Firm Spy cannot guarantee the veracity of the figures quoted in this post

Last week we published the first installment of the Firm Spy Salary Survey - revealing top-tier graduate salaries across Australia. Today brings the second installment of in this series. We turn to the top-tier first years; the lowly workers who can now finally do some trolley-pushing delegation of their own!

As we move up through the year bands, the figures we report will  likely become less accurate. Performance bands within year levels emerge even at the first-year stage, so lawyers at the same firm with precisely the same handful of months of experience may, nevertheless, be remunerated differently. This doesn’t mean that the figures below are necessarily incorrect, just that as we move forward through year bands, the figure you’re looking at might be at the high-end or low-end (or even the median) of a salary band .

From the perspective of junior employees, the existence of discrepant pay levels within a year salary band is a major nuisance. Moreover, when a junior lawyer at firm 1 compares their paltry new salary to a higher salary that is paid to an equivalently experienced employee at firm 2, and the lawyer from firm 1 thereafter communicates that information to their partner, the partner is simply able to dismiss the discrepancy by saying “the lawyer at firm 2 is obviously paid at the ‘high-end’ of the salary band’. Once partners have deflected this initial barrage of underpayment criticism in this way, their hope is that the issue will “go away”. And it usually does.

However, the Firm Spy is informed (by an anonymous source, as well as in the comments to yesterday’s post) that the Mallesons partnership has had less than its usual success this year in using this strategem to deflect pay concerns of junior lawyers. It is rumoured that partners have in recent weeks moved to stem the losses of junior lawyers moving elsewhere for higher salaries by embarking upon another salary review. A number of junior lawyers are believed to have had their salaries  adjusted as a result.

Now, onto the figures! As you will note below, we still need more help. If you know any other salaries that are missing, please either email us at news@firmspy.com or fill in the survey here.

Top Tier First Year Salaries 2010

Melbourne

• Freehills - $72,000
• Mallesons Stephen Jaques - $72,000
• Allens Arthur Robinson - $71,000
• Clayton Utz - $72,000
• Blake Dawson - $74,000
• Minter Ellison - $68,500

Sydney

• Clayton Utz - $73,000
• Mallesons Stephen Jaques - $78,000
• Freehills - $80,000
• Minter Ellison - $75,000
• Blake Dawson - $77,000

Brisbane

• Blake Dawson - $70,000
• Freehills - $71,000
• Allens Arthur Robinson - $68,000

Perth

• Mallesons Stephen Jaques - $74,000
• Blake Dawson - $70,000

The figures we have quoted are inclusive of super but exclusive of bulk-discounted items that the firm pays for (and attributes the RRP value to) like gym  memberships and miscellaneous benefits.

How does your firm stack up? Is it time to put more pressure on?

Send the Firm Spy your news and views!

In a fistful of cinematic scenes that won’t soon be forgotten, boxing underdog Rocky Balboa took viewers  literally step  by step through the elaborate training regimen that prepared him for his celebrated bout with Apollo Creed in 1976’s triple-Oscar-winning masterpeice Rocky. Set against the classic track “Gonna Fly Now”, Rocky Balboa rounded out these training efforts  by sprinting up the 72 stone steps leading into the Philidelphia Museum of Art, before shadow-boxing at the top of those stairs.

Those steps, now colloquially known as the “Rocky Steps”, are something of a Philidelphian tourist attraction, with WIkipedia noting:

Tourists and local residents often mimic Rocky’s famous climb, a metaphor for an underdog or an everyman rising to a challenge.

Just like Rocky in that epochal moment, the Firm Spy was literally punching the air as we read the pugilistic  brilliance of Hannah Low in her AFR article last Friday (the same article we spoke about yesterday). From the perspective of Allens Arthur Robinson, Low’s journalism can best be described as a short jab, an upper-cut, and then a knockout blow.

