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www.businesslaw-magazine.com No. 3 – September 6, 2018
Made in Germany
In this issue
Lawyers Top 5 – Legal market – Digital law and business – German Trade Secret Act
Constitutional law and compliance – Right of termination – ACC Europe column
2 – Editorial and content – BLM – No. 3 – September 6, 2018
Lawyers Top 5 German Trade Secret Act Right of termination
Professor Dr.
Thomas Wegerich,
Editor, 3 _ In a nutshell: Everything that 11 _ Opportunities, threats, 18 _ How to effectively give notice of
Business Law Magazine leading corporate lawyers need to requirements termination under German law
have in mind New German law respecting the Letters of termination: Following
wegerich@businesslaw-magazine.com
From practice for practice: protection of trade secrets: the formal requirements
CMS Hasche Sigle, Reed Smith Enterprises need to know about it By Sabine Feindura
Business Law Magazine: and McDermott Will & Emery By Dr. Henrik Holzapfel and
What keeps lawyers awake at night By Dr. Heike Wagner, Rolf Hünermann Dr. Martin Königs
and Dr. Uwe Goetker ACC Europe column
Dear Reader,
What keeps them awake at night: The importance of Constitutional law and compliance 20 _ Cybersecurity, career mobility,
in-house lawyers as trouble-shooters and risk Legal market and more
managers at their companies is growing. Prof. Mari
14 _ ‘Diesel affair‘: ACC’s global network: Addressing
Sako, Saïd Business School, University of Oxford, has
conducted an extensive study of the German legal
5 _ Risk managers, but also A landmark decision the concerns and interests of
market that focuses on the changing role of general opportunity managers Not a violation of fundamental European in-house lawyers
counsels. A must read for both sides of the commu- The changing role of in-house rights: German Federal By Christopher Murphy Ives,
nity: in-house lawyers and attorneys at law firms. lawyers in Germany Constitutional Court allows Julia Zange and Carsten Lüers
What keeps them awake at night: In this edition of By Professor Mari Sako searches at offices of corporate
the Business Law Magazine, we launch the new lawyers in connection with
column “Lawyers’ Top 5,” which mirrors the “In-house internal investigations
Top 5” section that Martina Seidl (Fujitsu) and Digital law and business Guest contribution
Christiane Dahlbender (Mars) kicked off in June 2018.
from Dr. André-M. Szesny, LL.M.
Don’t miss out on what Dr. Heike Wagner (CMS), Rolf 7 _ A potential game changer
Hünermann (Reed Smith) and Dr. Uwe Goetker Smart contracts: The backbone of
(McDermott Will & Emery) rate as top-level topics on
blockchain technology
their agendas.
By Dr. Jörn Heckmann and
What should keep them awake at night: Blockchain Dr. Markus Kaulartz
technology is just around the corner, and so are
smart contracts. Dr. Jörn Heckmann and Dr. Markus
Kaulartz believe these are potential game changers
for the legal market. You should know why.
Yours sincerely,
23_ Advisory board 27_ Imprint
25_ Strategic partners
26_ Cooperation partners
Thomas Wegerich
3 – Lawyers Top 5 – BLM – No. 3 – September 6, 2018
In a nutshell: Everything that leading corporate lawyers need to have in mind
From practice for practice: CMS Hasche Sigle, Reed Smith and McDermott Will & Emery
By Dr. Heike Wagner, Rolf Hünermann and Dr. Uwe Goetker
I
n the last issue of the Business Law Magazine, we Dr. Heike Wagner,
launched the In-house Top 5 section. As of today, Partnerin, Corporate
CMS Hasche Sigle, Frankfurt am Main
this section will be mirrored by the premiere edition
of the Lawyers Top 5. We will be presenting all the heike.wagner@cms-hs.com
important and practice-oriented topics that are high on www.cms.law
the agendas of leading corporate lawyers in Germany.
Since 2014, this magazine’s core statement has been: 1. Smart operations: Innovative structuring of competi-
“From lawyers for companies.” tive corporate business by using commercial lawyers
and technologies and by maintaining high quality
With the Lawyers Top 5, we would like to contribute standards.
further to improving transparency in the German legal 2. Attracting new talent in the M&A world in the time
market on both the demand and supply side, in conjunc- of Generation Z: How young talent’s demand for a
tion with companies, law firms, auditing firms and better work-life balance can be brought in line with
service providers. Our newly established Top 5 series worldwide clients’ demand for 24/7 responsiveness
supplements the practice-oriented reporting introduced and availability across time zones.
in the Business Law Magazine four years ago. And 3. Trading barriers and sanctions: More challenges
because time is a factor – and, of course, time is mone facing international investors – to what extent will
– we have tried to make our reporting as succinct as this lead to a decrease in M&A activity on the part of
possible. international investors both inbound and outbound?
4. PE and strategic investors in auction processes: How
The Lawyers Top 5 column is launched in this can a listed strategic (US) investor be competitive in
issue by our strategic partners Dr. Heike Wagner, an auction without making too many compromises
Rolf Hünermann and Dr. Uew Goetker. in regard to their internal compliance requirements
concerning due diligence and sales and purchase
agreements ?
