Germany: Right to issue instructions and professional independence of in-house counsel

The Federal Lawyers' Act (Bundesrechtsanwaltsordnung, BRAO) regulates the requirements for the legal activities of in-house lawyers who work for their employer as part of their employment relationship. According to Section 46 (4) BRAO, admission to the bar as an in-house lawyer requires in particular the contractual and actual guarantee of the in-house lawyer's professional independence in the exercise of their profession. This requirement is often in conflict with the employer's right to issue instructions. 

A judgement of the Frankfurt Labour Court (dated 28 January 2025, file no. 24 Ca 5262/24) provides helpful indication for distinguishing between permissible organisational instructions in accordance with the employer's right of direction on the one hand, and the professional independence of in-house lawyers guaranteed by the Federal Lawyers' Act.

Facts of the case

The plaintiff, a lawyer employed by a large company as an in-house lawyer, objected to instructions issued by his employer as part of an annual review. Following a six-month sabbatical and sick leave due to mental stress, his superior had instructed him to consult and obtain authorisation before drafting loan agreements as well as to attend regular jour fixe meetings. 

The plaintiff considered these instructions to be an inadmissible interference with his legally protected professional independence as an in-house lawyer pursuant to Section 46 (3) and (4) BRAO. He argued that the company's requirements for the preparation of contractual documents and their implementation were part of the core of his work as an in-house lawyer. The defendant employer, on the other hand, took the view that the consultation obligation was merely an organisational measure for capacity management that affected not only the plaintiff, but the entire team. The instructions served to fulfil the employer's duty of care and to manage the workload. The Frankfurt Labour Court dismissed the claim in its entirety. The core of the decision is the distinction between the employer's right to issue instructions and the professional independence of the in-house lawyer. The court came to the conclusion that the professional independence of the plaintiff pursuant to Section 46 (4) BRAO was not impaired by the disputed instructions.

Pursuant to Section 46 IV BRAO, professional independence is lacking if the applicant is bound by instructions that preclude an independent analysis of the legal situation and case-by-case legal advice. However, working as an in-house lawyer does not require the exclusion of any right of an employer to issue instructions. Even the self-employed lawyer is not completely free from instructions, but is bound by the instructions of his client within the framework of the client relationship. Overall, the professional profile of in-house lawyers is therefore characterised by the fact that they may not be given any professional instructions as to how they should legally assess a matter and, in principle, how they should handle it. 

Even taking into account Sections 46 (3) and (4) BRAO, the employer retains the option of making organisational specifications regarding the course of operational processes and, in particular, assigning tasks and functional responsibilities, redistributing them or amending. According to the court, this also covers the employer's stipulation that after the legal assessment of the matter has been completed by the plaintiff employee, the employee's superior decides whether the corresponding drafts are to be prepared by the in-house lawyer himself or by another person, possibly an external lawyer. Such a decision is not associated with questioning the expertise and legal advice of the in-house lawyer in question, but rather serves to manage capacities in the team. However, it was also decisive here that it was not clear from the plaintiff's submission whether and to what extent the employer was able to influence the result of the legal analysis with this instruction. 

In this respect, the court did not consider the professional independence and personal responsibility of the plaintiff to be affected by this, but rather also stated that the employer's right to issue instructions included making certain tasks, even in the case of an in-house lawyer, dependent on non-legal requirements such as authorisation by the responsible superior in individual cases or assigning the task to other persons or external lawyers. For the legality of the instruction, it should also be noted that in-house lawyers remain employees despite their professional independence and are therefore subject to the organisational requirements of their employer.

The court also clarified that the obligation to participate in regular jour fixe meetings is also a permissible organisational measure that does not unlawfully interfere with the plaintiff's working methods.

Practical significance of the decision

The judgment of the Frankfurt Labour Court provides valuable guidance for practitioners in dealing with the conflict between the employer's right to issue instructions and the professional independence of in-house lawyers guaranteed under professional law:

The judgment emphasises the dual status of the in-house lawyer as an independent legal advisor on the one hand and an employee bound by instructions on the other. This dual status inevitably leads to a certain tension. Work instructions to manage the workload and to organise cooperation within the team generally fall within the legitimate scope of the employer's right to issue instructions, even if they structure the work of the in-house lawyer in organisational terms.

The professional independence of the in-house lawyer relates primarily to the legal assessment and not to organisational aspects of the activity. The employer may, for example, determine when and under what organisational conditions certain activities are to be carried out, as long as the assessment of the content is left to the in-house lawyer. This also includes the decision, after an internal legal assessment has been carried out, to transfer further processing, be it the preparation of drafts or the supervision of cases, to external third parties.