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H A R VA R D L A W S C H O O L P ROGRAM ON THE L EGAL P ROFESSION law.harvard.edu/programs/plp T HE G ERMAN L EGAL P ROFESSION © 2011 by the President and Fellows of Harvard College. All rights reserved. Disclaimer These reports reflect research done by students at HLS in the Spring of 2011, and are based on secondary sources, as noted in each report. While we believe the information reflected in the re‐ ports to be true, the information has not been independently verified, and the reports are not meant to be complete with respect to any particular topic, and particularly as regards the legal system in its entirety, or in political or constitutional context. Readers should also recognize that terminology may vary from country to country, which may make naïve comparisons misleading. For example, the concept of a “lawyer” varies from country to country, and data on “lawyers” may include practicing and non‐practicing attorneys. No one should rely on the information con‐ tained in the reports for any purpose. Structure of legal education Germany Legal Education German legal education consists of a four-year undergraduate degree completed following completion of secondary school and passage of the university entrance exam. Students then take the First Examination, a comprehensive set of exams that emphasizes academic knowledge of the law. This is followed by a two-year practical training period (Referendarzeit). Typical age of starting lawyer Status hierarchy of law schools Students then must pass the Second Examination, a comprehensive set of exams that emphasizes practical legal skills. Upon passage, students are entitled to work in any legal profession. German students typically begin university at age 19 or 20.i Legal education requirements (university component, practical component, and two comprehensive exams) combined take a minimum of seven years, but most students take somewhat longer to complete.ii Most German lawyers do not begin their careers until their late 20s.iii There are 44 universities in Germany that offer a legal education. There is not a particularly strong status hierarchy among German law schools. There are no admission exams for entrance to university, law faculties may only refuse admission to a student if there is not enough space, and legal education is standardized across universities.iv The exception to this general rule is Bucerius Law School in Hamburg. Bucerius is Germany’s only private law school, and although only founded in 2000, it has quickly developed a very strong reputation. Conflicting results from various German university rankings seem to confirm the lack of a clear status hierarchy. The Center for Higher Education Development (CHE) and the newspaper Die Zeit conduct annual rankings of German universities. Rather than providing a numerical ranking, the CHE University Ranking groups universities into top, middle, and bottom groups. In the 2010 Ranking, 12 universities’ law faculties were placed in the top group, 15 were placed in the middle group, 14 were placed in the bottom group, and three were unranked.v Rough size of top law schools How professional (vs. academic) is the law degree? Professional regulation: basic licensing Length of study for licensure The German magazine Wirtschaftswoche also conducts an annual ranking of German universities as measured by a survey of hundreds of human resources managers at large German corporations. In 2010, the Ludwig Maximilian University of Munich (LMU Munich) and the University of Münster tied for first in the Wirtschaftswoche ranking, while Bucerius was third. While Münster and Bucerius were also in the top group in the CHE rankings, LMU Munich was in the bottom group of the CHE rankings. Overall, only half of the universities in the top ten of the Wirtschaftswoche rankings were also in the top group of the CHE rankings.vi As of 2009, 89,331 students were studying law at German universities.vii Approximately 10,000 students pass the Second Examination every year.viii There is not a large variation in the size of law faculties among German universities; on average there are approximately 2,000 students at each public university’s law faculty. The main exception is Bucerius Law School, which only has 561 enrolled students.ix German legal education has a strong practical emphasis. During the four-year university training, students are required to study a broad range of legal topics. Instruction typically is from the point of view of an impartial judge rather than an advocate.x Students also are required to do practical work during breaks between semesters.xi Once students have passed the First Examination, they must complete a two-year practical training period. During this period, students must work at a civil court, a criminal court, a prosecutor’s office, and in a private legal setting.xii Students also attend classes taught by practitioners during this period. Reforms in 2002 emphasized the importance of practical training in “lawyering skills like negotiation, advocacy, and legal advice.”xiii Students are qualified to work in any legal profession once they pass both the First Examination and the Second Examination. To practice as a private attorney (Rechtsanwalt), a student must apply to join a state branch of the Federal Chamber of Lawyers (Bundesrechtsanwaltskammer). However, there is no separate bar exam, and an applicant can only be rejected under a narrow set of circumstances (primarily ethical or criminal grounds). Students study for the First Examination for about six months. 