5. Risk management and compliance in the post-
mergerintegration process. –>
© c12/iStock/Thinkstock/Getty Images
4 – Lawyers Top 5 – BLM – No. 3 – September 6, 2018
Rolf Hünermann, Dr. Uwe Goetker,
Rechtsanwalt, Partner, Reed Smith LLP, Attorney-at-Law (Germany), Partner
Frankfurt McDermott Will &Emery, Duesseldorf
rhuenermann@reedsmith.com ugoetker@mwe.com
www.reedsmith.com www.mwe.com
1. Collaborate – teamwork is key – within our organiza- 1. Matching and exceeding client expectations/needs:
tion but also with clients: “Driving progress through Our ambition is to provide first-class service to our
partnership” is our mantra. clients and to understand their needs and require-
2. Enhance efficiency for the benefit of the client as ments entirely. In order to keep our clients always
well as for the firm; happy clients are the best satisfied we conduct different types of client surveys
foundation for a happy Reed Smith team. and matter reviews that give us valuable insights into
3. Develop young talent; today’s young talent will be our professional relationship to the clients.
tomorrow’s leaders: It’s a joy to see members of the 2. Thought leadership: We have been constantly
team improving day by day – including mentors. exploring and tracking the implications of change
4. Anticipate legal developments: We are the smartest and are collaborating with global experts on oppor-
lawyers when we identify legal risks that may impact tunities and challenges that lie ahead of our clients,
our clients’ commercial success early enough to have e.g. in the context of blockchain technology, ICOs,
the right remedies – so far, we’ve succeeded in data/secrecy protection, Fintech, Brexit, and develop-
reaching this goal. ing new legal products for our clients.
5. Embrace diversity and inclusion: It’s a great honor to 3. Challenging and promoting the team: Fostering the
work for a law firm using significant resources to team spirit by increasing the level of responsibility of
globally support this important topic. junior partners, counsel and associates has always
been beneficial for the development of our lawyers.
4. Successful integration of laterals:Strategic and
efficient identification of laterals across our practices
and geographies follows the systematic integration
into our firm that offers great synergies and added
value for both parties.
Preparing for the future: We observe market trends
and developments in the law firm business, e.g. in
relation to AI, legal tech, alternative pricing, etc., in
order to best predict the (near) future and constantly
adjust our business model.
5 – Legal market – BLM – No. 3 – September 6, 2018
Risk managers, but also opportunity managers
The changing role of in-house lawyers in Germany
By Professor Mari Sako
W
hat keeps in-house lawyers engineer”(Gilson R.J., Mnookin R.H. 1995: time. Arguably, the most prominent shift
awake at night? The answer “Symposium on business lawyer and in Germany has been the enhancement
to this question changes value creation for clients”. Oregon Law of the risk-control role. It is widely known
over time and varies across companies Review vol. 75, no. 1). Risk control encom- that during this decade, some German
and countries. Summarized below are my passes both upside risks (risk-taking) and companies have suffered major compli-
findings on this topic from a study of downside risks (risk avoidance), but ance challenges due to bribery and
in-house lawyers in Germany. Compari- lawyers are trained and conditioned to anti-trust violations, including the
sons with an earlier study in the United focus on the latter (Kurer P. 2015: Legal emissions scandal. These compliance
States and Britain in the wake of the and Compliance Risk, Oxford University breaches heightened the strategic
2008 financial crisis are intriguing (M. Press). In-house lawyers are tasked with importance of risk control. Moreover,
Sako ( 2011) “General Counsel with ensuring compliance with anti-trust, “mediatization” (media attention) forces
Power?” http://eureka.sbs.ox.ac. anti-corruption-, and data-protection companies to deal with legal and non –
uk/4560/1/General_Counsel_with_Power. laws. Business partnering is primarily a legal (including reputational) risks as one.
pdf). role assumed by senior in-house lawyers Companies continue to hire lawyers as
who do not merely advise, but also For an individual company, this new kind lawyers, not as managers.
What do in-house lawyers do? participate in the company’s strategic of risk management might lead to the © ijeab/iStock/Thinkstock/Getty Images
decisions (Veasey E.N., Guglielmo C.T.D. appointment of a new CEO, the CEO may
In-house lawyers wear multiple hats in 2012. Indispensable Counsel: The Chief restructure to make business units more intimacy with internal clients. This
their day-to-day work. They provide Legal Officer in the New Reality, Oxford visible to the corporate headquarters, and requires cultural change, not just struc-
service support to their internal clients, University Press). Acting simultaneously boards may spell out more explicitly tural and procedural changes.
control company-wide risks and act as as an independent lawyer and as a which director is responsible for legal and
business partners. The service support manager pursuing business opportuni- compliance. Above all, the general Why a preference for insourcing?
role is about facilitating business transac- ties requires skilled judgment. counsel (GC) is on the front line in
tions – for instance by drafting contracts, implementing a robust risk-control and The 2008 financial crisis had a major
structuring M&A deals, and advising on Risk control on the rise compliance system. In restructuring the impact in the US and in Britain. At the
country-specific laws and regulations. legal function, the GC must walk a time, soaring billable hours led major
Legal scholars, noting this role, refer to a While all three roles are important, their tightrope between providing independ- corporations to insource in order to cut
business lawyer as a ”transaction cost level of importance has changed with ent advice to business units and retaining legal spending. In my study, German –>
6 – Legal market – BLM – No. 3 – September 6, 2018
companies’ legal department heads said including establishing panels with formal Fortune 500 companies carry the independent lawyers who only speak in
they also preferred to insource legal work performance reviews, insisting on greater managerial titles of executive vice executive meetings, primarily to address
as much as possible. A common reason cost transparency through alternative president or senior vice president, and legal issues. Companies continue to hire
cited across countries for this preference billing arrangements, and accessing many are incentivized with stock options. lawyers as lawyers, not as managers.
is that in-house lawyers have a deeper boutique law firms. Boutiques are pre- Not surprisingly, GCs at major US compa-
knowledge of the company they work for ferred for their better focus, greater nies would be content with saying: “I’m a Conclusion
than do external lawyers. In keeping with flexibility, and lower fees. Of these business person who happens to be a
practices, boutique law firms are a very lawyer; I’m a business partner who brings In conclusion, it is clear that in-house
German phenomenon – not seen in the legal background to business problems.” lawyers are of increasing importance to
>> United States or Britain, where law firms German companies and are taking on
German companies have follo- are consolidating to become full-service German companies have followed a multiple challenges: (a) managing legal
providers. Is this boutique phenomenon different historical path. We must and non-legal risks better, (b) improving
wed a different historical path.
