Constitutional Court puts off new employment ruling

The German Constitutional Court has suspended a decision by the German Supreme Court, which ruled that when lawyers switch firms, the new firm must drop instructions in which the lawyer's previous firm has represented the other side.

The decision, which was made on 6 November 1999, but only published last month, would mean that any lawyer who has a partner working on a case must accept that they have served the client and therefore cannot advise the other side, even by allowing another partner in their new firm to carry out the instruction.

In the case at the German Supreme Court, the partner in question appeared on the firm's letterhead, although he was not a fully-integrated member of the firm. However, according to the court, he still shared the firm's relationship to its clients.

The losing firm, Volz Angelstorf & Manok, which is appealing against the suspension, claims that the decision goes against the constitution.

The Constitutional Court has granted an injunction while it examines whether the decision will give rise to an unacceptable barrier to partner moves. It is concerned that if the rules are applied strictly then it will be impossible for lawyers to move firms without a conflict arising.

According to Allen & Overy managing partner in Germany Mark Welling, the situation is a mess. "It's unclear whether the rules apply just to partners or whether they also include associates. It's also unclear whether the decision will affect partners moving to firms outside Germany."

If the decision goes ahead, large firms face a number of potential problems. "There's more of an issue for larger firms, as there's more likely to be relationships in larger firms that are unrelated to the person moving. In smaller firms, the chances of ongoing transactions are smaller," says Welling.