The Short Jab

Low starts by giving a quick, punchy overview of corporate Australia over the last year and the kind of utterly reprehensible behaviour that floored juniors workers across major firms:

The credit crunch saw a squeeze in head count… Insiders say that the phenomenon of “freezing” lawyers out - where a solicitor is not given any work from a supervising partner and is unable to meet billing targets as a result - was rife in the profession last year. The focus on “performance managing” employees out was a convenient alternative for firms who didn’t want to announce formal redundancies to the market.

For those judging this bout from outside the ring, you’ll recall that Allens Arthur Robinson did announce a “voluntary” redundancy scheme last year. However, we received a spate of anonymous tips from Allens spies that questioned the voluntariness of those redundancies.

The Upper Cut

Low then proceeds to land a punch flush on the chin of AAR, highlighting a glaring discrepancy between redundancy figures reported in the firm’s formal redundancy program and massive additional losses to fee-earner head count outisde the redundancy program:

Allens Arthur Robinson cast off 114 staff under it’s voluntary redundancy program, but only a third were lawyers. But the AFR Partnership Survey reveals that the firm’s full time lawyer head count plummeted from 947 in January 2009 to 839 in January 2010, a fall of 11.4 per cent.

So if the voluntary redundancy program only netted a reduction of approximately 35 fee-earners, how else did AAR manage to reduce head count by a remarkable 73 (approx) additional lawyers? If, hypothetically, the rumours we reported that some of the “voluntary” redundancies were actually involuntary, it could be that as few as, say, 25 fee-earners truly volunteered to partake in the AAR voluntary redundancy program. In those circumstances, it would seem tremendously odd that some 300% MORE lawyers would soon thereafter voluntarily opt to depart the firm but without a redundancy payment. In boxing terms, this would amount to a monumental upset.

The Knockout Punch

But no modern-day boxer - not even Rocky Balboa in his momentous return to the ring in 2006’s Rocky Balboa - can win a fight without a knockout punch. And so, having found the firm vulnerable after exposing the very peculiar statistics above, Low connected with a right-hook to AAR’s jaw:

Allens has previously said that performance reviews are not being used as redundancy by stealth, but lawyers at the firm say that is not the case. One lawyer says staff were told the firm was locked into its lease and the only factor that could be adjusted was people. Many Allens lawyers were called into a meeting with their partner only to be presented with a resignation letter and told to go now with a payout, or be pushed later with no payout, the lawyer says. He cannot reveal his identity because in order to receive the payout, he had to sign a deed of release promising he would not leak any information about the firm, “and if we did, they would hunt us out and sue us”, he says. The difference of 70 lawyers between the 108 lost by the firm last calendar year and the 38 or so that are accounted for under the voluntary redundancy program, was done by “stealth”, the lawyer says.

The Ten-Count

Of course, every fallen giant will try to rise from the canvas. Ivan Drago, for example - the  imposing Russian boxer  played by Dolph Lungren in Rocky IV who boasted a super-punch of 1850psi - tried valiantly, though unsuccessfully, to regain his footing in the 15th round against Rocky. Here, so too does AAR spokesman Chris Fogarty. But could the referee rouse AAR prior to the ten-count?

… Allens spokesman Chris Fogarty says the difference is simply lawyers leaving the firm for local and international roles because the jobs market has picked up. He maintains that turnover “remains at decade low levels” and says the anonymous claims are a mix of complete fabrication and deliberate misrepresentation.

Sorry Chris, but a lightweight is no match for a heavyweight “rising to a challenge”. One, two, TEN!

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We received a few replies to our call yesterday for news on the way firms are handling the Christmas shut-down. In essence, we were hoping to find out if any firms were using the opportunity - a traditional down time in the calendar - to force staff to take unused annual leave.