7 – Digital law and business – BLM – No. 3 – September 6, 2018
A potential game changer
Smart contracts: The backbone of blockchain technology
By Dr. Jörn Heckmann and Dr. Markus Kaulartz
T
he rise and fall of cryptocurren- stance, energy trading with the small
cies (for example, Bitcoin) has amount of renewable energy necessary
dominated the financial press in to charge an electric car — would finally
recent months. As a result, people have become financially sustainable.
started to believe that Bitcoin and
blockchain technology are synonymous. However, the technology of the 1990s
But they are wrong: Cryptocurrencies are required an intermediary to execute the
just one of many uses for blockchain smart contract as a trustworthy authority.
technology. Due to the fact that block- It is obvious that this need for an inter-
chain technology can be used in many mediary as a trustworthy authority is at
other applications, it is expected that odds with the goal of reducing costs. As a
blockchain technology will become a result, the idea of smart contracts sank
game changer for many industrial into oblivion. This fundamentally
sectors. One of the reasons for this changed with the rise of blockchain
expectation is the potential the technol- technology, which does not need an
ogy holds to enable the execution of intermediary as a trustworthy authority.
encoded “smart contracts” within the
blockchain. But what is a “smart contract” Blockchain as a trustworthy authority
from a legal point of view, how can these
contracts be used, and why do they have To understand the symbiosis between
the potential to disrupt today’s use of Smart contracts were developed to eliminate the need for expensive lawyers and slow court smart contracts and blockchain technol-
ordinary software? decisions. ogy, it is essential to look at the underly-
© metamorworks/iStock/Thinkstock/Getty Images
ing principles of blockchain technology.
At the end of the 1990s, early pioneers of Broadly speaking, blockchain is a kind of
smart contracts discovered that legal contract” or “smart contract”). This new contracts without human interaction. The digital ledger for statements between
contracts could be transferred into source process was expected to reduce both risks pioneers of this idea were led by the hope computers. This digital record is stored on
code in such a way that they would and transaction costs, given that the new that large-scale business conducted the participating computers in a distrib-
execute themselves (a “self-executing technology would be able to execute the through microtransactions — for in- uted manner and does not require a –>
8 – Digital law and business – BLM – No. 3 – September 6, 2018
central authority. This departure from a cally if the temperature in the trailer rises therefore, be more relevant in the realm expensive monitoring of the contract
central authority is groundbreaking over a predefined number. In this exam- of machine-to-machine communications, after it’s signed. The potential for auto-
because until now, data has always been ple, the contract would utilize blockchain where it does not in fact make sense to matic execution of a contractual agree-
stored in a centralized location (for technology to facilitate the entire use English or another human language. ment is one of the main advantages of
example, a server) with an intermediary. claim-settlement process, potentially smart contracts.
reducing the administrative burden. But there’s an urban myth that says if you
Instead of a central authority, validation decide to use a programming language, But where there’s light, there’s also
from a majority of participating comput- Smart contracts: Legally binding agree- you’re only bound to the programmed darkness. For example, one of the
ers in a peer-to-peer network (P2P) ments? rules within the smart contract. In fact, technical restrictions of a smart contract
guarantees the integrity of the data and even in using a programming language, is that the fulfillment of a condition has
dramatically reduces the risk of data The questions arises whether a smart to be programmed with mathematical
manipulation. This means that the contract is actually a legal contract or not. precision. In other words, the program-
participants are not trusting an interme- One might say a smart contract is, in >> mer is obliged to use fixed values in the
diary; instead they are only asked to trust general, neither smart nor a contract. A A smart contract is only soft- analysis of conditions, instead of vague
the technology and its cryptography. smart contract is only software that legal terms such as “a reasonable period
ware that transfers assets
transfers assets under predefined of time.” But perhaps this restriction is
How smart contracts work conditions.
under predefined conditions. only temporary and will disappear with
9 – Digital law and business – BLM – No. 3 – September 6, 2018
a transfer of only €10.00 to the receiving even if this remains some way off — is to banks have been early adopters of smart to be used — now or in the future —
party. If this party claims it’s still owed implement a dispute-resolution interface. contracts. In addition, smart contracts as a means of payment for goods or
€90.00, the other party might claim it This would enable the parties to ask an offer huge advantages to those who want services, or as a means of money or
can rely on reference to the source code arbitrator or a court for a decision and to to create a contract platform between value transfer.
(“code is law”), thus substantiating that “insert” the decision retroactively into the independent strangers. In this context,
the parties only agreed to transfer smart contract. As a result, the smart one widely discussed potential use is the zz Utility tokens: These are tokens in
€10.00, instead of the verbally negotiated contract and the arbitrator’s or court’s charging and billing of electric cars at tended to provide digital access to
€100.00. To enforce their rights, the decision would be synchronized. charging stations. To make this cutting- an application or service, usually by
parties would then need to take legal edge idea a success story, proper stand- means of a blockchain-based infra-
action through the traditional avenues. Smart contracts: A long-term perspective ardization is needed — which, so far, is structure.
At that point, the advantages of a smart not in sight.
contract and blockchain technology Many companies, from small start-ups to zz Asset tokens. These represent assets
vanish into thin air. global players, are testing and working on Smart contracts and ICOs such as a debt or equity claim on the
issuer. Asset tokens promise, for exam-
This leads to another question: Is it At the moment, however, the most ple, a share in future company earn-
possible to program “the law” into a >> discussed potential use for smart ings or future capital flows. In terms of
smart contract so there’s no longer a The smart contract and the contracts is token sales, or ICOs (“initial their economic function, these tokens
need for judicial decisions? Despite the coin offerings”). ICOs are a means for are therefore analogous to equities,
arbitrator’s or court’s decision
fact there are still serious issues about companies to collect money. Instead of bonds or derivatives. Tokens that
programming “the law” into a smart
would be synchronized. writing long business plans and conduct- enable physical assets to be traded
contract, this seems to be quite logical at
www.laborlaw-magazine.com Next Issue:
10 – Digital law and business – BLM – No. 3 – September 6, 2018 September 24, 2018
in ICOs and issued a paper on the legal Dr. Jörn Heckmann,
qualification of ICOs, though at heart Rechtsanwalt, Counsel, Made in Germany
CMS Hasche Sigle,
the financial authority has not yet
Hamburg
provided clear guidance on the matter
and mainly states that each case has joern.heckmann@cms-hs.com
to be assessed individually.
