We are reliably informed that in sporting parlance, the first day of this working week is known in AFL circles as “Mad Monday”. It is a day fabled for the Bacchanalian indulgences of players from the less successful clubs of the AFL . Dress-ups, booze and general frivolity are but the norm. On this day two years ago, for example, a celebratory Brendon Fevola “paraded outside a city bar in a nightie with a sex toy protruding from his pants” (for footage of the event, click here).

is anything available?

But while Fev occupied himself with a giant dildo and Ben Cousins probably spent this day Travis Tucking into his first bag of “bye-bye-urine-tests”,  we think it was a very different kind of Monday madness which gripped top-tier law firm Mallesons earlier this week. Not only did the firm have to digest the reference made in Friday’s News article (read by half of corporate Australia) that the firm is “run like a prison farm”, but it was also forced to endure the galling task of reading the BRW Top 500 Private Companies.

It was far from cause to celebrate.

The BRW revealed that in the last financial year, Mallesons revenue dropped by 10.5%; a drop-kick trajectory that would see the firm fold like Fitzroy within a handful of years. Not even Clayton Utz, a firm we recently characterised as being on the precipice of nuclear meltdown, could come within a 50m-arc of Mallesons. Clutz posted a revenue decline of 9.7%.

However, both Clutz and Mallesons stood in stark contrast to other top-tier firms:

• Blake Dawson revenue declined by 3.5%;
• Freehills revenue declined by 3%;
• Allens Arthur Robinson revenue (based on BRW estimates) appears to have grown by approx 2%; and
• Minter Ellison revenue grew by 2%

So powerful was this shirt-front that Mallesons has tumbled from its position as Australia’s largest firm by revenue, losing that premiership flag to Minter Ellison by $8.6m. And while Clutz’s fall is explicable by a number of umpire reports (in particular the loss of key partners to A&O), we cant think of any such excuse that is available for Mallesons.

If there are no excuses, what next?

When football fans perceive that their club is underperforming, invaribaly it results in the sacking of the coach. But what happens when a law firm isn’t performing?

Fortunately, Chief Executive Partner Robert MIlliner has already considered the prospect of life after Mallesons, making the following comments to BRW in July of this year:

Post-Mallesons Plan: “I won’t go back into practice - I’ll go and do something different… I wouldn’t mind another executive role - it’s a question of what’s available. I was thinking about doing a few boards and a few people have said to me, oh, you’re too young - young in the sense that I should do a full-time executive role first.”

In relation to the “question of what’s available”, do you think opportunities will open up for the coach that has taken his team from premiership glory to … wooden-spooner-in-waiting?

Send the Firm Spy your news and views!

A few weeks ago we published two controversial reports relating to reductions in non-partner fee-earner headcount at Allens Arthur Robinson and Clayton Utz. In the Clayton Utz post, we queried whether the 13.4% reduction in the firm’s non-partner headcount was attributable to “natural attrition” - as the firm contended - or a result of coordinated redundancies - something which aligned with rumours we reported at various times over the last year.

putting the spotlight on the stats

In the AAR post we looked at the official “voluntary” redundancy statistics reported by the firm, and contrasted that figure with the total number of non-partner fee-earners that had left the firm. We speculated that the significant difference in the number “voluntarily” leaving the firm through the redundancy program and those that had otherwise departed the firm might be attributable to alleged “freeze-outs”.

Over the weekend we received the following comments from an anonymous Mallesons spy:

FS - you have reported on the 2009/2010 financial year reductions in headcount that occurred at some major corporate firms but have omitted to scrutinise Mallesons in the same fashion. What gives?

Indeed we had forgotten to get the flashlight out in relation to Notoriously BIG Aussie firm Mallesons. According to the AFR (25/6):

In the year to July 2, Mallesons non-partner fee-earner headcount will have fallen from 1070 to 843 (down 21.2 per cent, the biggest fall of the surveyed firms).

All told, that is a reduction of 227 lawyers. But the voluntary redundancy program, according to the firm, accounted for less than half that number. Morover, the AFR reported in mid-September 2009 that the redundancy scheme affected “about 110 staff, or 5% of the workforce”.