Surprise surprise - notorious tightwads AAR are rumoured to have implemented a very tight scheme in which staff will lose almost half of their annual leave entitlements. This from an anonymous AAR spy last night:

Re: your story on involuntary leave- Allens is closing Christmas Eve this year and re-opening on the 11th. All staff forced to take leave unless they have the approval of their section head to work during the office closure. No extra leave is given to compensate for this, so you’ve lost 8 of your 20 annual leave days for the year as the firm shifts the burden of a traditionally quiet period onto its staff (and justifies it by saying “the firm believes it is important for staff to spend this time with their families”). Interestingly, last year we re-opened a week earlier…

No doubt our best mate, AAR spokesperson Chris Fogarty, was behind the “spend time with your families” rigmarole.

Meanwhile, it appears Mallesons have finally gotten into the festive cheer by actually giving staff some extra leave. We received the following from an anonymous Mallesons spy yesterday:

Mallesons is closing on Christmas eve and will not officially reopen until 11 January. All told, staff are forced to spend 5 days of annual leave, but will receive 3.5 days of annual leave for free. If people have urgent work, they will not be required to take those 5 days, but this is subject to partner approval… I think everyone is pretty happy with the arrangement. Let’s call it a very minor solace for the sh*t that everyone has been through this year and for the almost laughable “bonus” we received.

We’re happy to call it a ” very minor solace”, but better than nothing!

What is your firm doing? Let us know - send the Firm Spy your news and views!

We thought it appropriate, in this huge week of Australian Rules Football, to pay homage to our national sport with the inaugural Firm Spy Downlow Award.

Whereas the Brownlow is awarded to the fairest and best player in the AFL, the Firm Spy Downlow is awarded to the corporate firm whose conduct over the previous year is so censurable, that we consider it can best be characterised as a cheap shot down-low.

We even have a “blue carpet special”!

Criteria for assessment:

1. appearance on the blue carpet;
2. form over the season;
3. depth and magnitude of reportable offences; and
4. hitting them down-low (ie a single act so miserly in nature that it strikes physical pain into employees).

NB - The Firm Spy in no way guarantees the accuracy of any of the sources (eg The Australian & ALB) we have cited and cannot, for obvious reasons, ensure the accuracy of the anonymous sources informing sections of this post.

The Blue Carpet Special

To the uninitiated graduate shopping around for a suitable law firm, the prospect of international travel enlivens the imagination. Graduates dream of international riches, foreign lands and cutting-edge legal melodramas. Allens has built on this graduate appeal, advertising itself as ‘best friends with Slaugher & May in London’, suggesting to graduates that as a consequence, ‘you could have the opportunity to do client work that requires you to spend some time in another office’!

But just like most footballing WAGs, what you see on the blue carpet might not be quite what you get after a long, booze-fuelled awards ceremony. In response to proposed tax law amendments, AAR spokesman Chris Fogarty told The Australian on 3 June 2009:

the law firm would find it more difficult to send lawyers to its Asian offices to work on short-term projects and to give younger lawyers overseas experience.

Shall we call this … a wardrobe malfunction on the blue carpet?

The Season

Round 1

When news hit that the Allens partnership had instituted a pay freeze, the following was reported by ALB 0n 17 April 2009:

“I’ve been speaking to other staff about it and there was a fair degree of relief about the announcement. [Managing partner] Michael [Rose] has been visiting and briefing offices in person, and video recordings are posted on our intranet, so all our staff know whats happening. He’s doing a remarkable job and has our admiration” one anonymous source told ALB.

Yes, thanks Mike - this pay freeze is such a relief! That anonymous source wouldn’t have been AAR media affairs spokesman Chris Fogarty, would it?

Round 2

In the same ALB article, Michael Rose said:

“We have predicted, and been preparing for, a downturn in the legal services market. No business is immune from one of the largest recessions in living memory”.

Apparently some businesses are immune Mike; Allens Arthur Robinson revenue increased 2.2% in 2008/2009 and most AAR partners received $900,000.00, while some took home as much as $1,400,000.00. Cha Ching!!

Round 3

On the same day, Rose told The Australian:

that although Allens was looking for cost savings, the firm … would not reduce its intake of law graduates. “We just took on 77 graduates last month and we have a pipeline running out for the the next two years, and we don’t intend to make any changes to that pipeline.”

