Corporate Immigration 2016: Roundtable
Who’s Who Legal brings together three leading experts in the corporate immigration industry to discuss issues facing lawyers today.
Investor and entrepreneur visas
With many jurisdictions competing to attract entrepreneurs, what opportunities are available in your jurisdiction for investors? What are the main advantages and disadvantages of the programmes?
Karl Waheed: French immigration law provides for an investor scheme, called Exceptional Economic Contribution, for an individual who invests €10 million in hard assets or creates 50 employees. The cash investment of €10 million must be in productive assets (such as infrastructure, equipment of intellectual property) and not in passive assets (such as bonds, or other financial products). The funds must be “fresh”: that is to say, they must not come from a “disinvestment” of an existing operation in France. They may be leveraged, as long as at least 30 per cent are personally brought by the individual investor, and the investor retains control of the investment vehicle.
An alternative to meeting the cash threshold would be the creation of 50 jobs, or the saving of 50 jobs which would have been lost in absence of the investment. The prefect with jurisdiction over the place of investment may lower the thresholds (amount of money or the number of jobs) to take into account the local economic needs.
The qualifying investor and his or her spouse are adjudicated a 10-year, renewable residency card, which is tantamount to permanent residency in France. This programme has been in existence since 2008, and statistics show that it is not in demand. The thresholds are too high, and so are French income taxes for residents.
An alternative scheme, called Skills and Talent, is for individuals who have skills, talents or business abilities which would be beneficial to the French economy. The application of this scheme is quite complicated for business investors. The business investor has to produce a business plan, which is scrutinised by the tax authorities for viability. The application of this scheme involves following the guidelines, to be issued by a steering committee when it has stopped deliberating. The application of this scheme is cumbersome, with an uncertain outcome for small to medium-sized businesses.
The current government is aware that the existing immigration schemes are not adequate to attract investment and skills to France. So it promulgated a new immigration act on 7 March 2016, which is intended to lower the investment thresholds drastically. The thresholds are to be stipulated in the implementation regulations, which are expected to be published in a month or two. We anticipate that the government is likely to lower the minimum investment to the vicinity of €500,000 and require the creation of at least five jobs.
Liam Schwartz: Israel’s primary natural resource is its educated, talented workforce. This workforce is itself supported by strong technological, financial and academic environments. As a result, it has for many years served as an international centre where entrepreneurs and international businesses have found a welcoming infrastructure.
Despite its past success in attracting entrepreneurs, Israel faces significant challenges in attracting a new generation of entrepreneurs from other jurisdictions competing for these same entrepreneurs. Israel’s ability to meet these challenges has been impeded by a somewhat awkward visa regime, which offered no long-term solution for individual entrepreneurs seeking to come to Israel to develop new ideas and products.
In a move to remove this impediment, in late 2015 the Israeli government launched a new programme, called Innovation Visas for Foreign Entrepreneurs. This offers foreign entrepreneurs the opportunity to come to Israel for up to 27 months in order to develop new technological enterprises, and to then remain for more than five additional years for the purposes of working in the startup they have established here.
Under the innovation visas programme, foreign entrepreneurs first apply to the startup committee of the Ministry of Economy and Industry for recognition as a foreign technological entrepreneur. This recognition will be granted if, for example, there is a likelihood for substantive cooperation with local entrepreneurs and technology workers.
On the basis of this formal recognition, foreign entrepreneurs are welcome to apply for the new innovation visa. Entrepreneurs who are citizens of countries participating in Israeli’s visa-waiver programme may even enter Israel without visas, and then apply for change to innovation visa status.
A downside of this new visa programme is that the innovation visa is essentially a form of long-term tourist status. During the 27-month period, the foreign entrepreneur may not be employed in Israel, and may not receive compensation of any kind from an Israeli source.
On the other hand, because the programme is intended to encourage foreign entrepreneurs to develop ideas and establish startup companies, the entrepreneur may seek to change to formal work status at any time during the 27-month period. Entrepreneurs may continue to live and work in Israel in this work status for a maximum of 63 months.
It remains to be seen whether this new programme will result in entrepreneurs opening their startups in Israel rather than in Silicon Valley, but the new innovation visa programme shows that Israel is clearly trying to meet the challenge of attracting the world’s new generation of entrepreneurs to this country.
Stephen Yale-Loehr: The United States has several visa options for investors and entrepreneurs. None of them is ideal, however, so a careful analysis of each person’s facts and circumstances is necessary to determine which is best.
On the non-immigrant (temporary) visa side, there are E-2; H-1B; L-1; and O-1 visas, among others.
