Research Trends & Conclusions: Management Labour & Employment 2011
With the benefit of 14 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.
After a relative lull in activity, labour and employment lawyers are seeing increasing levels of work as corporate entities invest in new lines of business for the economic environment that lies ahead. Litigators have picked up a significant volume of work left over from the financial crisis. However, underneath these shifting levels of work lies a more fundamental change in the legal market.
A Changing Legal Landscape
This year we have collated the evidence gathered from thousands of votes and interviews with lawyers and corporate counsel specialists since 2009. In doing so, we have identified 60 of the most highly nominated individuals in each edition. We then calculated the proportion of lawyers belonging to boutique or full-service law firms. Here we define boutique firms as those focusing only on labour and employment law and regardless of size while specialist firms refer to those whose main area of focus is labour and employment but which also posses expertise in additional fields. Full-service firms are those that possess expertise in a full-range of commercial practice areas.
A clear development in the management labour and employment legal market worldwide for the past three years has been the steady rise in the number of boutique and specialist law firms at the very top of the market. The graph above shows that the number of these firms in the top 60 bracket has risen by 59 per cent between 2009 and 2011 while the number of full-service firms has fallen by 23 per cent.
This reflects in part the recent lateral movement of leading practitioners to boutique and specialist law firms. In an environment where clients are increasingly cost conscious, clients are attracted by the highly competitive fees that these firms can offer. One interviewee commented on a perceived “exodus of labour practitioners to boutique firms which has a lot to do with the latter’s pricing model. Large firms can’t take on such a competitive price unless providing experience to younger associates”.
While this may be the argument stipulated in interviews with those at boutique and specialist firms, the statistics show that full-service firms are still ahead at the top of the market. In total, 55 per cent of the lawyers in the top 60 bracket belong to full-service law firms and six out of the 10 most highly regarded lawyers in the world listed in the previous pages also belong in this category. They can offer clients a greater wealth of resources anywhere in the world and supply outstanding expertise from other departments if required, providing clients with a more efficient and streamlined international service. Many clients still prefer full-service firms for their labour and employment issues as they have the expertise to match this kind of package.
This change in the legal environment has filtered through into the results of the research as boutique firms have performed exceptionally well. Littler Mendelson PC has nearly doubled its representation in this publication since 2010 and now has the largest contingent of lawyers in the edition. The firm has benefited from the addition of the likes of Phillip Berkowitz previously at Nixon Peabody, Barry Hartstein from Morgan Lewis and Terrence Murphy at Buchanan Ingersoll & Rooney PC. Ogletree Deakins Nash Smoak & Stewart PC, another leading boutique, has also steadily increased its representation in the publication.
Specialist firms that have highly respected and in-depth labour and employment practices with capabilities in other areas have also performed well. Seyfarth Shaw LLP stands out with a steady increase in the number of its lawyers featured. The firm has recently opened an office in London with the addition of Peter Talibart from Norton Rose who leads the office. Marshall Babson from Hughes Hubbard & Reed LLP and Jeffrey Berman from Sidley Austin have also joined the firm since the last edition. Proskauer Rose LLP and Heenan Blaikie LLP also fit into this category and continue to increase their market share.
While the reasons for these lateral hires vary from person to person, it is clear that lawyers have made the move based on the opportunities that boutique and specialist firms in the current economic climate have to offer.
CURRENT CHALLENGES
Tighter legal budgets and a more globalised business environment have led to client demands for a unified service across their multinational operations. This is no mean feat for law firms as labour and employment law is widely treated as a country specific issue. Consequently, law firms are required to either have significant capabilities across the jurisdictions of a client’s operations or rely upon its alliances with firms abroad. This is something that full-service international law firms are well positioned to provide through local offices. Nevertheless, in recognition of this boutiques are stepping up to the mark as Littler Mendelsohn PC opened its 50th office in Caracas, Venezuela in October 2010 as part of its service to global clients.
An important issue for law firms is that clients have ramped up their in-house capabilities in the labour and employment field. Lawyers noted in interviews that day-to-day work such as general guidance, negotiations and advice on policy handbooks is kept in-house. Some lawyers state that this is creating a dichotomy whereby in-house teams are both part of the competition as well as a source of work for lawyers. Clients are now seeking external assistance particularly for industry intelligence and not strictly legal input. As clients develop more expertise in-house, private practitioners are increasingly required to provide a service over and above the level of expertise they have provided previously.