Smart contracts: A serious threat to
lawyers? Dr. Markus Kaulartz,
Rechtsanwalt, Senior
Subscribe for free: www.laborlaw-magazine.com
Associate,
Smart contracts were developed to
CMS Hasche Sigle,
eliminate the need for expensive
T
Munich
lawyers and slow court decisions, in markus.kaulartz@cms-hs.com he Labor Law Magazine is an online English-language magazine primarily aimed
accordance with the dogma “code is at company lawyers, HR specialists, compliance officers, managing directors, jud-
law.” Sticking to the facts, it’s obvious www.cms-hs.com ges, prosecutors and attorneys in Germany and in Germany’s leading trade partners.
that this dogma is without legal In articles written with real-world legal practice in mind, the magazine explores all
foundation and that smart contracts important questions related to German labor law.
cannot liberate us from legal issues. In
fact, programmers of smart contracts
need lawyers more than ever if they www.laborlaw-magazine.com No. 2 – June 25, 2018
are to avoid loopholes in smart
LLM
contract code, and lawyers need
programmers more than ever if they Made in Germany
are to understand the source code of
In this issue
smart contracts. We cannot have the Data protection – Labor law – Labor law & company organization
Labor law & mobile working – Labor law & restructuring – Immigration law & tax law
one without the other. Ideally, this will
lead to the birth of a new profession
that combines the advantages of both
the legal and IT spheres. Until then, it Published by
will be a long journey — but it will be
worth every step to attain the best of
both worlds.11 – German Trade Secret Act – BLM – No. 3 – September 6, 2018
Opportunities, threats, requirements
New German law respecting the protection of trade secrets: Enterprises need to know about it
By Dr. Henrik Holzapfel and Dr. Martin Königs
G
ermany will soon introduce a trade secrets are protected in Germany.
new act respecting the protec- However, due to the effects of a European
tion of trade secrets that will directive, some of the expected changes
substantially change the way trade were already applicable on June 9, 2018:
secrets are protected in Germany. Some
of these changes are already relevant zz Only information subject to actual and
today, and enterprises doing business in reasonable measures to maintain its
Germany should be aware of the new secrecy status will be protected as a
opportunities, threats and requirements. trade secret. This requirement did not
previously exist, and enterprises may
Key takeaways have to react to this new requirement
by adopting additional contractual,
Germany is on the cusp of introducing a organizational and technical measures
new act respecting the protection of to protect their trade secrets. Also,
trade secrets. The German federal to be in a position to enforce claims
government agreed on a draft act on July against third parties related to trade
18, 2018, and the new law is expected to secrets, enterprises should immedi- It’s particularly important to establish IT measures to protect secret information.
enter into force in December 2018. As we ately start documenting the mea © Natali_Mis/iStock/Thinkstock/Getty Images
use the term here, “trade secrets” relates sures they adopt to protect their trade
to both technical know-how (such as secrets.
construction drawings, manufacturing a departure from previous regulations, to refrain from reverse engineering).
methods, ingredients and recipes) and zz Reverse engineering (that is, decon- and enterprises may want to include Considering these new threats to
business information (such as customer structing a third-party product to clauses against reverse engineering information secrecy, enterprises may
data, purchasing prices and market reveal its design or to extract other in- in agreements with such third par- want to adjust their strategies for the
studies). formation from the product) is permit- ties as suppliers, customers and R&D protection of proprietary information
ted, except when otherwise contractu- partners. However, reverse engineering and seek a new balance between pro-
Once the new law enters into force, there ally agreed. This freedom to reverse will still be legal for third parties (that tecting secrets and obtaining IP rights
will be substantial changes to the way engineer unless otherwise specified is is, competitors are under no obligation (such as patents). –>12 – German Trade Secret Act – BLM – No. 3 – September 6, 2018
zz Under the new law, an enterprise may In order to implement the directive, trade secret, (3) the conduct of the All of this demonstrates the wisdom of
be liable for infringement of trade se- Germany will pass a Trade Secrets Act infringer and (4) the impact of the reevaluating strategies for protecting
crets even if its management has not (Gesetz zum Schutz von Geschäftsgeheim- unlawful use or disclosure of the trade proprietary information. Enterprises
acted culpably. This facilitates enforce- nissen; drafts as well as an explanatory secret. In addition to the option to make should double-check the measures they
ment against competitors, but also memorandum can be viewed by clicking civil law claims against an infringer, it will have implemented to protect information
creates a risk when it comes to defend- here). The draft Trade Secrets Act sets out still be possible to prosecute under secrecy. This process may help keep a
ing against third-party claims. This types of claims for companies against criminal law. company competitive. Failing to work
new risk may influence the employ- infringers who unlawfully acquired, used through this process, on the other hand,
ment contracts enterprises conclude or disclosed a trade secret. In addition to Furthermore, the German Trade Secrets may leave proprietary information
with workers who were previously claims for damages, injunctive relief and Act will contain special provisions for without any legal protection, and it may
employed by a competitor, perhaps information, companies may also make trade secret litigation. A court will be able even leave an enterprise’s management
bringing information proprietary to claims relating to the recall and destruc- to classify a trade secret as confidential; unintentionally responsible for that loss
their former employer. tion of products. However, a mere consequently, the alleged infringer and of protection.
