In Down Market, International Labor and Employment Lawyers Aim to ‘Lead the Way Through Crisis’

The global economic downturn has shifted the focus of international firms practicing labor and employment law, says Anders Etgen Reitz from the law firm IUNO in Denmark. Mergers and acquisitions used to be the driving force, but now “the restructurings that are going on throughout the world are really the main driver,” he says.

Reitz, the head of the HR Legal law practice of IUNO, also observes that firms are “more directly involved now with clients, assisting in trimming the organizations, and making them more ready for this new market situation.”

Employment lawyers have experienced this pattern before, says Reitz, in the Section of International Law podcast “Labor and Employment Law in the New EU Member and Candidate States.” When the market is down, you have terminations, and when it’s up, you have hirings, “but right now there is definitely a changing in the focus,” he says.

Clients are looking for ways to be more competitive in the market, and Reitz says he sees that in two ways. “There are huge layoffs in some companies, and that, in many countries, activates a lot of rules on how to terminate that amount of people,” he says. “But then many companies see that there is a huge advantage in trying to save costs in other ways than by termination and still be ready when the market changes.

“We see a lot of companies trying to change terms and conditions for employees, decreasing salary, stopping bonus systems,” he adds. “That, of course, also has a lot of employment law implications.”

In the expanding EU, the implications vary according to nation and whether a labor director has been installed. Reitz’s book, Labor and Employment Law in the New EU Member and Candidate States, covers key employment law issues on a country-by-country basis.

The author says that despite the challenging times, opportunities do exist now in labor and employment law for the international lawyer. “I think right now the employment lawyer’s main focus should be to try and lead the way through the crisis,” says Reitz, who counsels Fortune 500 companies in labor and employment law issues related to doing business in Scandinavia and Europe. “They should be one of the key players in what I could call the crisis-management team.”

That means “really be one-on-one with the client on how do we trim the business and make it ready for the crisis but also ready for when the crisis is over,” Reitz says.

Employment lawyers should also focus on developing new products that meet the demand of clients, which is to create value but do it for less money, he says. “We really see the clients being much more cost-focused than before, and I think that means you need to try and see, How can we help the client without having to write long memos?” Reitz says. “Maybe it’s thinking of other kinds of products, creating hotlines and so on.”

In the short term, Reitz says he sees continued financial troubles for clients and the need for creative problem solving. “One of the issues we see increasingly now is the task of developing useful retention tools for companies in a falling stock market and also in an environment right now where many companies are politically hostile toward bonus schemes,” he says. “How do you retain the top performers in a company when you don’t use stock options and bonus schemes?”

Another challenge is trying to figure out how to create job security, “because I think that will be an increasingly interesting employment benefit,” Reitz says. “In an environment where a lot of people are being laid off, how do you make sure that your employees are not underperforming because of the stress of losing their jobs?”

Finally, Reitz says he sees more internal-control activity and investigations of crimes by employees within companies. “That often goes hand in hand with the financial situation,” he says. “When it goes bad, people tend to think of illegal ways to get something out of the company.”