Legal Trends (Under a Different Shingle)

There's a new breed of employment lawyer in the market the employment law consultant.

By Michael Sullivan and Carrie Garcia Mar 1, 2005
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HR Magazine, March 2005 Over the past decade, both the role of the employment lawyer and the relationship between HR professionals and their company’s lawyers have changed. While once you may have considered employment lawyers to be a “necessary evil” you were forced to rely on during a crisis or a lawsuit, now you probably recognize counsel as partners in preventing such crises and lawsuits from ever occurring.

Although taking steps to avoid employment law violations has always been the ideal, courts now actively scrutinize employers’ proactive efforts to prevent employment law breaches and to investigate and correct them quickly when they occur. This is most evident in the area of sexual and other forms of workplace harassment, but similar imperatives are developing in other areas of employment law. Auditing wage and hour compliance and managing whistle-blower complaints are just two examples.

At the same time that the relationship between HR professionals and their counsel has been changing, a new business model for delivering preventive employment law services has evolved. Many companies have found that there are now alternatives to using their in-house counsel or traditional law firms for all their preventive needs, and have begun to use employment law consulting firms in addition to, or instead of, their usual lawyers.

In this article, we use the term “employment law consulting firm” to refer to firms that offer the professional services of employment lawyers with similar legal knowledge and backgrounds as traditional law firm lawyers, but with a practice focus on prevention as opposed to litigation.

While some employment law consultants and law firm lawyers view themselves in competition, many have found that they complement each other in providing the most effective mix of services for shared clients. Some practitioners in each of these environments are even humble enough to realize that there are circumstances when a consultant might be best for the client, and other situations when it is clearly time to call in the cavalry.

Does using an employment law consultant make sense for you? If so, when should you turn to these companies and when should you turn to your regular lawyers? We—as two lawyers, one in an employment law consulting firm and one in a traditional law firm—will guide you through considerations involved in making this decision in the context of three key practice areas:

  • Employment law training for supervisors and staff.
  • Harassment and other investigations.
  • Advice and advocacy during ongoing disputes, including lawsuits.

But first we’ll look a little further into why first-class preventive practices have become so important.

Prevention Dimension

Savvy employers realized even before the Supreme Court’s 1998 decisions in the seminal Faragher and Ellerth cases that an ounce of prevention is worth a pound of cure. But for those who resisted, those two cases made preventive measures a legal necessity.

Faragher and Ellerth established a standard for determining whether an employer is liable for sexual harassment perpetrated by its supervisors. If a supervisor commits a so-called “tangible employment action,” such as a discharge or demotion in connection with alleged harassment, the employer is strictly liable and has no defense if harassment is proved. If a supervisor creates a sexually hostile work environment but takes no tangible action, the employer will be liable unless it proves a two-part affirmative defense—the so-called “reasonable/unreasonable test.” That is, the employer must prove both that it took reasonable steps to prevent workplace harassment and correct problems and that the plaintiff unreasonably failed to use the employer’s preventive measures to allow the employer to correct the problem.

These decisions have dramatically raised the profile of preventive measures among employers and spurred the development of sound anti-harassment policies, supervisor and employee training, and effective investigative practices. At the same time, they have also driven changes and stimulated diversification in the compliance marketplace, one manifestation of which is the employment law consulting firm.

It’s Raining Training

Training is a crucial element in the bundle of preventive measures that companies must take to protect and defend themselves from discrimination, harassment and other workplace claims. (For a detailed discussion on this subject, see the Legal Trends column in the May 2004 issue of HR Magazine.)

In addition to extensive federal case law that makes effective training of supervisors and managers essential, some states have enacted legislation that expressly mandates it. For example, by January 2006, California employers with 50 or more employees must institute a formal sexual harassment training program for supervisors. (Lest you think this is just one more example of California as an outlier in legislating employee protections, note that Connecticut has had a similar law on the books for some time, and analysts predict that such requirements are likely to crop up elsewhere.) Moreover, the Equal Employment Opportunity Commission often requires training as part of settlement and conciliation agreements.

