The introduction of E-2 treaty investor visas is expected to make it easier for Israelis to travel to the US, and provide foreign national and corporate entities with a pathway to investment in the US economy.

However, these visas, which are due to be released in March, may be blocked because of the uncertainty caused by President Trump’s ban on people from certain countries entering the US.

The Lawyer spoke to Israeli firms to ascertain the effect of the E-2 visa programme on the legal market.

Q: How will the introduction of E-2 visas impact your business?

Orly Gerbi and Roi Hayun, partners at Herzog Fox & Neeman: Our immigration practice is focused primarily on obtaining visas for those entering Israel and not those travelling abroad.
Therefore, the impact of the E-2 visas on our practice will not be significant. Boutique firms with dedicated US visa practices, however, may see some increase in work. To provide our clients with a full service, we work closely with one such firm.

While it has in the past been difficult for Israelis to travel to the US on work visas (with the exception of those employed by corporations with US offices), the E-2 visa will introduce new opportunities to do so.

Though we don’t yet know the size of the investment required to qualify for the E-2 visa we can assume, based on the arrangements with other countries, that this will not exceed NIS750,000 (£160,000) – a sum that will likely attract enterprising and innovative Israelis eager to enter the US market.

Orly

To be eligible for the programme applicants must be in the process of making an investment in an American company that requires the investor to enter the US to oversee and direct that investment.

Marie Tsion, partner, Barnea & Co: The E-2 investor visas will allow US companies, entrepreneurs and employees to start business activities in Israel more easily. This visa is likely to increase the number of US companies establishing activities in Israel.

“As our firm deals with multinational clients, when the  E-2 visas are implemented we  will feel the impact quickly” Marie Tsion

These companies will require various legal services. In addition, Israelis will be eligible for E-2 visas in US. I believe we will be handling more relocations of Israelis to the US.

It’s no secret that a lot of Israelis and Israeli companies seek to expand to the US market, and this visa will facilitate that, especially in light of the long period of the visa and the fact that it might include family members.

As our firm deals with multinational clients on a daily basis, when the E-2 visa rules are implemented we will feel the impact quickly.

Shira Lahat and Adrian Daniels, partners, Yigal Arnon & Co: The concept of a borderless global economy is now a reality. Many countries, the US and Israel among them, have recognised the need for easier travel between countries to improve cross-border economic relations, encourage dealflow and incentivise foreign investors.

“Israel has revised procedures for issuing visas for foreigners, aimed at attracting entrepreneurs to ‘the Start-up Nation’” Shira Lahat

The E-2 visas will encourage Israeli investors to focus more on US investments by eliminating some travel restrictions. Israel too has recently introduced revised procedures for issuing visas for foreigners visiting Israel for short-term business trips, aimed at attracting entrepreneurs to visit and work in ‘the Start-up Nation’.

Q: What effect is it likely to have on the legal market in Israel?

Gerbi and Hayun: As mentioned, the only significant effect is likely to be an increase in business for boutique Israeli firms that specialise in US visas.

“The only significant effect is likely to be an increase in business for boutique Israeli firms that specialise in US visas” Orly Gerbi

If the E-2 visa becomes more prevalent and sought-after we can expect more practitioners to gravitate towards this area and develop relevant expertise. This again is contingent on the number of Israelis who apply for E-2 visa status.

Tsion: Whether we will see more US movement to Israel or more Israelis moving to the US, there’s plenty of legal work required – corporate, regulation, employment, tax, contracts and more.

Daniels

Lahat and Daniels: The growing involvement of Israeli investors in the US and other foreign markets will require Israeli firms to broaden their offering, either by collaborating with overseas law firms or by developing new expertise.

Israeli legislators may have to reconsider some the limitations applying to foreign lawyers who wish to practice law in Israel, and the restrictions applying to Israeli lawyers that limit them from engaging in other professions while being practitioners of Israeli law.

