Roundtable: Management Labour & Employment 2011
The International Who's Who of Management Labour & Employment Lawyers has brought together three of the leading practitioners in the world to discuss key issues facing lawyers today.
Participants
JAMES DAVIES
Lewis Silkin LLP
England
Littler Mendelson PC
USA, IL
NATIONAL v INTERNATIONAL
Who’s Who Legal: Small, focused, flexible and nimble versus a global network and a multi-practice area service – which model best fits the needs of international clients facing challenges in multiple jurisdictions? How does your firm cater to the demands of a globalised economy? What do you consider are the benefits of your approach?
James Davies: The model is perhaps less important than identifying a group of lawyers who can work well together, share a commitment to providing cost-effective, responsive and practical advice and are prepared to be flexible regarding, for example, charging models. My firm responds to international needs through the Ius Laboris Alliance of leading employment practices. The benefits for us are a group of lawyers in member firms in around 50 countries and other firms in another 50 or so jurisdictions who are selected for their pre-eminence in employment law, who have worked together often for 10 years and who are not generally encumbered by the costs of global full-service firm. We also benefit fro a central team who monitor quality and coordinate service initiatives.
Barry Hartstein: International clients often need to act quickly, shift gears and handle sensitive problems in multiple jurisdictions, thus requiring the need to act nimbly and have appropriate resources wherever needed. To address this challenge, Littler has been very strategic in catering to the demands of a globalised economy. Littler, which is a US-based law firm exclusively devoted to representing management in employment and labour law matters with over 800 attorneys, has been multi-dimensional in its representation of multinational clients. The firm has a core group of over 100 lawyers who have worked on projects involving employment laws throughout Canada, Europe, Asia-Pacific, the Middle East and South and Central America, and has been strategic in beginning to open offices outside the US, such as recently opening an office in Venezuela with seasoned practitioners from South America, developing a strategic affiliation with TransAsia Lawyers in China, and serving as the US member of the lus Laboris global alliance with member firms in over 40 countries and coverage in more than 100 jurisdictions. Based on Littler’s approach to date, the firm has been able to tap into whatever resources are needed to quickly and efficiently assist its clients in labour and employment issues around the globe.
Franco Toffoletto: Our answer is: the best of both: small, focused, flexible and global. Of course international clients facing challenges in multiple jurisdictions need a global network ensuring that they will get the same service abroad that they are used to getting in their own country. We know this. However, our experience also shows that they need to be guaranteed a high standard of quality, regardless of the country in which they are operating. They need to get the best employment lawyer in town. Employment law is so country-specific that you need to make sure that your external legal counsel is a true specialist, knowing the local context and specifics. That is why we co-founded Ius Laboris 10 years ago, an alliance of global human resources lawyers, and why it has grown so quickly and extensively (it now covers 42 countries). This is the unique thing about Ius Laboris: you get the best employment law specialists in each country, but when it comes to global issues, the lawyers in each firm are project managers equipped with all the necessary skills to run a cross-border project from start to finish, sharing knowledge and working together with their colleagues in other countries, offering a ‘single invoice service’, if needed.
ADR
Who’s Who Legal: Sources describe a busy portfolio of employment litigation, prevalent in good economic times and bad. In light of an increasing pressure on fees, how well suited is ADR to employment disputes in your view? Which forms of dispute resolution do you consider the most efficient and cost effective and to what extent are clients happy, or likely, to visit these options?
James Davies: ADR and mediation in particular remain a suitable mechanism for resolving employment disputes. I don’t detect any particular change here.
Barry Hartstein: We have continued to witness an increased reliance on ADR in the United States, particularly mediation of complex employment discrimination class actions and wage and hour class and collective actions. The continued challenge is the small cadre of mediators with the level of sophistication capable of addressing the issues presented. Mediation also has been an effective tool in certain forums such as before the Federal Equal Employment Opportunity Commission to resolve claims of discrimination based on building an effective core group of mediators to address such claims. In numerous jurisdictions in which employers may face significant jury awards in individual discrimination and other employee actions, mediation also has served as an effective vehicle for the resolution of such disputes.
