'A civilized country:' French business lawyer explains business law, bankruptcy and hedge funds

ALENÇON, FRANCE ---In France, businesses who have a beef don’t take their argument to a civil court.

They take it to a Tribunal de Commerce, a specialized court where the matter is judged by volunteer judges known as juges de commerce.

These judges are businessmen elected by their peers and, after being elected, must undertake training. Any training is very important in France.

Olivier Lefébure, lawyer and greffier for the Tribunal de Comerce in Alençon in Normandy.

Business matters may also include registering a new company or filing bankruptcy, all of which are specifically handled by a greffier de tribunal de commerce, “a court specialized in business litigation between commercial companies or commercial people,” according to Olivier Lefébure, greffier de tribunal de commerce in Alençon.

Except for Alsace-Lorraine in the east of France, greffiers in commercial tribunals (courts) are entrepreneurs who set up their offices linked to a computer company like Odyssey and provide legal support. 

In France, there are about 250 greffiers for 140 tribunals de commerce, Lefébure told The Probable Cause during a sit down interview May 6.

“France is the only country in the world that has this legal system for business and commercial litigation,” Lefébure explained. “It comes from the end of the Middle Ages. (Commercial) courts were created and, from the start, the judges were not judges, they were businessmen elected by other businessmen, more or less the Chamber of Commerce organizing those elections.”

A “juge consulaire” or “juge de commerce,” is a volunteer position with plenty of power.

“You do not get any payment for that, but you become a judge and your judgments are French public judgements with all the authority,” Lefébure said.

The greffiers know each other and business legal matters are somewhat fluid. For example, if one tribunal de commerce doesn’t have the legal know-how to handle a case, the case could be referred to another greffier in Paris or Marseille, he said.

Last year, in the Alençon area, there were about 200 bankruptcies handled by his office, a number he considers small.

Bankruptcies were almost non-existent during Covid because the French state stepped in and helped companies get through the pandemic, his company included.

That money has to be paid back, he said.

Now the French economy is suffering, not just from post-Covid fallout, but from inflation as a result of the war in Ukraine.

Electricity and raw materials are “much more expensive than before, something that has hit not only the French economy but the European economy as well," he said.

A new issue is the tariffs. “It’s not easy to predict what’s going to happen,” Lefébure said. “Your president is quite unpredictable.”

Where will all the French champagne end up? “In China," he joked.

China is a place where he’s spent a good amount of time.

Lefébure grew up in the department of La Mayenne, south of Normandy and west of Paris. It’s in the Loire Valley where his parents were farmers.

He went to grade school in his small village and high school (lycée) in Laval, the region’s capital. He attended the Université René Descartes in Paris for law and then a year at the University of East Anglia in Norwich, England where he studied case law and received an LLM.

In France, it is the “droit écrit” or written law, not case law, used to settle legal matters, he explained. 

Lefébure knew early on he wanted to be a corporate lawyer working in bankruptcy law and business litigation, so he decided to get an MBA and attended a private university in Lyon. For that education, he took out loans, much like you do in the States, he said. 

Lefébure got a job with a French law firm in Paris, eventually becoming a partner. The firm sent him to China to run the banking office there.

He and his family, including his wife “who speaks very good Chinese” and three children, spent five years in Beijing before returning to Paris.

The family moved to New York when his wife got a job at Columbia University. They spent six years there before he returned to set up his greffier business in 2015. Besides his business in Alençon, he is part owner of a greffier in St. Malo in Brittany.

In Alençon, his staff numbers five; in St. Malo, six. He is testing software using artificial intelligence that he believes could help experienced judges, only because experienced judges would be equipped to make the final decision on texts, he said.

Even though there are some politicians advocating to make greffiers and their employees civil servants, he wants to remain independent of the state.

He makes his comparison with the greffiers in Alsace Lorraine where they are civil servants because of the many times Germany invaded that area and took over those two provinces.

“They do not get the same performance as us. We  work faster and we need less (fewer) people to work faster and better. That’s because we are efficient,” Lefébure said.

He is satisfied with the French public education system, of which he is a product, and the quality of his employees, one of which is a law student.

However, finding employees to work in small, picturesque areas like Normandy is the challenge, he said.

One of his sons is now a corporate lawyer working in mergers and acquisitions (M&A) in Paris. He is of two minds when it comes to M&As in France.

When a family business sells out to a corporate entity like a hedge fund, Lefébure sees a threat to family businesses and capitalism as a result of the pressure to produce short term profits.

“M&A works (here) like it does everywhere. We still have some companies who are doing leveraged buyouts (LBOs. )You have some funds investing in those companies,” he said.

But, “you (can) see that these kinds of financial funds are creating something that I find not so good for the global economy and for the long term for a territory (like La Mayenne.)

“They (hedge funds) want the payback and they want it quite fast. When you have those type of funds entering in the capital of a company, you see the long term approach pushed to the side,” he said. The approach is “more short term, sales and to sell it after a few years.”

For 30 years in the Mayenne, the unemployment rate has been the lowest in France and that can be attributed to successful family-owned operations, he said.

“That’s not the case with hedge funds. There is no next generation and so my view on those investments - they could be important and useful to invest in some “territory” and to provide cash enough for companies to “continue to operate” and to grow, but  I do not believe in the long term it’s very good for employees.”

Employee protection helps with some of that, but France has gone "a bit too far” protecting employees, Lefébure said. "But still, I do appreciate we are in a country in which people and employees are getting a good level of protection This is part of what I call a civilized country.”