It might also require reviewing some practices and amending them for multinational interactions. For example, jurisdiction clauses and applicable laws in agreements will probably have to be reviewed.

Q: What opportunities are presented by the E-2 development?

Gerbi and Hayun: The E-2 visa programme typically attracts individuals interested in investing in small businesses overseas, as opposed to large corporations already conducting business overseas through the traditional ‘B-1’ (in Israel) visa programme. The real impact will therefore be felt by the small business market in the US and Israel.

Investing in small US businesses has been popular. Consider the number of E-2 visas issued over the past few years – according to the US State Department, in 2015 alone over 40,000 were issued. Between 2013 and 2015 nearly 115,000 E-2 visas were issued, more than 8,000 of which were granted to French nationals and nearly 35,000 to Japanese nationals. If the only criterion to receive the E-2 visa is the minimum investment requirement the proposed visa programme will be equally popular among Israelis.

However, the introduction of the visa is unlikely to stimulate similar excitement among Americans looking to enter the Israeli market. Israel is well-known for its highly skilled workforce, but not for its low-cost manufacturing workforce. While international investment is always welcome in Israel, individual Americans are unlikely to find Israel suitable for their investment.

With so many other countries closer to home Americans looking to make moderate investments are less likely to travel a significant distance to take on business risk in an unfamiliar jurisdiction. Therefore, while the E-2 visa will inevitably encourage Israeli entrepreneurs to travel to the US, the new programme is not likely, by itself, to encourage many US businesses to establish operations in Israel.

Tsion: For the new US players in the Israeli market we can offer the full range of legal services, starting with establishment of the local legal entity, tax structuring advice, employment advice and ongoing legal services as required. This is what we already offer to all our foreign clients and is one of our firm’s specialist areas. Hopefully, the new visa will bring more investors to Israel. As for Israeli companies sending employees to US, we can provide them with employment and tax advice relevant to relocation.

Shira Lahat, and Adrian Daniels, partners at Yigal Arnon & Co: Making international investment easier and encouraging co-operation presents innovative opportunities to law firms. New markets will be opened up and the law firms able to identify and seize these opportunities will become the leaders in the field, and establish their professional status.

“Law firms that establish multinational practices will increase their value proposition to clients” Adrian Daniels

Law firms that are successful in establishing multinational practices will also have an opportunity to position themselves as having experience in bridging and connecting between local and foreign investors, thereby increasing their value proposition to clients.

Q: What are the challenges for Israeli firms for this year?

Gerbi and Hayun: The Israeli economy continues to grow despite geopolitical uncertainties and global economic worries.

The Israeli economy is too small to influence the fallout of Brexit or the protectionist policies of President Trump, but Israeli technology continues to attract attention from investors and multinational corporations from the US and, increasingly, from Asia. So one challenge for the legal profession is to keep up with investment trends.

One of the active areas in Israel for lawyers at the moment is the pace of enactment of legislation and regulations affecting M&A activity in general, and the financial sector in particular. Recent legislation means many significant companies in Israel are up for sale. The obvious candidates to buy these assets are prevented by Israel’s new ‘competition and anti-concentration’ legislation.

All in all, we expect a busy year in the economy.

Tsion

Tsion: This promises to be another exciting year in Israel. The tech sector continues to grow and there is continued interest in making Israeli investments.

Lahat and Daniels: Israeli law firms, like law firms around the globe, will have to face growing competition from local and foreign actors, and will be required to adopt innovative solutions if they are to maintain, let alone improve, their productivity and profitability.

In a general sense, uncertainty over Brexit in the UK and how Europe will emerge as a market will either promote or inhibit business. It’s difficult to say what the Middle East will look like after 12 months under Trump in the US, and the other political events going on.

Israeli firms are facing strong competition from each other and from technological developments that provide automated due diligence of documents, automated contacts and agreements, and robots that provide legal answers to legal questions. This will be a challenge for all firms in the years to come.

The legal industry will see disruption as the finance and insurance industries have. All are facing huge disruption due to competition and technological advances.