In-house lawyers – new developments

DRV publication dated 12.12.2014 as well as benchmark paper of BMJV dated 13.1.2015

Following the decisions of the Federal Social Court (BSG) on 3 April 2014, the Deutsche Rentenversicherung Bund (DRV) commented on its planned administrative practice on 12 December 2014. On 13 January 2015, the Federal Ministry of Justice and Consumer Protection (BMJV) also published a benchmark paper on the planned new legislation. This sets out a legally secure path for employers in terms of dealing with so-called old cases.

Following the decisions of the Federal Social Court on 3 April 2014 (see our October 2014 Newsletter, page 7 et seq.), the DRV also commented on the planned handling of so-called old cases on 12 December 2014. Fundamentally speaking, the DRV has opted for a “future-oriented solution”. As a result, the DRV will not request back payment of past pension insurance contributions for in-house lawyers who

• have a current exemption notification for their present employment,
• have already reached the age of 58 as at 31 December 2014 (unless they are not performing any legal advising role for their current employer),
• are re-registered with the statutory old-age pension insurance scheme by 1 January 2015 at the latest.
• In the first two case groups, the DRV will likewise not demand any pension insurance contributions in future for the current employment.

This decision by the DRV falls short of the expectations of many company lawyers. In particular, the DRV has failed to take account of the call made in literature to grant protection of confidence on the basis of the formulations in the exemption notification. Irrespective of the question of how the individual exemption notification is to be assessed, the DRV grants protection of confidence in the above mentioned cases only.

Solution approach of the legislator

The legislator is now also concerning itself with the exemption of in-house lawyers from compulsory membership of the statutory old-age pension scheme. Federal Minister of Justice Heiko Maas presented a benchmark paper on the new ruling on 13 January 2015. According to this benchmark paper, the wording of the Federal Lawyers’ Act (BRAO) should be adapted. In particular, the double-profession theory should be abandoned. In future, a lawyer employed with a company should become a compulsory member of the Bar Association. Additionally, special rulings should be made concerning settlement; in particular, the Lawyers’ Remuneration Act (RVG) should not apply, court representation should be limited and specific criminal-procedure regulations on the right to refuse to give evidence should not apply.

The BMJV is now working on a specific legislative proposal which will precisely reflect these individual points. Based on current estimates, the changes could come into force as early as the middle of 2015.

What consequences can employers draw from current developments?

To obtain protection of confidence for the past, companies must register all in-house lawyers with the DRV by 12 February 2015 at the latest, in so far as these are unable to produce an exemption notification for their current employment and have not yet  reached the age of 58 as at 31 December 2014. This will enable them to create legal clarity for the past and the future. In all cases, companies should require their in-house lawyers to apply for a new exemption or confirmation of the continued validity of their old exemption, while at the same time not relinquishing membership of the professional pension scheme – in order to avoid pension gaps.

Employers who do not register their in-house lawyers although they are not exempt from compulsory pension insurance for their current employment, risk a demand for back payment of contributions from the DRV, including for the period before 1 January 2015 up to the limit for statute barring, as well as criminal prosecution (Section 266 a StGB (Criminal Code)) of themselves or their executive bodies.

Summary

Even if the DRV has fallen well short of the expectations of company lawyers, its publication dated 12 December 2014 has created legal clarity and offered employers a possible solution in the current unclear situation. The benchmark paper put forward by the BMJV gives rise to hope of speedy statutory clarification of the legal position, thus also enabling those in-house lawyers who have to be registered with the DRV by their employers to obtain a new exemption as soon as possible.