Research Trends & Conclusions: Management Labour & Employment 2012
With the benefit of 15 years of research and tens of thousands of votes from clients and private practitioners, Who’s Who Legal takes a closer look at developing trends in the management-side labour and employment legal marketplace worldwide.
Employment law is defined by the relationship between an employer and employee – the very nature of this relationship creating a potential hotbed for disputes. The past year has been particularly litigious with practitioners around the globe reporting high levels of dispute work, and this trend shows no sign of slowing down – particularly in the US, which is experiencing a wage-and-hour class action phenomenon.
One of the largest investments that any company makes is in its employees, and as such employers have to adapt to changes in societal norms and focus on regulation in the workplace, ranging from new anti-discrimination laws to the latest frenzy in social media. As one lawyer put it, “Employment law maps social evolution.” This year’s research highlights the immediate effect that activity such as social media can have on many areas of employment and labour law, impacting upon regulations relating to concerted activity, trade secrets and claims of harassment or discrimination in the workplace. Furthermore, it has blurred the boundaries between work and personal life and has the potential to extend employment legislation’s jurisdiction. One conclusion that was apparent throughout our research was that lawyers in this field are consistently finding themselves working on the cutting edge of the law.
CHANGING LEGAL LANDSCAPE
The management labour and employment legal market has become an increasingly challenging place to work and compete in over the last 10 years.
As one of the last practice areas to become truly international in scope, lawyers are exposed to a growing pressure to familiarise themselves with not only the employment laws of their own jurisdiction but of an increasing number of foreign jurisdictions. This demand is led by multinational companies requiring employment advice on their international projects which can cover as many as 120 jurisdictions according to those we interviewed. There is a need for lawyers to operate as project managers, to coordinate with lawyers in other jurisdictions and to have a strong global network in place. A growing trend among these companies is to implement global standards and policies – which can be difficult when an acceptable practice in one country might violate a law in another. In addition, global brand awareness of companies, along with the ethics and corporate social responsibility which feed into this, are becoming an important part of a company’s operations.
Furthermore, with fee pressure increasing across the board on legal services, this sector is no exception. When coupled with clients ramping up their own in-house capabilities, practitioners find themselves having to provide a service over and above their previous offerings. The leading experts in this edition are working on increasingly complex disputes, supplying industry knowledge alongside their legal expertise and providing clients with competitive pricing and alternative fee arrangements.
In this context, both full service firms and boutique and specialist firms have a lot to offer. The full-service firms can bring in lawyers from other departments to solve any problem that arises, while those specialising in labour and employment work can offer great expertise across a range of areas within the field – including experience of some of the most complex cases.
Debate surrounds which model offers the better service and in recent years lateral movements in the direction of the boutique and specialist firms have been the norm, with one lawyer commenting that “boutiques are very hard to compete with”. Presenting the other side of the argument, one lawyer observed that “national general firms are getting more and more big clients due to the perceived convenience of getting one firm to do all their work”. The general consensus is that boutique firms are doing a lot of the mid-market work as they can compete more aggressively on price than full-service firms, and at the speed at which boutiques are opening new offices it would appear that they are doing something right. But, as one lawyer put it: “How long can they sustain this rate of growth?” Fee pressure from all clients is forcing a move towards fixed-fee arrangements and where this is not possible for litigation, discounts are commonly applied. As competition picks up in the sector in new developing regions, fee pressure will be even more intensified.
A look at the leading firms in this practice area shows that there has been little movement among the leading players over the past four years. Littler Mendelson continues to lead in the field, with more recognised lawyers than any other firm, while Seyfarth Shaw comes in joint second alongside Proskauer Rose.
Over the past four editions we have been plotting a trend in the rise of the number of leading specialists at boutique and specialist firms in the field who are recognised in our research. We have determined this trend by identifying, for each edition, the 60 most highly nominated individuals and calculating the proportion that belong to either boutique or full-service firms. To distinguish between the firms we have used the following definitions: boutique firms are those focusing only on labour and employment law, while specialist firms are those whose main area of focus is labour and employment (but who also possess expertise in additional fields). Full-service firms are those which possess expertise in a full range of commercial practice areas.
As discussed above, the boutique and specialist firms have been increasing their market share; opening more offices, taking on new partners and fighting competitively on fees for work. Our research supports this trend, showing a steady increase in the number of most highly nominated lawyers who are at boutique or specialist firms. For the first time in this edition the proportion of those at boutique or specialist labour and employment firms is greater than full-service firms – 55 per cent of the top 60. This shift is caused by an increasing number of individuals at boutique or specialist firms being recognised for their outstanding work, rather than those in the top 60 having moved away from full-service firms to boutiques.