While recent statistics have confirmed that AAR graduate recruitment will remain stagnant for the next 2 years, vacation clerkships are expected to be considerably reduced over the same period, casting doubt over the bold claims that the firm doesn’t intend to make any changes to its ‘pipeline’ in the near future.

Round 4

In the same article from The Australian on 17 April 2009:

Mr Rose believed… Companies were seeking more certainty about their legal costs [and]… the downturn was likely to force law firms to be “far more creative and constructive in terms of their fee structures”. Fixed fees were likely to become more common …He said clients had become uneasy about billable hours in the past few years. “Good firms need to respond to that unease,” Mr Rose said.

Most unhelpfully, Allens declined to clarify its headcount movement in the BRW Top 500 Private Company Survey. However, we were able to calculate a rough estimate of the number of lawyers in the firm by dividing the firm’s total revenue by the revenue per lawyer, as reported in the AFR Law Firm Profit Survey.We came up with a figure of 876 lawyers.

Meanwhile, The Australian reported on 3 July 2009 that 114 people had volunteered in the Allens redundancy scheme; a figure which was ‘fairly evenly split’ between fee-earners and non-fee-earners. Assuming 57 lawyers have therefore departed the firm, this means 93.5% of the legal staff that existed in 2008/2009 will likely be expected (we assume) to bring in the full 100% of AAR revenue in 2009/2010. If the firm expects “double digit growth” again in 2009/2010, this means 93.5% of the number of 2008/2009 lawyers will be expected to bring in 110% of 2008/2009 revenue next financial year.

Of course, all of this is not made easier by the concession made by Mr Rose that “companies were seeking more certainty about their legal costs’, and ‘fixed fees were likely to become more common’.

Round 5

Michael Rose and Chris Fogarty at various times rejected claims that some voluntary redundancies were in fact involuntary. We received no less than three separate comments from anonymous AAR spies that questioned the voluntariness of the redundancies.

Reportable Offences

• Engendering (what we consider to be) false hopes in graduates that international travel awaits;
• Getting a firm spokesman an anonymous source to sing the praises in ALB of a very unpopular pay freeze;
• Implementing a pay freeze, introducing a redundancy scheme and claiming that “no business is immune from one of the largest recessions in living memory’, yet reporting astonishing six and seven figure partner profits;
• Foreshadowing to clients that the firm would be more robust in responding to more competitive costs agreements, yet (we presume) expecting a firm with massively reduced headcount to achieve the same, if not a higher, budget in the 2009/2010 financial year;
• Being associated with rumours (reported by us) that some of the ‘voluntary’ redundancies were in fact involuntary.

Hitting them Down-Low

After performing woefully on the Blue Carpet, having a season to forget, and posting a list of reportable offences long enough to make the mind boggle, only one thing stands between Allens Arthur Robinson and Firm Spy Downlow glory.

Was there one occasion when the firm really hit employees down low?

On November 14 last year, the Allens Arthur Robinson partnership decided to cancel the Christmas party. At the time, a firm spokesperson said of the move:

We didn’t think it was an appropriate time to celebrate when so many of our clients are suffering.’

Supposing the Christmas party would have cost the partnership $100,000, this would have meant that partners would have had to have set aside an almost infinitesimal 0.06% of the reported $158,000,000.00 partnership profit in 2008/09. Yes, less than one/tenth of one per cent!

For the 876 lawyers (not to mention support staff) who on average each delivered to partners an estimated profit of $180,000.00, this is a shot down low!

Congratulations to the Allens partnership on this year’s win!

Send the Firm Spy your news and views!

Last week the Firm Spy contacted the genial AAR spokesman Chris Fogarty in the hope of getting a comment on rumours we have heard that the Allens partnership is presently deliberating over a massive firm-wide involuntary redundancy scheme.

Yes, a new wave of layoffs in addition to the massive voluntary redundancy programme in which 114 Allens Arthur Robinson employees apparently left the firm!