So where did the additional 117 lawyers come from? Mallesons staunchly refuted our rumour  at the time of the scheme that approximately 200 lawyers signed up for the voluntary redundancies, so on that basis, it has to be assumed that the relevant 117 additional lawyers left the firm for no payout.

Save for junior lawyers who might wish to reach a valuable “PQE” milestone to move laterally, the Firm Spy can see no logic in a lawyer deciding to leave the firm in the same year as a voluntary redundancy scheme, but choosing to do so after the voluntary redundancy scheme period. It makes no sense! Receive a healthy payout or receive no payout whatsoever? One would have thought that those populating the offices of Australia’s elite law firm would have the presence of mind to form a well-considered view on the best way to answer that proposition.

The better, more logical view we would argue must be that a degreee of pressure was exerted over some of the affected workers by their partners or management. It might have been akin to the alleged AAR freeze-out pressure.

And if this is the case, we get back to a message we delivered a few weeks ago: that Mr Milliner is conducting the Symphony of Destruction. Moreover, why would an elite university graduate throw themselves into a career at Malleons when:

• hours are probably longer than at competitor firms;
• pay is probably lower than at competitor firms;
• being an excellent lawyer “is simply not enough”; and
• there is a chance that you will be managed or frozen out of the firm if times get tough.

From a graduate’s perspective, is Mallesons really all that it is cracked up to be? Has a partnership expectation of gobsmacking profit, and a relentless desire to maintain that profit, reached a point where the firm’s attraction to elite graduates - arguably its most important asset - is finally waning?

Or, as Notorious B.I.G would have said, is this just a case of Mallesons Mo’ Money Mo’ Problems?

Send the Firm Spy your news and views!

We went looking for some news on Mallesons last night and stumbled onto an interesting piece. A cursory search on Google news revealed no less than three articles featuring a jubilant Mallesons boasting that it had lured Clifford Chance litigation expert Denis Brock.

a draft cross referral agreement

We immediately thought two things:

1. attracting Mr Brock to the firm will give Mallesons an excellent chance to save some face in the wake of ex-Mallesons partner Dave Poddar’s recent defection to A&O (and our subsequent article considering why it would make great sense for many other Mallesons partners to follow him in the “triple jump”); and
2. there is something awfully fishy about a Clifford Chance partner “defecting” to Mallesons when virtually the whole legal world is waiting for an official announcement that Clifford Chance and Mallesons are merging.

We then thought that perhaps it was possible that these two issues are related: the Mallesons board conjured a way to strengthen its apparently vulnerable brand by contriving that it had “lured” a Clifford Chance expert, while at the same time giving that expert an opportunity to witness the nuances of Mallesons before reporting back to his old Magic Circle firm.

Tellingly, Mt Broc’sprofile still appears on the Clifford Chance website. Perhaps the firm will leave it there? His profile reveals that Mr Brock has been with Clifford Chance for 24 years and has been a partner for 15 years. In our view, there is every chance he is the kind of emissary who Clifford Chance would entrust with such an important reconnaissance mission.

Let’s recount the current state of intelligence on the Clifford Chance & Mallesons merger:

• In 1999, Mallesons & Clifford Chance first met to discuss merger plans;
• In late 2008, renewed merger talks broke down as a consequence of the GFC;
• In October 2009 we received a credible report that an in principle agreement on a merger had been reached between Mallesons & Clifford Chance and that a formal announcement would soon thereafter be made;
• Also in October 2009 we saw Mallesons CEP Robert Milliner comment that his firm would likely follow the lead of major UK firms in its remuneration structure of employees;
• In May 2010, the AFR published a report that Mallesons and Clifford Chance were again in advanced stages of merging, but this report was discounted by an anonymous comment we received that appears to have been authored by a Mallesons partner;
• In June 2010 we received our most logical report on the Clifford Chance plans in Australia: that it would do so on its own terms to the exclusion of Mallesons; and
• Also in June, our great friends at Rollonfriday delivered a very interesting scoop on the Mallesons/Clifford Chance tie-up; namely that Clifford Chance intends to open on its own terms in Australia but under the auspices of a “best friends” relationship with Mallesons under a formal “cross-referral agreement”.