the infringer’s attorneys must treat the
Current developments and background secret as confidential even after the end The advisable confidentiality measures
>> of the legal proceedings. Additionally — vary on the basis of the specific circum-
The impulse for the new law respecting Enterprises should double- and this is a first in German procedural stances surrounding the trade secret
the protection of trade secrets was the law — the court will be able to limit a (such as its value), its importance to the
check the measures they have
European Union Directive 2016/943, a party’s access to evidence containing business, and customary confidentiality
directive on the protection of undisclosed
implemented to protect infor- trade secrets. measures in the business’s field. In any
know-how and business information
mation secrecy. event, the explanatory memorandum on
(trade secrets). This directive is intended13 – German Trade Secret Act – BLM – No. 3 – September 6, 2018
what the current level of protection is. may be easier to use for advertising and may not be taken on business trips firewalls, encryption, monitoring access
The aim of this process is (often) to promotional purposes. It will often still be abroad. to information, and rules regarding the
identify existing information that is not possible to combine the advantages of use of private storage media.14 – Constitutional law and compliance – BLM – No. 3 – September 6, 2018
‘Diesel affair‘: A landmark decision
Not a violation of fundamental rights: German Federal Constitutional Court allows searches at offices of
corporate lawyers in connection with internal investigations
Guest contribution from Dr. André-M. Szesny, LL.M.
I
n July 2018, the Federal Constitution- internal investigations in Germany.
al Court reached a landmark deci- However, they reveal that there is no full
sion: the search of the Jones Day law attorney-client privilege in Germany.
firm and the seizure of attorney docu-
ments did not violate the fundamental The Federal Constitutional Court took its
rights of the lawyers involved or their time in making these decisions: Over a
clients. The procedural measures were year passed before it released the seized
prompted by an investigation into two documents for review by the public
car manufacturers carried out by the prosecutor’s office. In the meantime, the
Munich public prosecutor’s office in Federal Constitutional Court had re
connection with what has been termed stricted the public prosecutor’s office
the “diesel affair.” Jones Day had conduct- from looking into the files.
ed an internal investigation on behalf of
one of the car manufacturers. The public No protection of fundamental rights for
prosecutor’s office wanted to obtain the non-EU law firms
results of this internal investigation with
a search and seizure of the attorney The Court’s Chamber in charge refused
documents. The Munich District Court I protection of fundamental rights to the
issued the decisions in question, and the law firm Jones Day on the grounds that it
law firm, its affected lawyers and the car is a non-EU firm without the standing to
manufacturer appealed the decisions bring a constitutional complaint. The law
with a constitutional complaint. firm, with its registered office in the US,
had no independent activity at the
The decisions of the Federal Constitution- Munich office that was searched, indicat-
al Court do not imply that judicial ing that it has an independent adminis-
measures against lawyers are always trative seat. In addition, the focus of the The view of the Federal Constitutional Court is surprising.
permitted. Nor do they mark the end of law firm’s activities is not in the EU, –> © aerogondo/iStock/Thinkstock/Getty Images15 – Constitutional law and compliance – BLM – No. 3 – September 6, 2018
but in the US, where the diesel affair is fundamental rights is intact. The lack of defenders. This position is justified by individual defenders. The importance of
being primarily followed by the firm. capacity to hold fundamental rights and criminal prosecution interests and the this lies in the fact that, under German
the resulting vulnerability of non-EU law legislator’s intention. criminal law, only natural persons can be
The Chamber also did not accept the firms creates a dramatic competitive charged and sanctioned. Under German
appeal of the lawyers employed by the disadvantage in all areas of consultancy. This does not mean that a restrictive law, corporate defense lawyers are
firm because they could not seek protec- As soon as Brexit becomes effective, law interpretation is the only one possible: therefore not equal to individual defense
tion of fundamental rights “ad personam.” firms based in Great Britain will also The Federal Constitutional Court has lawyers. Fines – but not penalties – can be
This applies in any case insofar as the suffer from this disadvantage. “only” decided that the opinion of the considered against the company only if a
individual lawyers’ offices are not subject District Court does not violate the manager is accused.
to the basic right to inviolability of the A narrow interpretation of attorney- constitution. However, it is now expected
home. Due to the lack of a private space client privilege that other district courts will adopt the The protection of corporate lawyers
to retreat to in the office, it cannot be narrow interpretation of the District against search and seizure arises when
considered a “home.” Only the firm itself The Federal Constitutional Court has Court Munich I. The decision of the the company takes a “position similar to
or all its partners can claim protection of ruled that the narrow interpretation of Federal Constitutional Court therefore the accused” – that is to say, when it
fundamental rights. attorney-client privilege by the Munich I makes clear that a general attorney-client officially becomes part of the proceedings
Regional Court does not violate any privilege does not exist in Germany (any conducted against an individual (involve-
Non-EU law firms should take the fundamental rights of the client. This longer). The only limit to vulnerability ment [“Nebenbeteiligung”] pursuant to
decision as an occasion to create condi- narrow interpretation comprises two key before these measures is the principle of section 438 and 472b of the German Code
tions in which their capacity to hold points: (1) The German Code of Criminal proportionality. of Criminal Procedure). This is the case if
Procedure provides for a prohibition of there is sufficient suspicion against a
seizures only for documents that are part The view of the Federal Constitutional manager of the company and thus the
>> of an attorney-client relationship in
which the client is charged with an
Court is surprising. As recently as 2010,
the German legislator demonstrated that
probability that the company is sanc-
tioned increases. The protection is also
Non-EU law firms must take
offense. The prohibition of seizures does in relation to the rules on search and extended to the defender of the company
the decision as an occasion not apply to documents and objects that seizure, it wanted to align the level of no later than when the company has to
to create conditions in which are subject to the right of lawyers to protection for all lawyers with the level be heard in relation to its involvement.
their capacity to hold funda- refuse to testify due to their relationships established for defense lawyers. The
mental rights is intact. This to other clients. (2) This implies the recent decisions reveal that this is no Not the end of internal investigations
will also affect British law admissibility of searches of lawyers as longer the case.
firms after Brexit.” well, insofar as they are not active as It is clear that corporate lawyers are16 – Constitutional law and compliance – BLM – No. 3 – September 6, 2018
refrain from informational measures: >> References:
Clarifying suspicious situations is a The introduction of a corpo-
compliance obligation – violating this The decisions of the Federal Constitutional
rate criminal law, which has
obligation can lead to claims for damages Court bear the following reference numbers:
by the company against its acting board
been a subject of discussion in 2 BvR 1287/17, 2 BvR 1405/17, 2 BvR 1562/17, 2
members on the one hand, and on the
Germany for some time, may BvR 1583/17 and 2 BvR 1780/17. Full versions
other hand to liability under criminal law lead to a change in the legal available in German on the website of the
and fines (liability of the principal or situation. Federal Constitutional Court:
supervisor). Compliance efforts and
The decisions of the Federal Changes due to a new corporate criminal
law?