It didn’t come as a huge surprise that Fogarty first demanded we reveal our identities, before launching into a homily that the Firm Spy is cowardly for hiding behind the shield of anonymity, and then finally refused to even consider our request for comment. We invited Chris to send us his thoughts via email and promised to publish them, but we haven’t heard anything yet.

On the weekend, we received the following comments from an anonymous spy:

I wonder if AAR would care to confirm the rumours that firm management told staff last week that they are currently carrying 100 too many lawyers…does this mean that despite “double digit” growth another round of redundancies is likely?????

Good question! Last financial year AAR boasted 3.8% growth in revenue, which apparently translated to double digit growth in partner profits. For the mathematically challenged, this means that if a fictitious partner earned $1,500,000.00 in 2008, they would receive $1,650,000.00 as a minimum in 2009 (10% growth).

Count the zeros! That’s a mother lode of cash … in the middle of the worst financial crisis in history!

Hardly the sort of financial woes that would justify a second wave of redundancies, we would have thought. And yet, like the anonymous source quoted above, we have heard similar rumours from other AAR spies in recent days. We invite Chris and the partnership to confirm these rumours.

If true, is it time Allens staff considered striking? Send the Firm Spy your news and views!

[ED: since publication we have been helpfully informed that Mr Fogarty is not a partner of AAR, but a spokesman for the firm.]

We received two emails last week from Allens spies who insisted that some of the 114 people populating The List (voluntary redundancies) emailed by Michael Rose around the firm on Thursday were in fact given a bit of a nudge. Allens partner Chris Fogarty, the same guy who inadvertently revealed the bizarre nature of Allens’ graduate advertising, offered the following response to our report:

No one was tapped on the shoulder and asked to go, Mr Fogarty said, and the program, launched in April, was “100 per cent voluntary”. “I think it’s pretty insulting to the people who have taken redundancy,” Mr Fogarty said of suggestions — published anonymously on a website — that some staff had been pushed to leave the firm.

On the same day of the above report, we received the following comments from an AAR spy:

those rumours are totally correct..at performance review a number of people have been told they are “better off” applying for voluntary redundancy. I have also heard that the firm has put law grads on a one year “contract” as well as given most people a worse performance review this year (thus no bonus)

Who do you believe?  Three anonymous AAR spies, or a member of a partnership which has instigated a pay freeze, cancelled the Christmas party and, as reported in AFR (3/7), enjoyed … ahem … DOUBLE DIGIT GROWTH in profits?  Send the Firm Spy your news and views!

Not only does Allens Arthus Robinson stubbornly refuse to offer graduates a decent rotation system, but it seems that the graduates’ original decision to work with the firm may have been influenced by empty rhetoric that work would involve international travel.

In response to tax laws proposed by the government in the federal budget, AAR corporate affairs director Chris Fogarty today snivelled that as a result of the changes:

the law firm would find it more difficult to send lawyers to its Asian offices to work on short-term projects and to give younger lawyers overseas experience.

However, appearing on the AAR website are the following grand statements:

We have a ‘best friends’ relationship with Slaughter and May [in] London. One way in which we maintain … this relationship is to second and exchange people between the two firms. An exciting aspect of working at Allens is the global scope of the work we do for our clients. This means that you could have the opportunity to do client work that requires you to spend some time in another office in… Asia…  It could see you living and working in another city or country for an extended period. Working in another office is a valuable opportunity to add to your professional development by meeting new people and developing your networks, building your profile among colleagues and clients, and learning new skills. Of course, there is also the exciting experience of living in another city or country!

So come to Allens, kids! You’ll get to travel the world and get paid for it!* (*If the Federal Government passes proposed tax laws you will remain in Australia)

Is it right for law firms to exaggerate on their careers web-pages to entice graduates? Should law firms simply ‘fess up that being a lawyer means four walls and not much fun from now unto forever?

Send the Firm Spy your news and views today!