Competencies. Many companies naturally turn to their law firms to provide training. But—let’s face it—some lawyers are boring (present company excepted, of course). Though not universally true, law firms historically have offered training as an “extra”—usually a loss leader and more of an approach to client development than a strategically driven line of business. Consequently, a law firm may not make it a priority to develop in-house expertise in instructional design and training delivery, for example. So the product may be inconsistent—or, worse, ineffective to educate adult learners.

In contrast, training is usually the bread and butter for employment law consulting firms. They can and do spend considerable time and money developing a wide variety of training courses and may be more inclined to emphasize competencies in the professional development disciplines.

Content. Some law firm training programs focus on technical legal information and may not include human-resource–style training in management techniques, performance appraisal, interviewing, etc. For example, you may have managers who need to go through sexual harassment training, but, more generally, they need to learn how to respect and manage their subordinates. The best employment law consultancies have human resource as well as legal experts on staff, and can offer training that covers both the legal rubrics and effective management techniques.

There are times, however, when it makes sense to use your traditional law firm for training purposes. For example, lawyers who have worked for a client for a long time may be in the best position to tailor a presentation addressing the employer’s specific compliance issues based on their knowledge of prior or threatened claims.

In addition, if training is undertaken in response to or in anticipation of litigation, (and will not be relied upon as evidence to prove a Faragher-Ellerth affirmative defense), using your company’s traditional lawyers to conduct it can bolster an argument that communications about the training are protected by a legal privilege against disclosure. (For a detailed discussion of the attorney-client and attorney work product privileges in a workplace setting, see "Legal Privileges Against Compelled Disclosure" in the October 2003 issue of the SHRM Legal Report.)

Cost. Many law firms—especially those with business models shackled to the billable hours system—do not have the flexibility to offer alternative pricing options. For customized, in-house training, some law firms may give you no choice but to pay their regular hourly rates for training, while consulting firms often have more flexibility in structuring fixed fee arrangements. It’s true that law firms also may offer modestly priced public training seminars or even free in-house training to valued clients, but sometimes you will get what you pay for. Public seminars, by definition, will not be tailored to your specific company or business needs, and even free in-house training may not be.

No matter who your training provider is, ask a lot of questions about what you will be getting for your training dollar. Will the training be customized for your company? Who will be conducting it? What does it cover? How long will it last? Is it interactive or a lecture? By asking the right questions, you will be able to discern which program and provider best meet your needs.

Investigation Situation

Evidence of an effective investigation goes a long way toward meeting the two-pronged Faragher-Ellerth affirmative defense. A prompt, unbiased and thorough investigation demonstrates the employer’s reasonable care to prevent violations and makes it possible for the employer to take appropriate corrective measures. Moreover, if clear and reasonable complaint and investigation procedures are in place, a legal decision-maker—an administrative agency, judge or jury—may deem an employee’s failure to follow them to be unreasonable.

Although some investigations are appropriately conducted in-house, others may require a different approach. Especially when litigation is anticipated or feared, it may be best to use a neutral outsider. But who should that be?

While many companies would prefer a lawyer with expert knowledge and experience to take on this crucial role, some shudder at the thought of paying law firm rates for investigations. Others worry about the “cooling effect” that bringing in the lawyers might have on the investigation. Depending on the company culture, people sometimes shut down, or feel like they are “in trouble” when the company lawyer is involved. Others feel that they should not participate without their own laywer.

Employment counsel themselves often have reservations about acting as both investigator and legal counsel. The investigation often becomes a crucial part of the employer’s defense if the case ends up in litigation. When that happens, the investigator of a complaint becomes a fact witness for the employer and will be questioned (and cross-examined) rigorously about the details of the investigation.

Does it create a conflict of interest if a firm’s lawyers conduct an investigation and then become witnesses? If an employer’s legal advisers are called to testify about an investigation, would a judge or jury perceive them as neutral investigators—or rather as advocates poised to “find” whatever is in the best interest of the company?

Because of these concerns and questions, many outside lawyers do not want to risk having to bow out of representing their clients at trial if they are called upon to testify about the promptness, thoroughness and reasonableness of the investigation. In addition, they understand the risks of mixing privileged advisory communications with unprivileged communications during a factual investigation and in the resulting report.