Constitutional Court do not
imply that judicial measures The introduction of a corporate criminal
against lawyers are always law, which has been a subject of discus-
permitted. Nor do they mark sion in Germany for some time, may lead
the end of internal investiga- to a change in the legal situation. These
tions in Germany. However, outlines of corporate criminal law
they reveal that there is no full expressly provide for freedom of seizures
attorney-client privilege in from corporate lawyers – with good
reason. This is a positive incentive for the
Germany.A nwaltSpiegel
Deutscher
Online | Roundtable | Spezial | Panel
Roundtable-Termine im Herbst
11. September 2018 18. September 2018
Supply-Chain-Risiken steuern Arbeitsrecht in Zentraleuropa –
und versichern Was Unternehmen und Investoren
Redaktionsgebäude der F.A.Z., Frankfurt am Main, 15–19 Uhr beachten müssen
Redaktionsgebäude der F.A.Z., Frankfurt am Main, 15–19 Uhr
Kooperationspartner:
Kooperationspartner:
13. September 2018 10. Oktober 2018
Der professionelle Aufsichtsrat der Zukunft Musterfeststellungsklage vs. Sammelklagen:
Mehr Verantwortung = höhere Risiken Was auf Unternehmen zukommt
für Unternehmenskontrolleure Redaktionsgebäude der F.A.Z., Frankfurt am Main, 15–19 Uhr
Redaktionsgebäude der F.A.Z., Frankfurt am Main, 15–19 Uhr
Kooperationspartner:
Kooperationspartner:
Nähere Informationen zum Programm sowie die Anmeldeformulare finden Sie unter: www.deutscheranwaltspiegel.de/roundtable18 – Right of termination – BLM – No. 3 – September 6, 2018
How to effectively give notice of termination under German law
Letters of termination: Following the formal requirements
By Sabine Feindura
I
n Germany, if an employer wishes to should not be possible to construe the
terminate an employment relation- wording as a simple offer to conclude a
ship with an employee, the first step termination agreement or a proposition
is to determine whether the Act on to negotiate an amicable termination of
Protection against Dismissal is applicable employment.
to the case, so the employer must have
substantial grounds for the dismissal. Although this has no bearing on the
Furthermore, in a variety of circumstanc- termination’s effectiveness, the employ-
es, like disability, pregnancy, maternity or er’s notice letter must by law include a
parental leave, and works council statement containing the following
membership, other laws provide specific information:
protection against dismissal. Employers
should seek legal advice if needed. No We hereby inform you that upon receipt
matter if protection against dismissal is of this letter, you are obligated to imme-
applicable to the case, any notice of diately register with your competent
termination must comply with a long list labor agency as a person seeking employ-
of formal requirements stipulated by ment. If you fail to notify the agency or
German law. When writing a termination your notification is delayed, this may
letter, employers should heed the result in a reduction of your unemploy- It is always necessary to ensure the notice of termination is sent to the correct address.
following recommendations to ensure ment benefits. © BernardaSv/iStock/Thinkstock/Getty Images
the termination cannot be challenged on
formal grounds: Summary dismissal or with due notice
upon delivery to the recipient. If due Actual employer
Wording If the termination is summary (with notice is given (ordinary termination), the
immediate effect), this too must be applicable notice period must be deter- Notice must be given by the actual
First of all, the text should clearly state clearly stated. In a case of this nature, it is mined and the end date indicated in the employer. If the employer is a group
that the employment termination is advisable to specify that the termination notice letter. company, the notice of termination
unilateral on the part of the employer. It is “extraordinary” and comes into effect should not come from another –>19 – Right of termination – BLM – No. 3 – September 6, 2018
company within the corporate group (e.g., Signatory dismissal. For example, an HR manager example). It is also legally permissible to
the holding) by mistake. As a general rule, who has been working for the company deposit the letter in the employee’s
the company that last paid the employ- The identity of the signatory is also very for some time may already have settled correct home mailbox, though this option
ee’s salary and is named on the pay slips important. If the employer is a company, matters (e.g., the hiring) with the is not as secure. The deliverer should take
is the actual employer. not every supervisor and manager can employee concerned. However, if the HR photos and write a note upon delivery
legally act as the signatory. It is impera- manager is employed by the parent with the name of the person or persons
If the employer is a company, the name of tive that the authorized legal representa- company, to effectively terminate delivering the letter alongside their
the company must be indicated on the tive of the company signs any notice of employment contracts concluded by the signature(s), accompanied by the date,
stationery or printed in plain text under termination. For companies legally seated subsidiary, he or she must enclose an time and place of handover/delivery. The
the signature. It is also advisable to in Germany, the letter must be signed by original power of attorney signed by the employee is not obligated to sign an
include the address of the employer or a representative of the company regis- hand of the legal representative of the acknowledgment of receipt, but the
company and to make sure that court tered in the local Commercial Register subsidiary alongside the notice of deliverer may request this.
letters sent to this address are reviewed (Handelsregister). Some companies are termination.
