Good news for company lawyers

On 1 January 2016, the law on reforming the rights of company lawyers (Syndikusrechtsanwälte) came into force. The reform will enable company lawyers to remain in the lawyer’s occupational pension insurance (Versorgungswerk), ie entitle them to be exempted from the statutory pension scheme. By this law, the legislator has corrected the decision of the Federal Social Court (Bundessozialgericht, BSG) from April 2014, according to which in-house lawyers were required to pay contributions to the statutory pension insurance instead of to the lawyer’s occupational pension insurance. Since this decision had a significantly negative impact on almost 40.000 in-house lawyers in Germany, the legislator was forced to react.

However, the new law is not only restricted to the pensions issue: For the first time, the law expressly regulates the occupational group of in-house lawyers at companies. From now on, lawyers who are employed by companies and who work in a professionally independent and autonomous manner shall be admitted to the bar as so-called company lawyers.  In order to be admitted as a company lawyer, the lawyer’s activities need to fulfill four requirements which are now regulated by sec. 46 para. 3 of the Federal Lawyer’s Act (BRAO), namely:

  • Examination of legal matters, including clarifying facts and developing and assessing possible solutions;
  • Providing legal advice;
  • Focus of activity on shaping of legal relationships, in particular by negotiating independently, or on enforcement of rights; and
  • Responsible external appearance.

These four criteria must be reflected by the individual employment contract with the company lawyer.  The company lawyer can only successfully apply for admission to the bar at the competent Bar Association (Rechtsanwaltskammer) and for exemption from the statutory pension insurance if all these requirements are met.

However, not all in-house lawyers are forced to react now. Those who have already been working in a company and who have been granted a valid pension insurance exemption before the Federal Social Court decision in April 2014 do not need to apply again – at least as long as they remain with their employer.

However, those in-house lawyers who have started working for a company only after the Federal Social Court decision in April 2014 and, thus, have not been granted exemption so far, need to apply for admission as company lawyers as well as exemption from the statutory pension with retroactive effect, before the deadline of 1 April 2016.

Altogether the new law is a very welcome development, in particular for in-house lawyers. However, it took all competent authorities by surprise since no one expected this law to come into force so soon. The Bar Associations and lawyer’s occupational pension insurances have already said that the processing of applications may take up to several months and that it may also take a while until the specific requirements are fully clarified. The Bar Associations have announced that they will assist the companies in drafting the right wording for company lawyers’ employment contracts.

Due to these fundamental changes it is highly recommended that all in-house lawyers and their employers take action to deal with these changes and the consequences for the employment relationship.