An E-2 visa is for people who make a “substantial” investment in a US company. The investor must develop or direct the company; he or she cannot be a passive investor. E-2 visas are available only to people from countries that have an investment treaty with the United States. Some major countries, including Brazil, Russia, India and China, do not have such treaties. E-2 visas are initially valid for two years, and can be renewed.
An H-1B visa requires an employer-employee relationship, which makes it difficult to use for investors who want to run their own companies. Moreover, there is a limit on the number of new H-1B visas that can be issued each year. In 2015 nearly four times as many companies applied for new H-1B visas as could be issued, effectively making this category a lottery system. An H-1B visa is initially valid for up to three years, and can be extended.
An L-1 visa is available to someone who is an executive or manager or who has specialised knowledge and is being transferred from a foreign company to a US branch, affiliate, or subsidiary. The person must have been working for a qualifying organisation abroad for one continuous year within the three years immediately preceding his or her admission to the United States. Thus, it too requires an employer-employee relationship, which is not ideal for many investors. An L-1 visa is initially valid for one year if establishing a new office in the United States. Other L-1 visa holders may stay initially for up to three years, and can receive extensions.
An O-1 visa is for people who have extraordinary ability. It can be hard to meet the regulatory requirements for this category, especially for people in business.
Several immigrant (permanent) green card categories might also benefit investors. The EB-1-A category is for people who have extraordinary ability. EB-1-B green cards are for “outstanding” professors and researchers. If the investor happens to be a multinational executive or manager, he or she may qualify for an EB-1-C green card. If the investor’s work is in the “national interest”, he or she may qualify for a national interest waiver green card in the EB-2 category. If the person invests $500,000 or $1 million in a US company that creates 10 jobs for US workers, he or she may qualify for an EB-5 green card. Finally, an investor may qualify for a family-based green card if he or she is married to a US citizen or has other close US relatives. Each of these categories, however, has its own requirements, quirks and backlogs.
If an investor’s spouse wants to work, the visa analysis may become more complicated. For example, spouses of H-1B visa holders cannot usually work. Spouses of L-1 and E-2 visa holders can work, however. These factors must be considered in determining which visa category works for the whole family.
Legislation has been introduced in the US Congress to establish a green card category specifically for investors. It is unlikely those bills will pass, however, until Congress enacts comprehensive immigration reform.
Given the still-difficult economic climate, it is unsurprising that lawyers worldwide reported that applications are being scrutinised more closely by authorities. With the action required and advice sought per case on the rise, what impact has this had on the staffing of matters or fee arrangements at your firm?
Karl Waheed: Due to the economic crises, the authorities tend to be more protective of the national labour market. The work-permit-adjudicating authorities interpret the regulations strictly and scrutinise the applications more closely. For example, when an assignee is being sought to be transferred to France, to provide a service, the authorities scrutinise the service agreement to ascertain that the ultimate purpose of such agreement is the provision of a fixed scope service, and not a disguised provision of labour. The authorities will issue a negative decision if the transaction is complicated with sub-contracts. We identify these issues in our initial assessment of the case, and make sure that the client understands the risks and has explored alternatives. Our fees are usually based on flat rates, and in some cases we end up with low or negative margins.
Liam Schwartz: I certainly agree with those lawyers who report that applications are being scrutinised more closely by authorities in this difficult economic climate. In my law practice, this trend is most pronounced in work visa petitions on behalf of specialised-knowledge employees.
On the bright side, the trend prompts us to maximise efficiencies in the work process and, in a sense, to be better lawyers. In meeting the challenges posed by stricter scrutiny, our staff spends a great deal of time reading and discussing the fine points of the various visa regulations, and meeting to speak about new immigration policy memoranda and judicial precedents. The result is highly focused applications intended to meet even the strictest of scrutiny.
One notable disadvantage to stricter scrutiny actually relates to environmental concerns. The amount of supporting documentation submitted in an effort to convince skeptical adjudicators that a petition meets its evidentiary burden has grown exponentially. Since petitions submitted to US and Israeli immigration authorities are still paper-based, and often need to be filed in multiple copies, one feels that in meeting paperwork requirements numerous trees need to be felled for every visa request.
As suggested by this practice management question, fee arrangements are indeed impacted. One primary consequence of increased scrutiny is a growing trend by the immigration authorities to issue requests for additional evidence following the initial processing of an application. Many immigration law firms debate whether the extra work hours involved in responding to these requests should be included in the base legal fees, or invoiced as a separated service. Because the extra work hours can be substantial, our firm does invoice for them.
Stephen Yale-Loehr: I agree with Liam that it gets harder to practise immigration law every year. The US immigration authorities seem to impose new requirements and issue more requests for evidence every day. Many of these requirements seem to be novel interpretations of regulations that have existed for many years.
