Legal Secondment in the Czech Republic: Benefits, Risks, and Best Practices

Are you considering whether it makes sense to hire an attorney from an external law firm on a long-term basis directly for your company? Secondment is a solution that has transformed how corporations secure legal support in the Czech Republic. In this article, you will learn about the benefits and risks it brings, and how to set up the cooperation so that it is effective and without hidden costs under Czech legislation.

What is legal secondment and how it works in practice

Legal secondment is a specific form of flexible deployment where an attorney, employed by an external law firm, effectively works at your company's headquarters and within your team for an agreed period. The attorney utilizes your facilities, integrates into projects, and handles the agenda in cooperation with your management, while maintaining a link to their home law firm in Prague.

In practical terms, this means you have an attorney at your disposal who is dedicated exclusively to your matters, knows the details of your business, and understands your organizational structure.

Seconded attorneys commonly handle a wide range of agendas, from contracting matters and preparing documentation for mergers and acquisitions to compliance and monitoring regulatory requirements. In this area, ARROWS provides comprehensive services regarding contracts and negotiations. They can work full-time or on a part-time basis depending on the intensity of your legal needs in the Czech Republic. 

What legal frameworks govern secondment in the Czech Republic

In the Czech legal environment, the secondment of a law firm to a client is most often implemented through one of two legal models, and it is crucial to choose the right one to avoid violating Czech law.

A legal services agreement is the standard relationship between a client and a law firm in Prague, with the specific feature that the place of performance is the client's headquarters and the attorney is available for a specified timeframe. The law firm invoices the agreed fee, including profit. The attorney is bound by the client's instructions regarding the factual assignment, but professional supervision and liability are borne by the law firm.

The second model is the temporary assignment of an employee according to Section 43a of the Czech Labour Code. This regime is stricter, and the Labour Code prohibits this assignment from being provided for profit. The employer may only request reimbursement of actually incurred costs from the user; otherwise, it would be considered illegal disguised employment mediation.

Attorneys from the ARROWS law firm in Prague can set up the contractual relationship to reflect reality and eliminate the risk of allegations of disguised agency employment. You might be interested to know that ARROWS offers comprehensive Labour Law services to ensure full compliance with the Czech Labour Code. Did you know that ARROWS has a specialized team for Czech employment law that handles these situations? 

microFAQ – Legal tips for setting up cooperation

1. Do I need a written contract?
Yes. Whether it is a legal services agreement or a temporary assignment agreement, a written form is essential under Czech legislation to define liability, scope of work, and protection of confidential information. Find details in our Holding Structures and Beneficial Ownership in the Czech Republic: Compliance Checklist section to ensure your corporate governance is robust.

2. Who pays the social security contributions for the attorney?
Health and social insurance, as well as taxes, are always paid by the legal employer (the law firm). You pay the invoice for services, which covers these costs and any potential margin.

3. What is the typical length of a secondment?
Usually from 3 months to 1 year, with the possibility of extension. Short-term secondments under 3 months are less effective due to the time required for onboarding.

Why large corporations choose legal secondment

In the last twenty years, secondment has evolved from a marginal solution to a standard strategy for large multinational corporations operating in the Czech Republic. The reasons for this decision are purely pragmatic.

A legal team must often handle hundreds of contracts and due diligence in an extremely short time, and secondment ensures qualified personnel within days. For foreign investors, we recommend reading about Cross-Border Construction Law and Building Due Diligence in the Czech Republic: What Foreign Investors Should Know to better understand local project risks. A law firm that knows your business will send an attorney who has the necessary context and does not require lengthy training.

Another motive is covering temporary gaps, such as parental leave, long-term illness, or the sudden departure of a key lawyer, or perhaps the need for narrow specialization. Details can be found in the section dedicated to IT and software law and cybersecurity if you are looking for technology experts. If you are dealing with a specific problem, an internal generalist may not suffice, while a seconded specialist brings know-how and leaves once the project is completed.

Although the hourly rate of a seconded attorney may be higher than the calculated salary of an internal employee, the total cost of ownership (TCO) can be lower. Recruitment costs, training, benefits, severance pay, and administration associated with employees are eliminated, so you only pay for effective time.

Key benefits of legal secondment

Immediate availability and guaranteed quality

Recruiting a high-quality in-house counsel in the current Czech market takes 3 to 6 months, while secondment can be implemented within days or weeks. Our Prague-based law firm guarantees that the dispatched attorney has the necessary education, a clean record, and professional insurance. This eliminates the risk of an unsuitable selection during a probationary period.

Security and liability for damages

If your core employee causes damage, they are only liable to you under the Czech Labour Code up to 4.5 times their average earnings, unless it was intentional. The rest of the damage is your responsibility. In the case of commercial secondment, the law firm is directly liable for damage caused by professional error with its entire assets.