2 Students may retake once if they fail, but are excluded from a legal career if they fail twice.xiv In 2009, 29.3% of candidates failed the First Examination.xv Requalification Lawyers per population and lawyers per working population Size of law firms Share of attorneys at top firms Profitability of law firms Leverage of law firms Compensation structure Students study for the Second Examination for six months to one year. In 2009, 16% of candidates failed the Second Examination.xvi European attorneys may requalify either by continually practicing in Germany for three years, or by sitting the relevant equivalence exam.xvii There is one attorney for every 372 people, and one attorney per every 198 working people. As of 2009, the German population was 81,802,000,xviii and there were approximately 43,460,000 Germans in the labor force. There are over 220,000 attorneys in Germany.xix Law Firms The JUVE Handbook maintains statistics on the 70 law firms with the most German-based attorneys. These firms which employ a total of 8,644 attorneys in Germany. The median firm size is 85; the average firm size is 124. Twenty-seven firms employ more than 100 attorneys in Germany, ten employ more than 250 attorneys, and only one employs more than 500 attorneys.xx A large proportion of Germany’s largest law firms are U.S. or UK-based firms with German offices. Approximately 3.9% of German attorneys work for one of Germany’s 70 largest firms. The Lawyer’s European 100 collects data on the 100 highest grossing law firms headquartered in continental Europe. Among the 17 German-based firms on the list, the average revenue per equity partner was €1.40 million.xxi Germany’s 70 largest law firms have a total of 2,591 equity partners out of 8,644 total attorneys. Thus, there are approximately 2.3 attorneys per equity partner.xxii According to a 2004 article, leverage in the larger German firms was increasing, with the result that associates tended to have to wait longer to become partners. According to a law firm consultant, leverage ratios of 1:3 had become more common.xxiii This article also mentioned that some law firms introduced statuses other than associate and equity partner, such as junior partner, to provide young lawyers with an incentive to reach an intermediate position. Firms, especially larger firms, generally still adhere to a 3 lockstep system for associates.xxiv However, reports indicate that there has recently been a slight tendency among firms to shift their compensation structures for associates towards an incentive-based system.xxv Law firm retirement age Law firm governance Type of legal system Punitive damages in civil cases Juries in civil cases Rules on contingent fee litigation Rules on attorney’s fees and other costs in litigation Typical starting salaries, as of January 2011, in the top-paying firms ranged from €85,000 to €110,000. Bonuses usually depend on performance of the individual and/or the firm. Top salaries for sixth-year associates at the top-paying firms range from €120,000 to €200,000.xxvi There does not seem to be a standard retirement age. For example, a White & Case partner left the firm in 2008 at the age of 61 to found his own firm.xxvii At Freshfields, the mandatory retirement age in the German office is between 58 and 65, but there are older retirees at the firm.xxviii However, there appeared to be dissatisfaction with letting partners stay at firms for too long. Usually, firms are governed by various committees of partners. German lawyers may incorporate their practice to obtain limited liability,xxix but only lawyers and other enumerated professionals who work together with the lawyers may own interests in such corporations, and lawyers must hold the majority of the voting rights.xxx Law/Legal procedure Germany has a civil law system.xxxi Punitive damages in civil cases are not permitted by law, and may be unconstitutional.xxxii Germany does not have a jury system. Contingent fees traditionally were not permitted. However, a 2006 decision of the German Constitutional Court held that a blanket ban on contingent fees was unconstitutional.xxxiii The German parliament subsequently passed a law allowing contingent fees if the client otherwise would not be able to enforce or defend her legal rights.xxxiv The losing party must pay all litigation costs, including court costs and the losing party’s attorney fees.xxxv The Rechtsanwaltsvergütungsgesetz (Law on the Regulation of Attorneys’ Fees) contains a series of schedules that establish flat fees for attorney services (statutory fees). Clients and attorneys may agree to a negotiated hourly rate in lieu of the statutory fee. However, the losing party is only liable for an amount equal to the statutory fee. Costs