Franco Toffoletto: As you say, employment litigation is always on the increase, both in good and bad times. This in itself is a problem, given that employment courts have a very heavy workload and are not always sufficiently staffed to process claims in a timely fashion. So ADR may be the answer, provided that it works and is reliable. Many attempts have been made in Italy so far to move in this direction, some of them very recently, with the introduction of the so-called ‘Collegato Lavoro’ (Law of 24 November 2010, No. 183) that put in place, among other things, various alternative dispute resolution tools. However even from the outset the reforms attracted a lot of criticism: they are complicated and the final decision is left to someone who does not necessarily have the same knowledge and professionalism as a judge. That is why the best option so far is still to go for the judge.
REGULATORY AUTHORITIES
Who’s Who Legal: Several respondents spoke of increasing scrutiny and enforcement on the part of regulatory authorities. What regulatory changes are affecting your practice, both in terms of amendment and approach? To what extent are authorities more zealous in their investigation?
James Davies: The biggest change in the UK is the FSA Remuneration Code, which governs pay in the financial services industry. The Information Commissioner has announced a more interventionist approach to policing privacy and data protection issues and this promises to be an area of greater importance for employers.
Barry Hartstein: Based on a divided US Congress, although prospects are dim for any significant pro-employee labour and employment legislation during the coming year, employers in the US have been confronted with emboldened Federal agencies based on the recent regulatory and/or enforcement agenda by various Federal agencies, including the Equal Employment Opportunity Commission (EEOC), the National Labor Relations Board (NLRB) and various divisions/agencies within the US Department of Labor, such Wage and Hour Division, Office of Federal Contract Compliance Programs (OFCCP) (dealing with government contractors) and Occupational Safety and Health Administration (OSHA). As an example, agencies such as the EEOC have expanded individual claims and converted investigation of individual discrimination charges into systemic investigations that have been national in scope in various cases. This sometimes has involved requests for nationwide e-discovery data requests even at the investigation stage prior to a lawsuit ever being filed. Such investigative efforts have created significant challenges for many employers around the US. Other far reaching and aggressive investigative and enforcement tactics also are being experienced in dealing with other Federal agencies.
Franco Toffoletto: The application of EU Directive 2010/76 is likely to affect our practice. Our clients in the credit sector will need to cope with major mandatory changes in their remuneration systems, together with the problems arising from unclear legal wording and possible inconsistent implementation among the member states. The Directive has not been implemented in Italy yet, but some initial indications from the regulatory authorities already suggest that this will be a challenge. Other issues arise from the newly passed provisions of the Collegato Lavoro concerning fixed-term contracts and from the inconsistent interpretation of the rule by Italian judges so far. Again, employers need strong guidance when assessing actual risks related to fixed-term contracts. More generally, employers have to watch out for labour inspectors, as they are more and more zealous in verifying the compliance of companies’ practices with employment legislation.
WHAT COLLECTIVE ISSUES ARE CLIENTS IN YOUR JURISDICTION FACING?
Who’s Who Legal: What are the class actions of 2011 and what other issues are clients increasingly requiring your advice on?
James Davies: We’re seeing an increased need for advice on trade union issues including industrial action. The surge in demand for advice on restructuring and negotiating pay cuts has abated.
Barry Hartstein: While lawsuits by and on behalf of large groups of employees have not been a global phenomenon, class and collective actions continue to be an issue of ongoing concern for US employers. Employers in the US continue to be subjected to wage and hour class and collective actions around the country. A trend that began in California has now spread across the US. The litigation has been broad based ranging from plaintiff lawyers challenging exempt status involving claims for overtime pay, challenging independent contractor status which also would subject employers to overtime claims by such workers, off-the-clock work, tip-pooling, travel time, pre and post-work activities, and meal periods. The growth of wage and hour class/collective actions litigation has been matched by the Obama Administration’s pledge to make wage and hour enforcement a priority. The scope of employment discrimination class actions in the US may now substantially diminish based on the 20 June 2011 decision by the US Supreme Court in Dukes v Wal-Mart, in which the Court ruled in favour of Wal-Mart reversing class certification. The outcome of the Dukes case, which was the largest ever certified discrimination class action, may not only change the way class actions are certified but will also have a tremendous trickle-down effect evident in the way other large corporations and employers align their business practices to conform with the evolving law stemming from this case.
