferences, mainly on international relations but also on scientific developments.

Yes, all these meetings and publications were a form of business development and advertising.

I have spoken on business acquisitions, German vs. US concepts of privacy, fracking and the history and importance of Pittsburgh.

FEES – Prospective clients usually want to know about hourly rates. These rates are important, but they are misleading. I generally bill at $380 an hour, down from $500 when I left the large law firm almost 15 years ago. I do not employ a paralegal, so if I do work that a paralegal could, I take that into account. I recently was sloppy in keeping track of my hours on a transaction. Cap on fees? I think these are very dangerous. Once there is no consequence to the client’s asking more questions or negotiating on and on…. I recently got sloppy about keeping track of my time. I thought I could trust the client and told him to send what he thought was fair. I returned 1/3rd of the payment – a 5 figure amount. In another case, I told the client that I would not charge more than the attorney on the other side. That was a mistake. I have waited now for approximately 5 years for payment of fees in a family dispute.  Looking back, I have fired about 5 clients, including Lufthansa, a major Italian cosmetics company and a German real estate developer because they did not respect the fee aspect of our relationship.

MY HISTORY WITH GERMANY/AUSTRIA/SWITZERLAND – I began to learn German about 1960 because my older sister had learned it. In 1966, I spent the summer at a US-run language school south of Bonn. I spent 1967-68 in Munich at the University. I picked up German again in 1979 and was awarded a very generous 2-year stipend to study at the Goethe University in  Frankfurt and at Georgetown University in Washington. While in Frankfurt, I worked with two excellent law firms. I am in contact with former colleagues still. On my return to the world of law firms, I joined a 20-person firm in New York City formed by German Jewish emigres. I began to travel to Germany regularly. I joined several German-US organizations in New York and Washington. I organized German-language instruction in the law firm. Through an old German friend, I was offered membership in 1999 in the Atlantik Bruecke. Through the same friend (and with the cooperation of MANY other German friends) I was awarded the German Distinguished Service Cross / Verdienstkreuz.

I continue to travel regularly to Germany, interrupted only by the Crona Virus. I regularly attend German language schools and have organized several German language discussion groups in Pittsburgh.

An aside – While in Berlin perhaps 10 years ago, I got an invitation to Hessenfest. There, I ran into Cherno Jobatey, who kindly told me about a recent spat over taxes between Chancellor Merkel and Roland Koch. A few minutes later, a roving TV crew asked me what I thought about the tax matter. Not long after, I was standing at a small table with a friend. Two places were still free. The Chancellor and Minister Koch. We were quickly surrounded by photographers.

CONTACT – I have two emails – rshouck3@gmail.com and rhouck@rhoucklaw.com. I try to use the rhoucklaw.com email for legal matters. My phone is 001 914 434 1710. My address is 5023 Frew Street, 7A, Pittsburgh, Pennsylvania. We are immediately next to Carnegie Mellon University and a 10-minute walk from the University of Pittsburgh.

On separate pages are:

about 30 articles on legal topics, many of them published, some in German;

over 70 summaries of various speeches, panel discussions and conferences; and

a few memos on things heard wile traveling in Europe and advice on where to stay, eat and see art.

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