How to negotiate a management contract or a managing director contract more professionally with the assistance of a lawyer

Roland Kirsten would be glad to give you advice before concluding a managing director contract.

Read everything you need to know as a managing director / executive when concluding a contract, so that there are no surprises later.

A brief introduction to the particularities of a service contract

The appointment as managing director (or executive) is usually a happy event for all concerned. Concluding a written contract should be involved, in which the essential key points of the agreed collaboration between the company and the managing director or executive are stipulated.

Different to normal employment where executives are also protected by labour law to a large extent, a service contract is much more strongly characterized by the concept of equal negotiating partners. One consequence of this is that agreements can be made or clauses from jurisdiction can be accepted that would not be possible under labour law or have even been declared illegal by legislation.

The commencement of collaboration is combined with great opportunities for the company and the new managing director. On the other hand, it is legitimate to minimize possible later risks at the same time. These must not be forgotten during negotiations, which are usually characterized by a positive pioneering spirit on both sides. The company in which executive positions are vacant or where new ones have been created, usually has an obvious headstart in knowledge and experience in contrast to the managing director or executive. For this reason, it should go without saying that the managing director or executive should avail himself of professional advice, in order to be immune against unpleasant surprises later. Simply communicating with colleagues about contracts is helpful but insufficient.

Why you should consult a lawyer as legal adviser

Do not only trust in your previous successful activities. Mistakes are made in this human and understandable disposition when signing contracts on one's own account. Alone the fact that you are taking time to read these lines shows that you are on the right track.

Why can you not just trust in your previous experience? In the end, the answer is simple. The possibilities of regulating a service contract are much broader than in the case of a standard labour agreement. Due to different assessment factors, they are often interpreted in different ways making it difficult for the reader to deduce. It is necessary to recognize all possibilities in advance with the help of a lawyer, in order to improve or adapt things in your interest where necessary. Vice versa, there are cases every now and then, where arrangements are suggested, which are only accepted at the time of signing because the person concerned did not reckon they would really arise. After all, when it comes to service contracts, the principle applies that you should concentrate on the really important matters, settle them and not wear out your negotiating skills on minor technicalities.

The economic value of a service contract for a new managing director or executive is usually very high. In the case of a very short duration of one to two years, the value usually lies above the value of a single-family house. Should you want to purchase one, legislation has stipulated the intervention of a notary public. As a new managing director or executive, you show the necessary professionalism if you accordingly get legal advice from a specialist in this field in advance.

Roland Kirsten will give you legal advice on all issues nationwide concerning your managing director contract or executive contract.

Christoffer Friedrich and Roland Kirsten both give employers legal advice when concluding contracts with executives in Frankfurt am Main.

Contact Roland Kirsten
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