promptly. Foreign employers sometimes legally represented by two persons If first-hand delivery is not possible, the
lose protection from dismissal proceed- jointly – in these cases, both persons Signatures under a notice of termination notice of termination should be sent by
ings because they are not aware of the must sign the notice of termination. as well as under a power of attorney registered mail or by DHL, Fed-Ex or a
summons before the first court hearing. must identify the signatory. If the similar postal carrier. In order to comply
If the legal representative of the company signature is illegible, at minimum the with the statutory period of notice, the
Signed by hand only (the managing director, for example) is surname of the signatory must be printed letter should be delivered to the post
not available to sign the notice of beneath the signature. It must be office early enough that it can be reason-
Any notice of termination must be signed termination, it can only be legally signed possible for the recipient to determine ably expected to arrive within the legal
by hand by the employer. A notice of by another representative if the notice is who signed the notice. time frame. If the letter is deposited in
termination sent by fax or e-mail may be accompanied by a power of attorney in the employee’s home mailbox after the
challenged because it lacks an original which the legal representative of the Delivery usual mail delivery time, it is considered
signature. A photocopy of a signed company authorizes the signatory to give to have been received the next day.20 – ACC Europe column – BLM – No. 3 – September 6, 2018
Cybersecurity, career mobility, and more
ACC’s global network: Addressing the concerns and interests of European in-house lawyers
By Christopher Murphy Ives, Julia Zange and Carsten Lüers
W
ith more than 2,400 ACC Europe serves these shared needs of Legal Officers Survey provides insights
in-house lawyers spread European in-house lawyers by publishing from general counsel (GCs) and chief
across the Continent, ACC resources, providing education, advocat- legal officers (CLOs), including what they
Europe, the European chapter of the ing on behalf of the profession, and anticipate will “keep them up at night” in
Association of Corporate Counsel’s facilitating peer connections through the year to come. This year, regulatory or
membership of more than 43,000 networking. Within this framework, government changes was the most
in-house lawyers in 85 countries, repre- European in-house lawyers benefit from concerning issue keeping CLOs and GCs
sents a diverse array of in-house lawyers. local content and connections within the up at night.
Given that these 2,400 members hail chapter as well as from the vast resources
from hundreds of companies and dozens and networks of a global legal associa- Taking the pulse of 1,275 CLOs and GCs in
of industries, the interests of the corpo- tion. An in-house lawyer in the hospitality 48 countries, the 2018 ACC CLO Survey
rate counsel community are wide-rang- industry in Brussels, for example, may also found that data breaches and the
ing. Indeed, they span the spectrum of cultivate a network of in-house legal protection of corporate data are the
issues currently facing the business peers in his or her hometown, but also fastest-growing areas of concern, as 36%
community. However, despite the benefit from the industry knowledge of a of CLOs rated this area extremely impor-
differences in law departments and hospitality-industry corporate-counsel tant in the year ahead. This is a huge
company size, industry, and country, the peer in Singapore. ACC offers both these increase since 2014, when just 19% rated
needs of in-house lawyers are ultimately local networks and global connections. it as extremely important.
more alike than they are different.
Information Similarly related to research, companies
All in-house lawyers have a shared need are increasingly curious about how their
to keep current on the latest legal With the ever-changing, increasingly competitors or organizations with similar
updates in their practice areas, to complex business and regulatory environ- size or revenue parameters navigate the
demonstrate the value of their law ment, corporations depend on their global business environment. To meet this
departments to their businesses, and to in-house lawyers to not only be aware of need, ACC offers extensive benchmarking ACC Europe provides the advocacy that
cultivate leadership skills to best serve the newest laws and enforcement trends, services. Last year, ACC research covered a helps European in-house lawyers advance
their careers.
their companies. but also to anticipate what’s next. host of topics of particular interest to
© Pixfly/iStock/Thinkstock/Getty Images
Published each January, the ACC Chief corporate counsel. These include salary –>21 – ACC Europe column – BLM – No. 3 – September 6, 2018
and benefits data for more than 5,000 yourself, lead the law and lead the Advocacy (CEO). This is less common in Europe than
in-house lawyers from 65 countries in the business. This combination of legal in other parts of the world, but no less
2018 ACC Global Compensation Report; updates, business education, and sessions In addition to serving members’ individu- important.
details on cybersecurity preparedness, on “soft skills” like communication, al needs for education and professional
insurance, and protocols in the 2018 ACC leadership, and emotional intelligence development, ACC works on behalf of the Last year, we also advocated that the
Foundation: The State of Cybersecurity touch on all three areas of responsibility entire community of in-house lawyers. European Commission should promote
Report; and intel on law-department for the modern in-house lawyer. From We seek to elevate the professional role incentives for corporate compliance
structures, C-suite reporting structures, counselor in chief to law-department and status of in-house counsel and to programs and recognize the important
and chief concerns for GCs and CLOs in leader to business strategist, the role of speak out on behalf of the in-house role of in-house counsel and legal
the 2018 ACC CLO Survey. in-house counsel today encompasses community on issues that impact professional privilege in ensuring robust
more than it has ever before, and lawyers members’ work and lives. whistle-blower protections. ACC sup-
Education and networking need to hone their skills in all three areas. ported the protection of whistle-blowing
Most recently, we submitted comments and stated that strong corporate ethics
While lawyers can access ACC reports, While many in-house lawyers join ACC as to the United Kingdom Financial Report- and compliance programs educate and
articles and briefing documents from members of corporate-law departments ing Council (FRC) on revisions to the UK encourage employees to come forward
anywhere around the world, there is no comprising dozens — if not hundreds — Corporate Governance Code and Guid- with allegations of corporate misconduct.