Peter Talibart at Seyfarth Shaw LLP makes a compelling point regarding the future of this practice area: “Labour and employment is one of the last areas to evolve into a supranational discipline. There are emerging themes across legal jurisdictions, for example in issues like mutual respect in the workplace. It is feasible that the next evolution of laws in this area will be a focus away from specific physical or psychological features such as age, race, sex, disability and gender and more towards general laws of dignity towards employees that will be better able to cover emerging issues such as harassment and bullying. It has become difficult for existing legal frameworks to keep up with the increasing pressures to legislate away improper conduct in the workplace. Multinational policy makers are moving the market as much as legislators are.” Lawyers will need to keep an eye on the thematic conformity of employment laws and the implications this will have for the service that law firms can provide to multinational corporations.
GROWTH AREAS
As would be expected following a recession, the level of litigation in this field has increased. Many contributors noted that law firms are picking up a significant amount of work regarding unfair dismissal and disciplinary actions. As the opportunities for employees to find work elsewhere have become more limited, employers can often find themselves up against more proactive employees. This has contributed to an increased focus for lawyers on discrimination issues. One sources notes that “75 per cent of these cases have a human rights dimension”. As employees are becoming more aware not only of their rights as an employee but of their more fundamental human rights, proceedings relating to disability, race, ethnicity and age discrimination are on the rise. Many continue to see that discrimination lawsuits include a retaliation claim where it is alleged that an individual was treated differently by the employer for raising a discrimination claim. Consequently, an increasing priority for law firms has been to prevent these claims from arising by providing proactive and strategic advice to clients.
Wage and hour class actions continue to be a predominant area for litigators in the US. One contributor in the United States argues that “this is an area that is exploding across the country”. Class actions have also seen a growth in other areas. One notable case has been Duke v Wal-Mart Stores Inc, which is the largest sex discrimination class action law suit in US history. The outcome of this case is likely to have an impact on how lawyers will litigate employment cases given that an important issue at the heart of Duke v Wal-Mart Stores Inc, concerns whether more than one million women, whose pay and promotion was decided by individuals at different stores across the US, can be considered as a class. Clients are watching anxiously as a ruling for the plaintiffs will imply that a multi-plaintiff case involving a protected group can easily evolve into something much more costly for large organisations. A judgment in favour of Wal-Mart will mean that protective groups will be required to take on large organisations in a smaller group rather than in class actions.
Litigators have also been kept busy as the countries that have previously experienced negative growth begin to bounce back. A symptom of this has been a rise in the number of employees moving from company to company as the economy improves. This has led to an increase in non-compete and trade secret litigation as clients become concerned about protecting their intellectual property rights. Litigators are currently in a perfect position as contentious matters left over from the recession are still in abundance as unemployment continues to rise but as economies see off the bottom of the curve, those areas that are associated with a growing economy are seeing some activity again.
Non-contentious work has been picking up over the past 12 months. Transactions are not near pre-crisis levels, yet as commercial industries adapt to and get ready for a new post-recession environment, employment lawyers are being called in to help restructure, merge and sell-off lines of business particularly in the banking and insurance industries. Interviewees were cautiously optimistic that there will continue to be a stream of increasing M&A activity in 2011 and 2012.
In the interviews conducted in Europe and North America, advising clients on their pension plans is widely recognised as an increasingly important growth area for law firms. The financial crisis has put significant pressure on clients’ pension schemes to the extent that for many companies it is a key boardroom issue. As clients restructure to adapt to a changing commercial landscape they are increasingly looking for excellent judgement and experience from external counsel in formulating sophisticated strategies and managing risk relating to their pension schemes. At the same time there is increased regulation internationally as governments try to ensure that employees do no lose out on their pensions as companies become insolvent. Law firms are likely to expand their capabilities in this field particularly as employers face an ageing workforce.
In the current economic climate, boutique and specialist labour and employment law firms have gained ground. Lawyers are being challenged across the legal market to exceed their clients’ expectations while at the same time pressure on fees continues as firms try and maintain market share. Law firms have had to create a positive outcome out of the financial crisis and those that have done so by fine tuning their service to clients’ needs are now seeing the benefits as litigation departments are as busy as ever and non-contentious and transactional teams report rising levels of work. Those individuals that have risen to this challenge and continue to be a vital port of call to clients are identified in the following pages.
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