Flexible shell of corporate lawyers

Appeared in Mr. Magazine no. 4
The Nederlands Genootschap Bedrijfsjuristen (NGB) recently amended its statutes allowing corporate lawyers without a permanent contract to become members as well. A helping hand for the large group of in-house lawyers who perform legal work as on-call workers for several companies. Now that companies seem to attach less and less value to the type of employment, the flexible shell is also becoming more diverse in nature. What must a good interim corporate lawyer meet these days and what type of corporate lawyer is most needed? Mr. delved into the "interim" world and talked to a number of specialists in the field.

The Nederlands Genootschap Bedrijfsjuristen (NGB) recently amended its statutes allowing corporate lawyers without a permanent contract to become members as well. A helping hand for the large group of in-house lawyers who perform legal work as on-call workers for several companies. Now that companies seem to attach less and less value to the type of employment, the flexible shell is also becoming more diverse in nature. What must a good interim corporate lawyer meet these days and what type of corporate lawyer is most needed? Mr. delved into the "interim" world and talked to a number of specialists in the field.
According to chairman Arnold Brakel, the decision of the NGB certainly did not come out of the blue: due to the ongoing flexibilization of the labor market, the group of self-employed lawyers without personnel (ZZP-ers), who largely do the same work as permanent employees, can no longer be ignored. Brakel: "CBS calculated the number of ZZP-ers at the end of 2016 at 1 million, 40% of whom are highly educated. At financial institutions, the number of flexible workers is currently around 10,000. We recognize that there are many lawyers working this way and we would like to give them access to the NGB and our training programs. As well as corporate lawyers working at non-profit organizations, by the way; they have recently become welcome too."

Brakel says that the flexibilization of the legal labor market started with companies, and has only been rolled out in the legal profession in recent years. "Large companies and multinationals have been filling their legal work relatively flexibly for years, with, for example, an in-house legal department, external lawyers for the super-specialty and interim in-house lawyers for the peak load, such as implementation of new legislation within an organization. It is difficult for me to estimate the size of the flexible shell of corporate lawyers in the Netherlands, but we can probably count on a significant expansion in membership."

One of those potential new members is Gabrielle de Vries, an employment lawyer who has been active as a self-employed person for more than ten years, during which time she has worked for companies such as Philips, ASML and NXP. De Vries does feel herself to be a corporate lawyer, partly because of the relatively long duration of her assignments, but still benefits from the relative freedom of self-employment. "From day one, being self-employed felt very pleasant," De Vries said. "As an interim, I have always been able to attract particularly fun and interesting work to me. I get involved in extensive employment law issues, from major reorganizations to staff grievance committees to performance workshops for managers. Because I have always worked for a few large clients I build up a file and become closely involved in the business, but the variety is very pleasant and I work from home a lot, which gives a sense of freedom. As an interim corporate lawyer, you are much more at the heart of legal processes than as an external lawyer and in that sense you belong more to the company. However, the flexible nature also has a downside. Projects are always finite, and the real policy work is figured out by the permanent employees anyway."

Moreover, the new Deregulation of Assessment of Labor Relations Act (DBA) is not exactly making things easier for ZZP'ers. The law, now delayed until 2018, aims to filter false self-employment from the flexible labor market by fining employees and employers with an obvious employment relationship. "An idiotic regulation, which many companies struggle with and ZZP'ers suffer a lot," De Vries said. "In practice, the DBA law is unenforceable: for example, as a test, it looks at the hiring period of a ZZP'er, but what is a reasonable period to hire an interim company lawyer if they are sometimes used for years for peak workloads? A lot of people like me have deliberately chosen self-employment and don't want to be employed at all. That law rattles on all sides."

Regien Haarbosch, a consultant at recruitment and consulting firm Voxius, also notices that the DBA Act has caused unrest in the market. "Companies suddenly see bears on the road that don't need to be there at all. The DBA Act is actually little more than stricter supervision of the rules that were already in place .Companies have been employing zzp'ers for many years, who in some cases have indeed ended up in a kind of employee role, including fixed working hours on location, team meetings and a Christmas package. That, of course, is not what the tax relief for self-employed entrepreneurs is intended for. The DBA Act aims to curtail (often long-term) interim assignments that do not sufficiently distinguish themselves from being employees. But now that the hiring client actually has to start adhering to agreements that have been in place for much longer, a cramp is developing in the market and the real ZZP'ers are the victims."

In the Netherlands, the effects could be disastrous, as the proportion of flexible lawyers at the senior level is very high. Whereas the flexible shell in the legal profession has only emerged in recent years, interim support at senior level has been in vogue in the business world since the mid-1990s. Voxius partner Hielke Bruin: "In the United States and the United Kingdom you also see flexible shells, but more at the level of structural paralegal support or in large class action litigations. In the Netherlands, that market is really mature. We have contact with about 1,000 interim lawyers, but we mainly work with a much smaller group of 50 to 75 lawyers that we think are really good. The assessment of good interim lawyers is not based on academic quality, because that is a basic requirement, but mainly on the ability to translate legal theory to the work floor or the boardroom. Being able to switch quickly, dare to make decisions and advise on the basis of knowledge and experience in similar situations requires a solid personality and - very important - putting into perspective the importance of Legal compared to other business processes. They are consultants rather than lawyers. The absolute top of interim lawyers in the Netherlands, people you can put in a room with a CEO and then spar with a logistics manager, is still relatively small at present. They are actually never out of work either and therefore often sigh that in salaried employment they had more time for vacations."