In our view, these updates and all of the general intelligence we have gathered is at odds with Mallesons’ claim that a highly respected Clifford Chance partner “defected” to Mallesons.

Mallesons and Clifford Chance are “best friends”!

We think the more sensible view is that Denis Brock is relocating to Mallesons to help prosecute the rumoured merger or formal “cross-referral agreement” and the Mallesons board has seized on it as an opportunity to rebuff the much publicised (and very worrying) defection of Dave Poddar to A&O.

What do you think?

Send the Firm Spy your news and views!

For those who missed the show in last week’s BRW, Mallesons Chief Executive Partner Robert Milliner featured in an article entitled Like Conducting an Orchestra. In that article, Milliner likened his role as head of one of Australia’s most profitable law firms to that of a penguin-suited musical leader, standing in front of a group of people from “band camp”, who frenetically waves a wand.

double-bass? DOUBLE-BASS?

This year marks [Milliner’s] 30th with Mallesons - the past 28 of which have been as partner and the past 6 have been “conducting the orchestra”.

The Milliner philharmonic roadshow appears to have hit a few favourable notes in the concerto interview, with BRW reporter Judith Tydd making the following opening comments in her Mallesons composition:

The reputation of Mallesons Stephen Jaques speaks volumes, from attracting some of the brightest law graduates to securing the most complex legal work for Australia’s leading corporations. But just what - or who - keeps the company ticking over?

Is it, perhaps, the harmonics? Apparently not. The article goes on:

It’s not just the prestige, the firm’s chief executive partner Robert Milliner, says. “It’s about the best work for the best clients with the best people,” he says.

While it is true that Mallesons has until now made a habit of attracting the “best people”, thanks mainly to a pipeline of elite graduates, we believe that the firm is slowly but surely beginning to lose some of its lustre for those dreaming of a corporate legal future. The double-bass is losing some of its strings, so to speak.

And the reasons why (we think) that graduates should be cautious about an early career at Mallesons were recently laid bare by the firm’s head of P&D, Kate Rimer. Yes, in an ensemble interview entitled Fast -Track Your Promotion with ALB TV, Mallesons’ Rimer produced a series of bad notes indeed!

A voiceover to the interview opens with the following prefatory words:

Kate Rimer says being an excellent lawyer in today’s environment is simply not enough.

Rimer continues:

“I think more and more that legal excellence or technical legal skills are a given… What our clients are telling us is valued is the ability to work with them, so it’s the client relaitonship skills, the business development skills, it’s the ability to work in and lead a team. So if you want to climb the ladder, if you are going to have a team of five or six lawyers working for you, how do you do that?… I hate them being called the “soft skills”, i think the client and people skills are really going to stand out the stars from the ordinary performers and that’s what we look for when we’re promoting people.”

But why would the best graduates in the country want to dust off their instruments in an environment where being an excellent lawyer “is simply not enough”? Did they attend university and orchestrate class-topping grades … all so they could fast-track their promotion with “soft skills”?

Or did they hope that they could forge a career in a firm where actually being a great technical lawyer, and not something of a marketing guru, would see them rewarded with promotions and the like?

And what about that rhapsody over underpay? Don’t the best graduates deserve the best pay and best working conditions? Not harder and longer hours than at competitor firms?

We think it is time that graduates paid closer attention to the notes being produced by the firm.

And perhaps it is also time Robert Milliner listened to the orchestra he is conducting. After all, we think their lead opus - which they are currently playing with considerable gusto - is Megadeth’s 1992 heavy metal power-ballad Symphony of Destruction…

Send the Firm Spy your news and views!

 Whenever the opportunity presents, we tend to heap invective on personal injury lawyers. We don’t like to generalize but we think an inordinate amount of legal doginess emanates out of PI firms. You cant really blame us when in little over 18 months the following things have happened:

• Brydens Compensation Lawyers was labelled “woeful” by the NSW Court of Appeal and was forced to foot the bill of three separate court hearings (yes - the FIRM had to pay costs!)