Adding to the mix is the US Supreme Court’s recent decision in ATT Mobility v Concepcion, decided on 27 April 2011, which held that a class action waiver provision in a consumer arbitration agreement is enforceable. The rationale that the US Supreme Court applied to the enforceability of class action waiver provisions in consumer arbitration agreements obviously has significant implications regarding class action waiver provisions in employment arbitration agreements, and during the coming year, there may be an expansion of arbitration agreements with workers in an effort to shield employers from class action claims.
Regardless of the outcome in the Dukes and ATT Mobility decisions, there will be a continued focus on class action type “pattern or practice” lawsuits initiated by the Federal Equal Employment Opportunity Commission, which has shifted many of its resources in recent years to remedying what it views as systemic discriminatory employment practices by employers. It is anticipated that the EEOC’s current trend will continue in which a substantial number of all lawsuits initiated by the EEOC will involve class action type lawsuits, in which the EEOC is not bound by US Federal Procedural Rules applicable to private class actions (ie, Rule 23 of the Federal Rules of Civil Procedure), which was at issue in the Dukes decision. The EEOC also takes the position that they are not bound by individual arbitration agreements.
Franco Toffoletto: Clients always need guidance in collective issues such as mass redundancies, TUPE transfers and collective bargaining, as they are very complex and tricky fields, where not only a thorough knowledge of the rules is needed but also extensive experience and sensitivity in managing industrial relations and bargaining with the unions.
Clients also need assistance in facing the new challenges arising from the widespread use – among employees – of social networking and in adapting global internal regulations (such as internal policies on monitoring employees’ use of the internet) to the specific Italian legal environment. They need advice on how to set up complex executive compensation solutions or on how to face employees’ international mobility (and its consequences on applicable law, jurisdiction, tax and social security applicable rules, immigration, etc).
CHANGING INDUSTRY DEMANDS - OFFERING INNOVATIVE FEE STRUCTURES AND TAILORED SOLUTIONS
Who’s Who Legal: How is the shape of your practice evolving to meet changing industry demands and the prevailing downward pressure on fees? How will your firm adapt to stay ahead of the curve?
James Davies: As I’m sure with all firms, we are looking at a variety of ways of reducing the cost to clients of the services we provide. Whilst the hourly rate remains the most common method of charging, alternatives are growing in popularity not only to reduce cost but also to provide clients with greater certainty. This includes multi-jurisdcitional options through Ius Laboris including fixed annual retainers.
Barry Hartstein: Our firm has always been competitive in its fee structure and has worked closely in partnership with clients for a number of years on alternative billing arrangements. Based on our approach, our practice has continued to grow and expand around the country. We believe our model has helped Littler stay ahead of the curve, despite the challenges faced by other firms around the country.
Franco Toffoletto: The practice of employment law has changed in the last 15 years. We have learnt to be more and more flexible due to many factors: changes in the workplace environment, advent of technology, greater competition from foreign firms, heightened client awareness and comparison between peer groups (eg, in-house counsel/HR managers etc). We have made every effort to meet clients’ requests, we are now used to working around the clock and we know for instance that American clients like to send a request late at night and get the answer when they wake up in the morning. Yes, we have had to learn how to cope with the demand for flexibility also in how we structure our fees. We use the best technology available to minimise the cost to the client of routine tasks, leaving us more time to concentrate on providing creative and strategic advice to our clients. We are also prepared to adopt flexible billing structures in order to meet our clients’ needs. We do not necessarily invoice based on hourly rates, but also on blended fees, a quotation for specific projects, a retainer agreement for legal services for a fixed annual fee, on a monthly basis (as often requested by multinational corporations), or on maximum capped fees. All kinds of fee structures are tried and tested at Toffoletto, as long as they meet our client’s needs. However, our experience is in fact that clients are always prepared to pay the right fees as long as they feel that they have been given a good quality service: knowledge, responsiveness and commitment and that, thanks to the innovative advice they got, they are saving money in the long-term.