The common key areas of activity experienced by lawyers worldwide in the past year is a further sign of the globalisation of employment and labour law.
Litigation remained top of the agenda, described as “very active and unabating”. With the stakes involved being higher in the economic downturn, lawyers reported that clients are less inclined to settle and more cases are going the full way to trial. Discrimination cases are high on the agenda in both Europe and North America – under the Obama administration, the Equal Employment Opportunity Commission has conducted many more investigations and made a big push on systemic cases, while in Europe the key cases have concerned gender and disability.
Class actions in the US have remained as prolific as ever with one interviewee remarking that the “courts are virtually flooded with wage-and-hour collective actions”. There appears to be no sign of this trend coming to an end anytime soon. The impact of last year’s US Supreme Court case Dukes v Wal-Mart has filtered through the legal system, and although lawyers reported that it has not dissuaded plaintiffs from filing class actions, they have had to rethink their strategies. Subsequent filings have been for smaller classes with more sophisticated arguments. According to one source the “plaintiffs bar is adapting and reviving itself, filing smaller class actions on more narrowed subjects”. It appears that in the wake of Dukes, courts are becoming more assertive. In some instances the courts have used Dukes to ascertain that a class should not have been certified, and taken away plaintiffs’ former victories.
As the economy improves and more hirings take place, trade secrets and non-compete work has been on the rise. With the economy still in a fragile state, companies are very protective of their client base and are “much more vigilant”, while “trade secrets cases have exploded”. With employees moving across the globe in pursuit of opportunities, and technology facilitating the movement of information, this is becoming a global problem. Social media feeds into this concern as sites such as LinkedIn are raising concerns over who owns client information and how to stop employees taking this information with them when they leave. Remedies have included injunctions and restraining orders, and this area of law is growing quickly across Europe and the US.
Whistleblowing retaliation claims have shown an uptick in activity. The Dodd-Frank Act in the US, which offers whistleblowers a bounty, has created difficulties for employers who are finding that their internal policies are being circumvented. The frequency of these cases is largely due to a change in individuals’ psyches, which some would attribute to the financial crisis. Employees are more willing to police their own environments and as a result, management lawyers are having to advise employers more frequently on their policies.
Regulation in the sector has increased around the world with agencies becoming more aggressive. In the US, under the Obama administration regulatory agencies are notably more active, with the National Labor Relations Board reportedly the most active of all. In the UK, the FSA Remuneration Code has led to advisory work on executive pay and compensation. Further afield, laws are becoming more complex: in South America and Asia, for example, the area is growing very fast, and Venezuela is due to have a new labour bill in May 2012. In response to this increasingly regulated area, law firms are bolstering their labour and employment practices and competition is said to be opening up.
Social media in the workplace was one of the most talked-about issues in our interviews, affecting clients globally and testing existing legal frameworks. Guidance has been issued in the US by the NLRB and cases in the UK shed some light on behaviour that is and is not acceptable; however, this is a concern which infringes on all areas of employment and labour law, for example, privacy rights of employees, confidentiality, non-compete clauses and trade secrets, harassment and discrimination and concerted activity. Lawyers reported that they are providing guidance and training, helping employers to create policies and informing clients on any updates.
Pensions in North America and Europe remain a major concern for many companies due to the huge deficits they represent. With increasing life expectancy companies are taking active steps to either increase their pension age or increase their contributions to pension schemes. Clients are showing a trend for moving from fund arrangements to contribution agreements.
In the transaction-related field, work is still at a relatively low level. Although lawyers reported that they are working on reorganisations and some mass redundancies, M&A activity is still sluggish with more limited activity reported in distressed assets and strategic moves. Lawyers noted that coming out of a recession can often prompt companies to deal with the effects, and thus lay-offs are not yet a thing of the past – although they are becoming more tactical as companies look to refocus their business lines. Hirings are once again occurring, but the rate differs from industry to industry. The technology sector is showing the most activity, as it is suffering from insufficient talent.
The labour and employment field has shown its resilience to the market downturn and has continued to be a very active area for lawyers. Those we interviewed reported that they are busier than ever – even with the current low level of transactional work, an area that should pick up in line with the economy’s recovery.
It is a testing field for lawyers to work in, having to advise clients through the latest developments in technology and society and adapt to the challenges that globalisation brings but it is these characteristics of the sector that make it such an interesting area to work in.
With further legal and regulatory developments expected around the globe in the coming year, and with contentious work predicted to continue at the same pace, the lawyers in these pages can expect another very busy year.