Attorneys are compulsorily insured under Section 24a of the Czech Legal Profession Act. Large firms like ARROWS typically have insurance limits in the hundreds of millions of CZK, which represents a significant safety cushion for a corporation.

Flexibility and zero labor law obligations

You can terminate a secondment or adjust its scope much more easily than an employment relationship. If a project ends early or you do not get along with the attorney in the team, replacement or termination of cooperation is a matter of business negotiation, not a complex termination reason under the Czech Labour Code.

microFAQ – Economics and risks

1. Is secondment cheaper than a permanent lawyer?
In terms of direct costs, usually not. However, it is more cost-effective when you factor in recruitment costs, severance pay, sick leave, vacations, and the risk of underutilizing a permanent employee after a project ends.

2. Can I terminate a secondment immediately?
It depends on the contract. The standard in commercial secondment agreements in the Czech Republic is a 1-month notice period, but a shorter period can be negotiated.

Risks and practical challenges of secondment

The difference between law firm and in-house mindsets

Attorneys are trained to identify risks and write precise legal opinions, while in-house lawyers must make quick, business-oriented decisions. A seconded lawyer must rapidly transition from the role of an external advisor to a team member. Experienced Prague-based law firms prepare their attorneys for this shift in mindset.

Conflict of interest

A law firm in Prague cannot represent a client if it represents the opposing party in the same matter, or if it would conflict with the interests of another client. A thorough conflict of interest check must be conducted before a secondment begins. It may happen that a seconded lawyer must be recused from negotiations with a specific business partner.

Confidentiality and data protection

The lawyer will have access to your most sensitive data and is bound by a statutory duty of confidentiality under Czech law, which is stronger than a standard NDA. However, it is necessary to ensure contractually that this data is not shared with the rest of the home law firm without justification, unless necessary for the performance of the service.

Risk and Solution Table (ARROWS Legal)

How to properly structure a secondment agreement

A secondment agreement should include a precise definition of services to avoid general definitions that resemble dependent employment. Furthermore, it is necessary to determine the place and time of performance, such as specific days of the week or a range of hours per month.

An important point is the remuneration, which can be set as a flat fee, an hourly rate based on timesheets, or a combination of both. The contract must also define the method of giving instructions, reporting of hours worked, and termination options, such as termination without cause.

Framework agreement vs. individual orders

For corporations, it is efficient to enter into a Framework Agreement for the Provision of Legal Services, which defines general business terms, confidentiality, and liability. The specific secondment is then implemented via a simple amendment or purchase order specifying the lawyer's name, duration, and price.

Legal secondment in an international context

If your company has international operations, secondment can be a tool for know-how transfer. ARROWS International can provide lawyers with knowledge of foreign law or arrange for your lawyer to be seconded to a foreign branch of a partner firm, which is crucial for managing cross-border transactions.

Executive summary for management

• Efficiency: You get a fully-trained lawyer without recruitment and training costs.
• Flexibility: You use the service only as long as needed, without the need for severance pay.
• Security: The law firm is liable for errors through its insurance, unlike an employee with limited liability under Czech law.
• Price: Cost-comparable to the total cost of a senior employee, but without fixed commitments.

Conclusion

Secondment is a modern tool that bridges the gap between internal legal departments and external legal counsel. It allows companies to quickly scale up capacity for projects and scale down during quieter periods. The key to success is the legally correct setup of the contract under Czech legislation to eliminate the risks of disguised employment.

If you are considering strengthening your team through secondment, the specialists at ARROWS law firm in Prague are at your disposal. Thanks to our years of practice and strong background, we can set up a model that is secure, tax-deductible, and functional.

Contact us at office@arws.cz for a non-binding consultation of your case.

FAQ – Frequently Asked Questions

1. What is the difference between secondment and agency employment?
The secondment of a lawyer is primarily the provision of professional legal services by a specialized law firm, where the added value is the provider's professional background and know-how. Agency employment is merely the leasing of people for the purpose of performing work under the user's direction.

2. Who manages the lawyer?
The client provides the substantive assignments. However, professional supervision and methodological guidance should remain with the law firm to maintain the essence of providing legal services and the attorney's liability under the Czech Legal Profession Act.

Read also:

• Compliance audits: How to conduct an internal audit before the authorities arrive
• How to Check Your Czech Business Partner Before It’s Too Late
• Operating Without a Licence in the Czech Republic: Legal Consequences Explained
• Mergers and Acquisitions in the Czech Republic: Legal Steps for Foreign Investors
• Holding Structures and Beneficial Ownership in the Czech Republic: Compliance Checklist