• repeated allegations were levelled at personal injury firm Keddies Lawyers that it overcharged clients and incurred unnecssary costs only to later bill them to a client;

• a male lawyer from Keddies Lawyers was convicted of assaulting a female police officer but not before exclaiming “I don’t have to do anything… I’m a solicitor!”;

• allegations were made that the CEO of Brydens Compensation Lawyers was embroiled in the Japanese Car Sale Harassment Debacle; and

• Hollywood has-been Erin Brokovich joined Shine Lawyers in an effort to drum up some publicity for the firm from injured mums and dads unaware that she is not a lawyer.

But today we are having a huge “shake of the sauce bottle” and congratulating national personal injury firm Slater & Gordon for helping produce Australia’s first female PM!

Yes, Rusty-crutched Gillard was once a partner at Slater & Gordon, refining her people skills on clients looking for a “no-win, no-fee”  deal. In fact, the “no win no fee” deal was introduced at Slaters one year before Gillard’s departure, in her Victorian office.

No Win - No Fee ™ lawyers Slater & Gordon believe that every Australian has the right to legal representation no matter what their financial circumstances.

Slater & Gordon’s innovative No Win - No Fee ™ arrangement is designed with exactly that purpose in mind. Introduced to Victorians in 1994, No Win - No Fee™ was created in direct response to growing community concern that access to legal justice was beyond the reach of many and increasingly restricted to those with the financial resources to pay for it.

No Win - No Fee ™ has meant that many Australians whose financial situation would otherwise deny them legal representation are now able to access the legal system. 

Access to justice, hey?

Gillard received her law degree from Melbourne University and was a lawyer at Slater & Gordon from 1987 to 1995. In 1990, Gillard was admitted as one of Slater’s first female partners.

Congratulations to Julia and to Slaters.

Send the Firm Spy your news and views!

For those besotted by her gorgeous flame mop (we are!), it turns out that Gillard’s de facto Tim Mathieson is a hairdresser

In an excellent article, aptly entitled Fears over performance pay, the AFR (4/6) gave an overview of the apparent shift in international legal circles from lock-step remuneration, based on experience, to performance pay. It is speculated in the article that major Australian law firms will soon also largely embrace a performance pay model.

performance pays on the catwalk

In the article, Allens Chief Executive Partner Michael Rose - who at the time was probably preparing for his annual “I’m-a-make-believe-derelict” sleep-over with 700 CEOs* - is quoted in the following way:

Allens Arthur Robinson expects to implement a performance pay regime before the end of 2011. Managing partner Michael Rose insisted the move was in line with client’s expectations. “Clients are not convinced that ratcheting lawyers salares and lawyers rates solely by reference to seniority is sensible,” he said.

We’re not sure which “clients” Rose has purportedly been speaking to, but we would anticipate that either:

• they are not lawyers; or
• they are not lawyers who have worked in a major corporate law firm where billable units are commonly reverse engineered several days, or weeks, after the fact.

In particular, we would anticipate that these “clients” have no notice that Allens Arthur Robinson was the target of one of recently retired Victorian Supreme Court Justice David Byrne’s most strident swipes at corporate law firms. Reporting Justice Byrne’s last interview as a judge, The Age noted (29/5):

In a case that still makes Byrne seethe, he lambasted Allens Arthur Robinson’s $3.7 million bill for costs in a case that ran for six years before it went to trial. The final bill was expected to hit $8 million, but this sum could not be recovered anyway because the opposing party sank into receivership. At the time, Byrne described AAR’s bill as ”a great reproach on the legal system” and said ”some restraint, some proportionality and perhaps less greed should be shown”.

Just a bit less greed, hey?

Would the removal of the “ratcheting” of the salaries of the lawyers responsible for this $3.7 million bill encourage more expedient, less greedy justice? Or would it encourage lawyers whose performance is measured on utilisation rates to chase a rabbit down every conceivable hole in order to place upward pressure on their utilisation and, hence, strengthen their greed claim for higher “performance pay”?

