Coudert Brothers' European Employment Practice Group: Serving Germany, Europe And The World

Monday, November 1, 2004 - 01:00

Editor: Please tell us something about your professional background.

Magotsch: I started to practice law over 20 years ago. I finished my law studies in Germany in 1983 after the completion of two state examinations which are necessary to qualify for practice here. Following this, I spent half a year in an audit program at the University of Virginia and went on to enroll in an LL.M. program in American law at the Georgetown Law Center. While I planned to return to Germany to practice, immediately upon completion of the LL.M. program I was invited to become a foreign associate with Wilmer Cutler & Pickering. I was first at Wilmer's Washington, DC office and then at their London office. Then, after having practiced law in Munich for a highly reputed law firm, I had an opportunity to help establish the Frankfurt office of Shearman & Sterling. In 1993 I moved into Schürmann & Partner, a Frankfurt-based firm that merged with Coudert Brothers in 2000. I have been in this office for 11 years, 10 years as a partner.

Editor: Please tell us about the European Employment Practice Group that you head for the firm in Frankfurt.

Magotsch: The history of this practice goes back to the Schürmann & Partner firm that was based in Frankfurt. The firm already had offices in Milan, Prague, Paris, and Stockholm, so at the time I became a partner the idea was to create a European employment practice rather than an exclusively German employment practice. It was a natural consequence of our merger with Coudert that I be called upon to run the European employment practice group within the Coudert system.

Editor: How large is the group?

Magotsch: In Europe we have between 40 and 50 lawyers who practice employment law exclusively. Coudert's employment practice group covers jurisdictions in Germany, France, the UK, Belgium, Italy, Russia and Sweden, and we have associated offices in the Czech Republic and Hungary.

Monique Beguiachvilli heads our French labor team out of Coudert's Paris office, the Belgium team is led by Francis Goffin from Brussels and the London head of employment, John Evans, is a member of the Management Committee of the Employment Lawyers' Association and also chairs the Association's International Committee.

Editor: What are the legal disciplines that the group includes?

Magotsch: The basic areas where we operate involve issues affecting employment and industrial labor law. We concentrate on institutional restructuring and the reorganization and setting up of businesses. We advise corporate entities in their efforts to make their structures leaner and more efficient, including advice concerning partial shutdowns, redundancy plans, outsourcing issues, social plan negotiations with unions and all of the issues that arise in an industrial labor practice. On rare occasions we may represent an individual CEO from a German, U.S. or British company, but most of our work is on behalf of corporations.

Our office differs from a U.S firm in the way it deals with pensions and personnel benefits. If the issues relate to taxation, they will be addressed by our tax group. If a clear employment issue is present, such as codetermination, it will be handled by our group. If we are going to advise on stock option plans, however, or a variety of employee participation arrangements, our group will team up with the tax department. In Europe, it is unusual for labor counsel to undertake this type of work without the participation of other practice groups or disciplines.

We rarely handle immigration work. The real expertise in this area resides in our New York office. In Europe today, with the expansion of the European Union, this is not an area of practice that is important to us.

Editor: What types of clients?

Magotsch: Major corporations constitute the client base. The Schürmann office, prior to the merger with Coudert, emphasized the representation of U.S. corporations. We continue to do this. Our clients now include AT&T, the Dover Group, Leggett & Platt, Lear, Honeywell, ICL, SC Johnson and Sun Chemical. Our Paris office tends to have links with clients which operate on a cross-border and global platform, including SC Johnson, Total, Matsushita and Toyota. Coudert represents, generally, Fortune 500 corporations and other large corporations.

Editor: When you speak of the practice group as European, does this mean that you are conducting the employment law function for, say, the Brussels and Paris offices of the firm, as well Frankfurt's?

Magotsch: No. Each jurisdiction has a local employment department, run by its head. It is my responsibility to oversee the work that is done in the different offices and to ensure that the quality of that work is maintained. I also have a coordination function, and clients will approach me - or Monique, Francis or John, depending on where the client is headquartered - with an issue rather than, say, lawyers in 15 different European jurisdictions.

Editor: Coudert Brothers is a global law firm. How does your practice group fit into the global scheme of things? How does it connect to the U.S. group?

Magotsch: Darrell Gay, whom your publication recently interviewed, was hired by Coudert to head its U.S. employment and labor practice group largely as a result of my efforts to provide support for the work of the firm's New York office and to receive support from that office. The increasing pace of globalization requires us to work together in a coordinated, synchronized manner and to enhance each other's efforts. After Darrell was retained, all of the firm's employment and labor lawyers - from Los Angeles, Washington, DC, New York and most of the European offices, including Paris, Brussels and Frankfurt - met to discuss an integrated strategy, and this process of consultation and coordination is an ongoing one.