When you are seeking both legal expertise and the appearance of neutrality in the eyes of those involved as well as before an ultimate fact finder, employment law consulting firms staffed by knowledgeable employment lawyers can be the perfect solution. They can ease some of the concerns that investigations—particularly in harassment cases—raise for both HR professionals and their lawyers.

Employment law consultants know the law, so they know the right questions to ask. Often, they are former litigators, so they know how to ask questions to elicit the most thorough and relevant information. They are often viewed as more neutral and employee-friendly than the company’s outside litigation counsel.

Outside lawyers who work frequently and closely with a client can also use consulting investigators as the “bad cop” when, for example, someone needs to tell senior executives that their conduct has crossed the line. Finally, because employment law consultants have no stake in the outcome and will not handle any ensuing litigation, they can serve as prepared, professional witnesses if the investigation becomes part of the employer’s defense at trial.

Nevertheless, outside counsel regarded as familiar and trusted advisers might be the best ones to handle very sensitive investigations on behalf of your organization. It may be your best judgment that senior management simply will not listen to anyone but your outside counsel if the outcome of the investigation is likely to be one that they will not want to hear. Other accusations may be so inflammatory or harmful that limiting the investigation to the smallest possible circle of advisers until the matter can be settled is more of a priority than concerns over what might happen at trial.

Whether you choose an employment law consultant or your outside law firm to handle a particular investigation will depend on the people, the circumstances and, often, the politics.

Advice and Advocacy

In many instances, your outside counsel will be the first ones to identify the need for robust employment law training and rigorous investigatory procedures—especially when litigation is foreseeable. Their continuing advice, based on intimate knowledge of your operations and employee relations climate, will best help you steer through dangerous waters.

But despite offering top-notch training and conducting neutral, thorough complaint investigations, employers are not always able to avoid the shoals of formal workplace disputes. Outside employment counsel is often the best choice when the time comes to represent you in mediation, arbitration or litigation after an investigation. Many of the same reasons that favor hiring an employment law consultant to conduct training or investigations (e.g., maximizing neutrality, maintaining privilege) are equally persuasive reasons for employers not to use the same consultant as an advocate, despite their possible qualifications.

This is not to say that it does not make sense for some companies to use employment law consulting firms with legal experts for certain legal tasks, such as giving advice and preparing position statements. But particularly in situations where an employment consultant is conducting an investigation, outside counsel is a better choice to handle dispute resolution and to give privileged legal advice.

Finding and Selecting

No matter whom you choose to perform your training, investigations and traditional legal representation, remember that you have options. But employment law consultancies are an emerging phenomenon in the professional services sector, and you may not find one in your locale. If you are in the market for such services, your outside counsel themselves may very well be the best ones to assist you in a search. Be alert for presentations and seminars that legal consultants may offer in your community and at national conferences. Visit their exhibit booths at conferences. Network with your fellow HR professionals.

If you decide that an employment law consultant is a good alternative, choose a firm with the same care you used in choosing your lawyers. Inquire whether a firm has both employment lawyers and HR experts on staff to ensure that they have the substantive knowledge to meet your company’s needs. Also, it behooves you to ensure that you are always getting legal advice from a professional who is properly licensed and covered by adequate professional services liability insurance—just in case. Finally, it is crucial that both your law firm and your consulting firm have a proactive philosophy—their goals should be to keep you out of trouble and ahead of changes in the law. Most important, they should work—together and separately—in your interest to accomplish your organization’s goals.

Michael Sullivan, Esq., is a principal in the Labor & Employment Group at Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz Ltd. in Chicago. He advises clients, litigates all types of employment disputes and, without regard to what you read above, gives pretty interesting training sessions. Carrie Garcia, Esq., is senior counsel with Vantage Solutions LLC, an employment law and workplace consulting firm. She provides proactive legal and practical strategies to her clients through advice and counsel, training (which she thinks runs circles around Mikes), workplace investigations and dispute resolution.

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