Labor lawyers in France have become overwhelmed with work, becoming indispensable to a mergers and acquisitions sector that continues to do well despite inflation worries and fears of impending recession across the world.
Several international companies have recently added social partners to their M&A teams in the French capital, including Fisherman and King and Spalding.
Mermoz, a new boutique firm specializing in private equity and mergers and acquisitions, has included a union partner in its founding team.
And social partners in Paris say the sector is so busy that companies of all sizes have had to redirect due diligence and other deal-related work to other companies in their network.
David Guillouet, founding partner of Paris-based MGG Voltaire, said mergers and acquisitions work in France “has exploded”. And that keeps his firm, specializing in labor law, very busy.
“Companies that are profitable and successful always do business,” he said. “I see it in many sectors: hospitality, real estate, construction, consulting, technology, banking. They emerged from the pandemic determined to protect their position and with the resources to do so. And all of these deals require due diligence and follow-up to make sure the merger works.
Emmanuelle Rivez-Domont, employment partner at Jones Day in Paris, echoed that sentiment.
“There was a time when we were just support for the M&A team,” she told Law.com International. “But now we’ve definitely been part of the team from the start of the deal, to the close and after.”
While rigid and complicated labor laws are a feature of many Western European systems, France is in a class of its own, say labor lawyers – and in some cases it’s the tail wagging the dog.
Rivez-Domont described a recent global deal she worked on involving multiple countries.
France accounted for “peanuts – maybe 5%” of the combined company’s global revenue, she said. “But we spent days discussing how to structure the deal to accommodate France with its constraints. It was a gymnastic exercise.
The French labor system’s emphasis on contract law and collective bargaining, often foreign to foreign acquirers, can create a minefield that can detonate a costly and embarrassing merger, lawyers said.
“Before, we were seen as a burden on the due diligence process because we had a lot to spot,” said Jean-Sebastien Lipski, labor law partner at Squire Patton Boggs in Paris.
“But over the past few years the paradigm has changed,” he said. “Now, the workforce is considered a strategic element to quantify the financial risks of a merger. Compulsory control, it has become a discipline in its own right.
For a target company, in particular, the implications are clear: “The more you comply with French labor law, the more valuable you are,” Lipski said.
Adding to the workload of employment lawyers, a recent change in French law allows acquired companies to reorganize their workforce alongside the sale, rather than leaving it to the new acquirer after the sale.
“As a selling business, you can now tell the buyer, ‘That’s the right number of employees, and I’ll take care of any layoffs or layoffs,'” Rivez-Domont said.
“It’s a useful law because you make sure you can sell a business on better terms,” she said. “But it’s also complicated and requires earlier and more intensive labor input.”
The rise of new HR issues for businesses, including remote working, greater visibility of mental health, diversity and inclusion, and employee health and safety. also reinforced the need for labor advice that lasts long after the ink has dried on the merger deal, lawyers said.
“Labour law has always had a special relationship within a law firm,” said Guillouet, who began his career at CMS Francis Lefèbvre before founding Voltaire in 2005.
“It’s not seen as very glamorous or profitable, unlike mergers and acquisitions,” he said. “But we are busy from January 1 to December 31, every year.”