substitute for in-person education. of lawyers, there are also ACC members ance on Board Effectiveness — urging the
Meeting the needs of the European legal from very small law departments, FRC to incorporate a recommendation on In Germany, ACC celebrated the German
population spread across the Continent, including solo practitioners. For these the role of the legal function in influenc- decision in 2015 to correct a 2014 ruling by
ACC Europe offers programs and semi- lawyers especially, networking with fellow ing corporate culture. the Federal Social Court on in-house
nars in dozens of cities. Just in the next corporate counsel is paramount. ACC of lawyer independence. The legislation
three months, ACC Europe will host course offers in-person social events This effort is part of a broader program to passed both the Bundestag and Bun-
programs in Brussels, Zurich, Frankfurt connected to and independent from our demonstrate that legal and regulatory desrat within a record period of less than
am Main, Milan, Amsterdam, Lugano, substantive legal programming . But we matters are increasingly central to the one year. Effective January 1, 2016, the
London, Paris, Böblingen, Geneva, and also offer a host of virtual networking implementation of business strategies. new law has established that corporate
Munich. opportunities as well. Lawyers looking to Inclusion of the law department in the counsel may become members of the
connect with others in similar practice development of business decisions German bar association and outlined
Our signature European program each areas benefit from joining one of the 19 signals to the company’s stakeholders requirements that would have to be met
year is the ACC Europe Annual Confer- ACC networks. Topics include information that ethics, compliance and other legal to consider an in-house lawyer “inde-
ence. We convened in Paris in 2018; and governance, intellectual property, and risk considerations are top priorities for pendent.” We hope to have additional
May 12 – 14, 2019, the event will take us to litigation. Programs include webinars, the company. ACC urges that a GC should victories along these lines as we promote
Edinburgh. In Paris, delegates explored conference calls, and online forums. have a permanent seat at the executive the professional role and independence
how to develop leadership in uncertain and boardroom table as well as report of the in-house lawyer.
times through three dynamic tracks: lead directly to the chief executive officer –>22 – ACC Europe column – BLM – No. 3 – September 6, 2018
Global connections yield knowledge litical events on business operations
3. Deutscher Exporttag
sharing worldwide, in-house lawyers need Themenplattform für die Exportpraxis
global resources and connections in
23. O K T O B E R 2018 , CO N G R E S S C E N T E R R O S E N G A R T E N M A N N H E I M
In 2018, in-house lawyers are dealing addition to local networks. ACC Europe
with cross-border issues more than serves to keep in-house lawyers aware
ever before; in Europe, more than eight of the latest legal developments,
in 10 in-house lawyers have cross-bor- facilitate global peer connections, and
der job responsibilities (ACC In-House provide the advocacy and education
Trends Report). Between cross-border that help European in-house lawyers
duties and the huge impact of geopo- to advance their careers.23 – Advisory board – BLM – No. 3 – September 6, 2018
Peter N. Baehr, LL.M. (AUS) Dr. Arnd Haller
General Counsel Europe/EMEA Legal Director
PUMA SE Google Germany GmbH
Herzogenaurach Hamburg
peter.baehr@puma.com haller@google.com
www.puma.de www.google.com
Dr. Hildegard Bison Ulla Harpen
General Counsel Europe Senior Counsel and Head of Project Supervisory Board Elections tk
BP Europa SE thyssenkrupp
Bochum Essen
hildegard.bison@de.bp.com ulla.harpen@thyssenkrupp.com
www.bp.com www.thyssenkrupp.de
Christiane Dahlbender Kai Jacob
Associate General Counsel Europe Head of Global Contract Management Services, Global Field Legal
Mars GmbH SAP Deutschland SE & Co. KG
Viersen Walldorf
christiane.dahlbender@effem.com kai.jacob@sap.com
www.mars.com www.sap.de
Dr. Florian Drinhausen Dr. Martin Kniehase
Chief Governance Officer Associate Director
Deutsche Bank AG Joh. Berenberg, Gossler & Co. KG
Frankfurt am Main Frankfurt am Main
florian.drinhausen@db.com martin.kniehase@berenberg.com
www.db.com www.berenberg.com
Dr. Stefan Fandel Dr. Severin Löffler
Rechtsanwalt, Merck KGaA, Assistant General Counsel, Legal and Corporate Affairs
Head of Group Legal Services Central & Eastern Europe, Microsoft Deutschland GmbH
Group Legal & Compliance | Group Legal Services Unterschleißheim
stefan.fandel@merckgroup.com severinl@microsoft.com
www.merckgroup.com www.microsoft.com
Christopher Grefe Carsten Lüers
Head of Foreign Trade EMEA Managing Counsel EMEA
ZF Friedrichshafen AG Verizon Enterprise Solutions
Stemwede-Dielingen Frankfurt am Main
christopher.grefe@zf.com carsten.lueers@de.verizon.com
www.zf.com www.verizon.com24 – Advisory board – BLM – No. 3 – September 6, 2018
Dr. Christian Rau Prof. Dr. Michael Smets
General Counsel EMEA Saïd Business School
Davita, DV Care Netherlands B.V. University of Oxford
christian.rau@davita.com michael.smets@sbs.ox.ac.uk
www.davita.com www.sbs.ox.ac.uk
Dr. Georg Rützel Dr. Klaus-Peter Weber
General Counsel Germany General Counsel
General Electric Goodyear Dunlop D-A-CH
Frankfurt am Main Hanau
georg.ruetzel@ge.com klaus-peter.weber@goodyear-dunlop.com
www.ge.com www.goodyear-dunlop.com
Matthias Schwarz Professor Dr. Stephan Wernicke
Executive Director Chief Counsel, Director of Legal Affairs
Talanx Reinsurance (Ireland) SE DIHK – Deutscher Industrie- und Handelskammertag e. V.
Berlin
matthias.schwarz@talanx.com wernicke.stephan@dihk.de
www.talanx.com www.dihk.de
Martina Seidl Michael R. Winkler
General Counsel, Vice President Legal & Commercial Head of Legal Corporate, Asia Pacific & COO,
Fujitsu Technology Solutions Daimler AG,
Munich Stuttgart
martina.seidl@ts.fujitsu.com michael.r.winkler@daimler.com
www.ts.fujitsu.com www.daimler.com
Dr. Hanns Christoph Siebold
Managing Director
Morgan Stanley Bank AG
Frankfurt am Main
hanns.christoph.siebold@morganstanley.com
www.morganstanley.com
Timo Matthias Spitzer
Banco Santander
Head of Legal Global Corporate Banking
D-A-CH, Frankfurt am Main
timo.spitzer@gruposantander.com
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