And how does the prospective unratcheting of lawyer salaries tie-in with the momentum we have seen from some clients toward fixed-fee billing?

We would argue that the “uncapped lawyer bonus plan” promulgated by Freehills, as well as the “unratcheted performance pay” in the Allens Arthur Robinson pipeline, is at odds with:

1. the generally enlarged inhouse legal teams across major Australian corporates;
2. the related move toward tendering and fixed-fee arrangements;
3. the rife disenchantment among junior lawyers of non-existent work/life balance; and
4. the overarching perception in government, the judiciary and society that major corporate law firms are “money-making machines”, presided over by a handful of uber-greedy corporate types, that make access to justice something of a running joke.

The AFR article made the following pertinent point:

Performance pay solely based on KPIs would result in lawyers working many more hours, NSW Young Lawyers president, Puoyan Afshar, said. This would leave the door open for the billable unit to increase its domination over lawyers’ lives. Work life balance is a key issue for junior members of the profession, with many jumping ship after two to five years, citing burn out and depression as reasons.

Is performance pay a step in the right direction, or will it leave corporate lawyers even more morally derelicte?

Send the Firm Spy your news and views!

*If you want to support the St Vincent De Paul’s CEO Sleepout - which we think is a fantastic charity (hat tip to Mr Rose for taking part) - click on this link.

We reported a couple of weeks ago that judicial commentators were criticising the corporate billable unit. Well, the chorus of condemnation directed at the profiteering of major law firms became a little louder on 4/6 when the AFR reported that:

I WANT ALL OF THE CHEESE

Victorian Chief Justice, Marilyn Warren, is concerned that mounting commercial pressures may be causing lawyers to forget their primary duty to the court. These include alliances between firms, incorporation, firms listing on the stock exchange, the use of litigation funders and the current national profession reforms with a focus on consumer rights.

…Warren told an ethics forum recently that firms have become ruthless money-making machines that force out experienced partners as young as 50 while young lawyers “are actively pursued or recruited”, only to be “exploited by the firm as reflected in their high attrition rates, especially young women…In the middle of the law firms are the associates, senior associates and prospective partners struggling to meet the profit demands of the modern practice… Their incentive for unfailing, relentless commitment to the firm’s profit is that they too may be made a partner, one day.”

Chief Justice Warren then went on to tie these comments into her appraisal of the recently released draft bill to create a nationally regulated legal profession:

…national profession reforms could diminish lawyers’ primary ethical duties to the court, because they were so consumer focused… “external regulation may be welcome but it must not come at the expense of the traditional role of the profession… [the proposed national reforms] do not, unfortunately, rise to the occasion”.

Warrem CJ’s comments are likely to come as a direct slap in the face to Mallesons Chief Executive Partner Robert Milliner, who also heads the Large Law Firm Group - the primary body calling for national legal regulation. Milliner told the ALB recently in respect of the draft reforms:

“The primary driver is to promote efficiency and uniformity in the regulation of the national legal profession. There is a desire to ensure that the regulatory framework facilitates the provision of best practice at the best price and in a consistent way right around Australia.”

We don’t blame you if you just spat your coffee over your computer screen. We sure did! Mr Robert Milliner… concerned to see that a regulatory framework exists that facilitates the provision of best practice at the best price. Like the Chief Justice, we smell a rat. A corporate rat!

If you had forgotten, let us remind you that Mallesons reported revenue that was $58million higher than its nearest competitor last financial year. Each equity partner reportedly took home between $1,400,000.00 and $1,600,000.00. Incredibly, Mallesons managed this remarkable profit feat despite having apparently less employees than its two nearest competitors in terms of revenue.

To join the dots for you all, we think this means two things:

1. the Chief Justice’s comments about corporate law firms (let’s use Mallesons as an example) being “money-making machines” are correct; and
2. People, including the Chief Justice, should be dubious of Robert Milliner when he professes concern that laws be introduced in order to facilitate the provision of best practice at the best price when the current state of the profession has enabled him to amass such an incredible reported profit take.