Immigration processing times have also increased in the United States. The longer waits increase clients’ anxieties and their calls or emails to us. We spend more time managing clients’ expectations than before. The longer adjudication times also increase the likelihood that a particular application may be lost or delayed. We have seen an increase in mandamus litigation filed against the US immigration agencies simply to force them to decide a long-pending case.
Another complicating factor is the lack of consistency among the various US immigration authorities, especially for clients who need discretionary waivers. What satisfies one agency may not satisfy another agency, or even a different official at the same agency if a traveller happens to arrive in the United States at a different airport than before.
All these factors require us to have more staff than before. Fortunately we have developed an excellent internal case-management system to track our cases carefully.
These factors also impact our fees. Most US immigration attorneys charge a flat fee for a particular petition or case. It is harder than ever to determine a reasonable legal fee, given all the uncertainties listed above. Like Liam, we charge an extra fee for responding to difficult requests for evidence.
How has your firm adopted technology to assist in cutting costs and increasing efficiency?
Karl Waheed: We made an investment in technology some years ago and without it we would not be in the leadership position in which we are today.
Liam Schwartz: Our firm’s marketing budget is a principal beneficiary of the opportunities afforded by technology. Marketing our corporate immigration services has become more efficient and less expensive thanks to advances in social media technologies. The social media sites which we’ve found most beneficial are LinkedIn, Twitter and Facebook. Parenthetically, these sites also facilitate enhanced communication with current and potential clients.
In the actual day-to-day running of our business, technological efficiencies are to a good extent linked to technological advances in government processing of applications. Regrettably, the US government has been slow to introduce the digital revolution into its immigration procedures (the State Department has led the way with an electronic visa application form, but Homeland Security failed in its attempt to digitalise its immigration forms). Ironically, the government of Israel – the “startup nation” – has also not introduced meaningful digital immigration procedures; the one exception is the new (and highly successful) digital pilot programme for short-term work visas.
Stephen Yale-Loehr: Technology aids us in a variety of ways. An internal case-management system allows us to track our cases carefully and to spot trends such as new types of requests for more evidence. We also use our case-management system to generate reports to help us determine how to improve our internal efficiencies, and to make sure cases are filed in a timely manner. Our case-management system interacts with Outlook to automatically email clients when their case has been filed or approved.
We use box.com to upload and download documents and to email copies of filings to our clients. That reduces the amount of paper we need in the office. Unfortunately, we still can only submit filings by paper to the US Citizenship and Immigration Services.
We email newsletters weekly to our clients to keep them informed. We use Spark as an internal communications tool to instant-message each other. We use WebEx to conduct webinars with clients and potential clients. We have a sophisticated phone system that allows us to track calls and return calls from our computers.
All these technology tools allow us to be more efficient and to work from anywhere.
Have you noticed any significant changes in the level of competition between lawyers and non-lawyers for immigration work? Do you anticipate any further changes in the near future?
Karl Waheed: In France legal advice can only be provided by lawyers. A non-lawyer providing legal advice in the area of French immigration law exposes himself or herself to criminal prosecution. Yet there is an increasing presence of non-lawyers who seem to be providing advice in the area of immigration laws. Our bar association is sensitive to this “encroachment” of non-lawyers, and will seek prosecution if the non-lawyers do not put an end to their illegal practice upon notice.
Liam Schwartz: Yes, particularly on the US immigration law side of our practice.
The main focus of concern is foreign lawyers who, although not licensed to practise by any American bar, hold themselves out as experts in United States immigration law.
Foreign attorneys who are not licensed to practise law by any US jurisdiction are non-lawyers in the US legal system. As such, it is inappropriate for these individuals to provide advice or prepare documents in connection with US immigration law matters.
Regrettably, this is exactly what an increasing number of foreign lawyers do. We see this in Israel, but it is a trend in other jurisdictions as well.
The “services” provided by foreign lawyers range from completing applications for tourist visa applicants, to coaching applicants for fiancé visas on how to answer questions from the US Consul and accompanying investor visa applicants at embassy visa interviews.
In jurisdictions such as Israel, this troubling trend is primarily the result of attorneys seeking to obtain work in an overcrowded legal marketplace. As such, the trend will continue to grow in the near future, especially in the current difficult economic climate. But whatever the root cause, the true danger posed by foreign attorneys engaging in US immigration law is not in the competition it creates for US-licensed attorneys; it is in the harm posed to unassuming local consumers who receive US immigration law “services” from individuals who are neither trained nor authorised to provide them.