Editor: We understand that a slow economy in Europe, and particularly in Germany, is forcing companies to downsize. How is this affecting your practice?

Magotsch: For the last 18 months our practice has been extremely busy as a consequence of the state of the economy. Cost reduction is seen as essential, and employment is one of the major cost factors. Accordingly, our practice has a great deal of work. Pan European pitches become more and more routine with larger U.S. corporations, as they attempt to strengthen the links with one global law firm capable of providing employment advice in the majority of European jurisdictions.

Editor: Can you comment on the ways in which German law - and that of other European jurisdictions - differs from that of the U.S. on the termination of employees?

Magotsch: This issue comes up frequently in our practice. In Germany there is no "termination at will," and the moment a company reaches a certain size, it is subject to statutes governing protection of labor and wrongful dismissal. Under this statutory regime, terminating an employee who has been with the company for more than six months requires a socially justified reason. The fact that the company just honors the notice period stipulated in the employment contract is irrelevant. It must have some reason to terminate related to the person's behavior or performance or some operational reason, and the burden of proof fully rests on the employer. As a matter of course, immediately following termination the employee files a wrongful dismissal claim in the labor courts. For this reason, every termination must be thought out and prepared well in advance. In addition, most German companies have works councils, which represent the employees. Under German law the employer is required to inform and consult with the works council in advance of the termination. That, of course, entails more preparation and time. The flexibility and latitude that American law firms have in representing employers in the U.S. is simply not available in Germany and, I would say, in most European jurisdictions.

Editor: Please tell us about the EU rules on employment consultation. How has this affected your work?

Magotsch: Since 1972 mandatory consultation on employment issues with the works councils by employers has been embedded in German law. As a consequence, employers here have considerable experience in dealing with this requirement. In addition, there is now a considerable body of case law on the rights of works councils with respect to consultation. In Germany, at least, we are familiar with these consultation rules and have great experience of how to comply with them in an effective manner. In a major exercise of its authority, the European Union has extended the rules to the rest of Europe, with particular effect on the UK, effective in March of 2005. We anticipate that a great many employers in European jurisdictions which did not have similar rules already in place are not going to be ready to deal with them. Our group expects to be very busy addressing the issues that arise from the extension of mandatory consultation to the rest of Europe.

Editor: In the U.S. we have found ADR a useful way in which to address workplace disputes, particularly at an early stage. Do you have recourse to ADR in your practice?

Magotsch: In Germany a mediation hearing in front of a labor court is the mandatory first step of any labor dispute. The only goal of the hearing is to mediate and settle the case, whether it involves one individual or hundreds. In addition, if a company is addressing outsourcing and restructuring issues, and the works council opposes management, there is a possibility that it may be able to force the company into a mediation process wherein both parties agree upon a judge and then attempt to resolve the matter in mediation. As a general matter, ADR is not as material to my practice in Germany as it would be in the U.S. in light of mediation, and even arbitration, being already built into the labor dispute process here.

Editor: What are the principal issues in your area of practice that an employer coming from outside Europe must address?

Magotsch: First, he must accept the idea that, while we have a European Union, we do not have one unified European employment law, one that extends to the entire EU. Each member state continues to have its own employment laws and rules and regulations, and they differ from one jurisdiction to the next.

In Germany, Italy, France and Belgium workers' representation and codetermination are in place at every level, and employers must be aware of how this process works. This is particularly important inasmuch as the unions support the works councils and provide their members with the education and training to deal effectively with their employers. In addition, data protection rules in Europe vary from those in place elsewhere, particularly in the U.S. A global enterprise that seeks to harmonize its data protection rules across the enterprise is going to be astonished at the diversity of the requirements it must meet in Europe.

Editor: Is there anything you would like to add?

Magotsch: At the moment Darrell and I are looking at together expanding the practice into Asia and particularly China. Today employment laws do not seem to be a burning issue there. That is going to change as China takes its place in the global economy. In light of the very significant presence of Coudert Brothers in China - with offices in Beijing, Shanghai and Hong Kong - our office looks to set up a German-Chinese desk and work closely with our colleagues Owen Nee and Jingzhou Tao. We have lawyers in our office with dual qualification in German and Chinese law already. We believe that we need to establish some sort of expert labor and employment expertise on our Chinese side.