Trends in Labour, Employment and Benefits 2016

Globalisation is nothing new, but the modern implications of integrating a global economy are nonetheless having an acute impact on the way businesses operate, and subsequently how law firms tailor their services to meet clients’ needs. As businesses expand and technology allows for greater integration across jurisdictions, companies are focusing on implementing harmonised global policies across all personnel. 

Globalisation: Opportunities and Challenges

Providing global advice is a key goal for many law firms in the labour, employment and benefits sector – although these firms often differ in their approach to meeting this goal. 

Countless law firms in the market have already chosen to make significant investments in building a global network to assist clients in jurisdictions in which they operate. 

The graph below, showing the leading firms in our research, demonstrates the regions in which the firms are found to have market-leading individuals. Littler Mendelson, a specialist employment and labour law firm, with more than 1,000 lawyers in over 70 offices worldwide, has the highest number of lawyers listed in this guide and practitioners are recommended from its US and Venezuelan offices; meanwhile Baker & McKenzie, a full-service firm with an employment practice spanning 47 countries and comprising 500 locally qualified lawyers, stands out for having the most diverse practice with practitioners rated highly across its offices in Asia-Pacific, Europe, and the Americas. Freshfields Bruckhaus Deringer, which also sees a high number of its lawyers selected for inclusion in the guide, possesses particular strength in its European offices. 

Those not wishing to have a presence across the globe have struck out on their own and found alternative options. Formal law firm networks, such as Ius Laboris, are a popular choice among national or specialist firms looking to partner with others to provide a global response. Aliances can allow clients to receive an integrated service without the need to choose a global law firm. To their advantage, these alliances can pull together the leading specialists worldwide.

Informal alliances and collaborations are also forming across the market, particularly where a larger firm might work employ the services of a boutique to provide a client with labour and employment advice to complement the main transaction. This has been prevalent in London where US firms who have not yet invested in full-service capabilities in their London offices have collaborated with boutiques or national firms to provide the employment and labour advice to their transactions.  

While methods may vary, our interviews with leading practitioners worldwide highlighted that providing clients with coordinated global advice is becoming the norm, and as such, alliances and networks are becoming increasingly important to a lawyer’s armoury. 

From legal expert to business adviser

There has been a notable rise in dedicated employment in-house lawyers among medium-sized to large companies. While this has long been the trend for US companies, it is becoming more common in Europe. As companies tend to their day-to-day issues in-house, lawyers are feeling a slight pinch as the market for general labour and employment advice is squeezed. In response, private practitioners have become broader business advisers as well as looking at employment and labour as part of a general compliance area.

According to the market, the traditional streams of employment work are stagnant. As such, law firms are looking to expand their offering. Many of the lawyers we spoke to described their training and compliance programmes. These services not only provide access to new clients, but they also strengthen existing relationships, and can often lead to instructions further down the line. Furthermore, there has been a noticeable increase in the number of firms offering immigration services alongside their labour and employment practice in the hopes that it will introduce new clients to the practice.

In a bid to move away from the areas of work handled by in-house teams, some firms have begun to specialise in more niche areas; equal pay, employee data protection, and works councils are just some examples.

Reputational issues are also becoming a growing concern for clients, particularly as the media has recently chosen to shine a light on areas such as zero-hour contracts and the division of tips. This has led to clients often putting brand protection above principles, and settling to avoid high profile litigation. Lawyers described how clients are extremely careful to protect their companies from this sort of reputational damage.

Mid-market focus

The middle market has been a renewed focus for law firms over the last few years. Not only are many of these clients not quite big enough to have their own in-house employment lawyers, it is also made up of brokerage houses, private equity firms and insurers, many of which “were not hammered in the recession like the banks”. Indeed, these clients are very active and experiencing a high level of team and senior personnel movement. The financial market is protective of ideas and relationships and when people leave, the stakes are usually high; resulting in fertile ground for disputes. As a result, lawyers spoke of many restrictive covenant-related cases on their desks.

Furthermore, in the UK the Senior Managers’ Regime came into effect on 7 March 2016 which implements a new focus on personal responsibility and individual accountability on senior managers in the financial services industry. Firms are required to introduce self-certification for all individuals in senior management functions and other roles that are deemed to perform a significant harm function within the bank. Employment lawyers have been working closely with financial services regulatory experts to advise clients on implementation programmes.  

Whistleblower cases

Whistleblower claims continue to be an area of activity for lawyers. In the US, the SEC Office of the Whistleblower reported an increasing number of tips received under the programme: 3,923 tips in the fiscal year 2015, an 8 per cent increase from 2014, and a 30 per cent increase from 2012, the programme’s first full year. Highlights of the last year include an award to a whistleblower in the SEC’s first anti-retaliation case and the award of more than $1 million to a compliance professional who provided information leading to a successful enforcement action.

However, in the UK, the number of cases has dropped according to the FCA who noted a 19 per cent drop in 2015. Despite this, there have been some headline NHS whistleblower cases including that of consultant Dr Raj Mattu who won a landmark legal victory for unfair dismissal in April 2014, following the longest-running and most expensive whistleblowing case in NHS history. Moreover, city lawyers describe these cases as having mushroomed in recent years, with a typical case involving a challenge for unfair dismissal with a whistleblowing claim made in conjunction to uncap compensation.

The main story in the UK with respect to employment litigation has been the sharp decrease in tribunal cases since the introduction of fees to bring a claim. The result has seen a shift towards high court litigation. 

Executive compensation and benefits

The call for greater transparency regarding executive compensation has rumbled on since the financial crisis and in 2015, the SEC finalised part of the regulations laid out by the Dodd-Frank Act to enact a rule intended to increase the transparency of executive compensation. The rule will require around 3,800 publicly traded companies to say how much they pay their CEO, how much they pay their median worker, and the ratio between those two numbers.

There are further developments in the UK including mandatory gender pay gap reporting for big firms which will start in 2018. Employment law experts were quick to point out that companies will need to quantify their gender pay gaps as soon as possible, so that they are in a position to think out strategy for communicating and contextualising their gap, as well as to explain how they are going to close it.

***

Labour, employment and benefits work is often regarded a recession-proof practice that despite market turmoil continues to chug along. While most would still agree with this sentiment, among those we spoke to there was a sense of urgency for innovation in their practices as they acknowledged traditional work streams are stagnant. Yet, with ideas flowing and many already put into practice, it is certainly clear that this is a practice area in which the lawyers are not going to rest on their laurels. 

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