In recent years, the legal profession has also increasingly moved toward a flexible shell. In the market for interim in-house counsel, Brown says this has led to an increase in flexible deployment, particularly at both senior associate and paralegal levels. "In the legal profession, the flexible shell is successfully deployed for commodity-like work, which requires a lot of time but does not represent real value (anymore) for the client. Young but still expensive associates used to be used for this but clients no longer accept regular associate rates for this. Moreover, it is not good if this kind of work forms too large a part of young associates' work experience. Large Dutch firms therefore deploy experienced interim corporate lawyers for due diligence work, for example: good quality at a substantially lower rate."

In the broad carpet pad of interim corporate lawyers, Regien Haarbosch says this means that there is stiff competition on price. "Regular interim work is becoming a commodity, it has to be slightly cheaper every time and often a choice is made on 5-10 euros price difference in hourly rate. The administrative offices added by multinationals, for reasons of efficiency and now DBA protection, then make the process of hiring very bureaucratic. The market, in short, is in the midst of change."

Luc van Daele, managing partner at corporate legal services provider Legadex, also sees a clear trend in the outsourcing of the less high-profile legal work at companies: the threshold for putting work outside the door is disappearing. Van Daele: "Companies are increasingly inclined to outsource parts of their legal work to external service providers who provide a flex pool. This trend of flexibilization has been going on for some time, and we do not focus on the experienced interim worker, but on flexible deployment of junior lawyers and paralegals. The model in which companies have a permanent flexible shell of junior lawyers and paralegals with knowledge of the company is now gaining ground from the Anglo-Saxon world in the Netherlands as well. Outsourcing has been quite normal in other disciplines within a company for much longer and legal just follows the rest of the company in that respect."

Van Daele describes the profile of lawyers in such a flexible shell as "corporate. "Everyone wants a proactive person with considerable flexibility and adaptability and that sounds logical, but many a lawyer is still too self-absorbed. Remarkably, more and more attention is being paid to competencies in ICT and work processes: something that is hardly reflected in training, if at all, but is considered increasingly important."

Brown of Voxius sees a stronger demand at the top of the market for lawyers with an international profile, in line with the cross-border nature of much work at large companies. "People are looking for Dutch or foreign lawyers who have worked in multiple countries and therefore understand deviating business cultures. In addition, due to the upcoming European privacy regulations in 2018, there is much more focus on policy implementation. Compliance-related projects are emerging. Often this is the preliminary stage of a permanent position, for which a foundation must be set up in an accelerated manner. Then it's not just about sealing business risks but also creating a new business ethic. Companies increasingly want to adopt their own social DNA, and such projects are rolled out with both internal and external lawyers."

The line between company lawyer, external lawyer or interim company lawyer is thus becoming blurred, also sees Michiel van Ast, who, after a career as an IT lawyer and company lawyer, has fulfilled more than six years of interim assignments for companies in the telecom and IT sector. "The distinction between being employed or not is becoming less and less relevant: it does not matter at all to companies whether you are on the payroll, a sole proprietorship or a shareholder in a BV. What matters is the service you provide and the form is secondary." The generic term "interim lawyer" also seems to have had its day, according to Van Ast. "It dates back to the days when independent lawyers mainly fulfilled full-time assignments to fill up staffing during pregnancy, for example. You hop from assignment to assignment, where the trick is, on the one hand, to match the assignments and, on the other hand, to find the assignment that fits well in terms of rate and profile. Such classic interim assignments are of course still being fulfilled, but with the flexibilization of the labor market, all kinds of other forms are also presenting themselves, for example in the form of independently established lawyers who can be flexibly deployed. The classic interim lawyer is gradually giving way to the entrepreneurial independent lawyer."

Van Ast himself has since traded existence as a ZZP for his own firm, consisting of three independent lawyers. "Fully in line with the blurring of boundaries between corporate lawyers and lawyers, we too are not consultants or interim lawyers, but business-minded lawyers at a lower rate than a lawyer," Van Ast said. "The amount of work for entrepreneurial and independent lawyers is clearly increasing, and if you are substantively sharp, specialized and socially savvy, there is an awful lot of beautiful and meaningful work to be done. The benefits for companies are obvious. A flexible shell with top lawyers around a compact core is often more efficient and, on balance, cheaper than a broad legal team, including full-time interim staff. Many companies have long since done that math, and I expect flexibility to only increase in the coming years."

Haarbosch, Voxius: "In practice, interim corporate lawyers are often overqualified for the assignments in question, because most of them have a senior profile. Although their heavy expertise may not be necessary for the assignment sec then, it usually turns out that the interim lawyer can still add value. Companies know that an interim lawyer may seem like an expensive solution at first, but that temporary hiring is more efficient and cost-saving: it is impractical to capture all the expertise that may be needed at some point in time in a profile for one or more permanent FTEs." Brown: "Lawyers are traditionally employed on the more academic questions or when directors still like to have the 'insurance' of a Southasser's letterhead. The required competencies of corporate lawyers and lawyers are increasingly diverging: legal in a company is moving from a classic staff department further into the core business. As a result, the work of interim lawyers is also becoming more challenging and strategic."

Gabrielle de Vries has certainly noticed this over the past decade. "As an employment lawyer, at the end of a reorganization process you get to help draft a letter of dismissal. As a corporate lawyer, whether permanent or interim, you are at the heart of the reorganization and can think out in advance how best to shape such a process. You help think about the overall picture and are no longer just working in your own legal box. That gives an awful lot of energy and satisfaction."