are distributed proportionally if a party partially wins.xxxvi 4 Rules on discovery Rules on class actions Prevalence and prominence of “plaintiff’s bar” and class actions brought on behalf of shareholders or consumers against large companies There is no system of discovery, although in some circumstances the substantive law at issue may require parties to deliver certain documents to the court or to the other party.xxxvii The impact of the lack of discovery is mitigated by German rules on burdens of proof; “The burden will usually be shifted to the party who has access to the relevant information.”xxxviii Historically, class actions have not been permitted in Germany. The German parliament adopted the Kapitalanleger-Musterverfahrengezetz (Capital Investors’ Model Proceedings Act) in 2005 to allow limited class actions for securities fraud cases only. The law is “expressly intended as an experiment” in class action lawsuits and includes a sunset provision (it will expire in 2012 unless renewed).xxxix There is essentially no plaintiff’s bar in Germany due to the unavailability of class action lawsuits, stringent discovery rules, “loser pays” rule for litigation costs, and lack of punitive damages. i Stephan Korioth, Legal Education in Germany Today, 24 WISC. INT’L L.J. 85, 90 (2006). Id., at 96-99. iii Id., at 103. iv Id., at 90. v CHE University Ranking 2010, available at http://www.daad.de/deutschland/hochschulen/hochschulranking/06543.en.html?module=Hitliste&do=show_l1&hsty p=1&esb=5. vi “Uni-Ranking 2010: Deutschlands beste Unis aus Personalchef-Sicht,” WirtschaftsWoche, May 22, 2010, http://www.wiwo.de/management-erfolg/deutschlands-beste-unis-aus-personalchef-sicht-430954/. vii Statistisches Bundesamt Deutschland, http://www.destatis.de/jetspeed/portal/cms/Sites/destatis/Internet/EN/Content/Statistics/TimeSeries/LongTermSeries /Education/Content100/lrbil03a,templateId=renderPrint.psml. viii Korioth, Legal Education in Germany Today, at 89. ix “Facts and Figures,” Bucerius Law School, http://www.law-school.de/hochschule.html?&L=1. x Korioth, Legal Education in Germany Today, at 93-94. xi Id., at 92. xii Id., at 97-98. xiii Id., at 98. xiv Id., at 96-97. xv Bundesministerium der Justiz, Ausbildungsstatistik 2009, Übersicht über die Ergebnisse der Ersten Juristischen Staatsprüfung im Jahre 2009 (neues Recht), March 23, 2011, available at http://www.bundesjustizamt.de/nn_ 1634386/DE/Themen/Justizstatistik/Ausbildung/downloads/Ausbildungsstatistik2009,templateId=raw,property=p ublicationFile.pdf/Ausbildungsstatistik2009.pdf. xvi Id. xvii The Law Society of England and Wales. How to practise in Germany (2007), http://international.lawsociety.org.uk/ip/europe/574/practise xviii Statistisches Bundesamt Deutschland, “Bevölkerung: Bevölkerung nach dem Gebietsstand,” http://www.destatis.de/jetspeed/portal/cms/Sites/destatis/Internet/DE/Content/Statistiken/Zeitreihen/LangeReihen/B evoelkerung/Content75/lrbev03a,templateId=renderPrint.psml. ii 5 xix Korioth, Legal Education in Germany Today, at 89-90. JUVE HANDBUCH WIRTSCHAFTSKANZLEIEN 2010/2011, available at http://www.juve.de/handbuch/de/juvehandbuch-wirtschaftskanzleien-statistiken. xxi The Lawyer European 100, available at http://www.centaur2.co.uk/emags/thelawyer/tl_Euro100_2011/pageflip.html. xxii JUVE HANDBUCH WIRTSCHAFTSKANZLEIEN 2010/2011. xxiii Katja Wilke, Aufstieg zum Partner wird für Junganwälte immer schwerer, HANDELSBLATT, Sept. 4, 2004, available at http://www.handelsblatt.com/unternehmen/mittelstand/aufstieg-zum-partner-wird-fuer-junganwaelteimmer-schwerer/2396098.html. xxiv Christoph Luschin, Large Law Firms in Germany, 14 TOURO INT’L L. REV. 26 (2010). See also JUVE, Anwaltsmarkt 2010/11: Trends und Entwicklungen, available at http://www.juve.de/handbuch/de/2010/kapitel/u10. xxv Id. xxvi Azur-Online, azur100: Gehälter in großen und internationalen Kanzleien, available at http://www.azuronline.de/azhtml/mag_akt_2011-100_gehaltk.html. xxvii JUVE, Dresden: Ex-White & Case-Partner Bauer gründet Kanzlei, Nov. 5, 2009, available at http:// www.juve.de/nachrichten/namenundnachrichten/2009/11/dresden-ex-white-case-partner-bauer-grundet-kanzlei. xxviii JUVE, Altersweisheit: Freshfields diskutiert Kanzlei-Pensionen, May 12, 2005, available at http://www.juve.de/ nachrichten/namenundnachrichten/2005/05/altersweisheit-freshfields-diskutiert-kanzleipensionen. xxix BRAO, § 59c. xxx BRAO, § 59e. xxxi The Law Society of England and Wales. How to practise in Germany (2007), http://international.lawsociety.org.uk/ip/europe/574/practise xxxii Volker Behr, Myth and Reality of Punitive Damages in Germany, 24 J. L. COMM. 197, 198-199 (2005). xxxiii Bundesverfassungsgericht [BVerfGE] [Federal Constitutional Court] Dec. 12, 2006, 1 BVR 2576/04 (F.R.G.). xxxiv Rechtsanwaltsvergütungsgesetz [RVG] (Law on the Regulation of Attorney’s Fees), § 4a. xxxv Zivilprozeßordnung [ZPO] (Civil Procedure Code), § 91. xxxvi Id., § 92. xxxvii ABA SECTION OF ANTITRUST LAW, OBTAINING DISCOVERY ABROAD 128 (2d ed. 2005). xxxviii Id., at 129. xxxix Mark C. Hilgard and Jan Kraayvanger, Class Acts and Mass Torts in Germany, IBA LITIGATION COMMITTEE NEWSLETTER (Sept. 2007), 40. xx 6