We’ve taken it upon ourselves to create a very rough, and slightly less dubious, draft bill of reforms that we think Mallesons could implement to achieve “best practice at the best price”:

• Charge less money for legal services. This will mean clients get a “better price”. Possibly the “best price”;
• Give consideration to whether “best practice” occurs at 3am, or on weekends. Or at 3am on weekends.

Can you think of any corporate rat reforms? Please tell us in the comments below.

Send the Firm Spy your news and views!

In response to last Friday’s post regarding dodgey corporate awards, we received the following comments:

analytical review

So….. What does IFLR say about this? Have Blake Dawson and Mallesons written in to clarify? The Mallesons Wikipedia entry says that Mallesons won the IFLR “Australian Law Firm of the Year” for 2009. That’s the same award that Blake Dawson claims on their website. http://en.wikipedia.org/wiki/Mallesons_Stephen_Jaques I think both firms should duke it out Mad Max Beyond Thunderdome style. “Two firms enter. One firm leaves.”

At least we won’t confuse them with Dorda Brugger Jordis. They won IFLR’s “AUSTRIAN law firm of the year for 2009”. http://www.dbj.co.at/phps/Presse/Pressinfo_engl20090323.pdf

No, there will be no confusion about the Austrian winner, that’s for sure! But in an excellent scoop, it appears that the awards we identified aren’t the only ones that should be queried. We received the following very interesting comments from an anonymous spy on the weekend:

Even more dodgy are Fairfax’s CFO Magazine Awards , which have a whole heap of gongs for law, accounting and bank organisations, among others. As someone who has been close to the process I can tell you that these awards appear to go a long way to keeping the mag afloat and it is an unspoken understanding that those who take out advertising and or ‘sponsorship’ deals with CFO tend to get rewarded more than those who don’t. The judging process is strange to say the least yet huge resources are poured into the award submissions with firms eager to blab about how they met this or that criteria though it is doubtful the busy judges supposedly from the top end of town read these lengthy essays of self promotion in detail. (This is reflected in the scant reasons given for the wins). Nominees for awards are then charged handsomely to take out a table at the actual awards lunch or dinner. The proud CEO gets to be photographed with the award but not to say much if anything (as time is always tight at these awards bazaars). Once the award is in the bag, the firms rush back to issue a press release and put the win on their email footers and in every client pitch for the next 12 months until it’s time to buy (sorry win) the next award.

The Clear Forthright Open Awards?

We then received the following comments from an anonymous Mallesons spy (thanks to the white wizard, or whomever it was in the Mallesons media team that authored this):

Mallesons does not currently pay Beaton Consulting for Client Choice research, so how interesting that we still won the BRW ClientChoice award this year. Shock, horror! Maybe we won the award because clients actually consider our service to be better. The majority of legal awards are voted as a result of polling clients. Since these clients work with most of the major firms, they have no vested interest in choosing one over another, unless they think the service is better. As for IFLR, Blakes won Australian Firm of the Year and Mallesons won Regional Firm of the Year in the latest awards. A quick check of the IFLR website would confirm this. Or doesn’t Firm Spy bother with traditional journalistic principles like basic research? It’s your analysis on this one that is shonky, not the awards.

Well, we actually took the unusual step of doing some basic research on this one (although we’ve never claimed to follow traditional journalistic principles and, in a moment, we’ll get to the reasons why it is a sad case of the pot calling the kettle black for a person in a position of authority at Mallesons to characterise our analysis as “shonky”). We visited the Mallesons Wikipedia page, which claims the firm won the IFLR’ Australian Law Firm of the Year 2009 as well as the Mallesons website, which claims Mallesons won IFLR’s National Law Firm of the Year (Australia) 2009. Blakes apparently claims also to have won the same award - IFLR’s Australian Law Firm of the Year 2009 - ostensibly the same award. No, we didn’t sign up to IFLR, but we think our analysis is reasonable.

The real analysis that needs to be questioned, we think, is the transparent muddy analysis allegedly given recently by Mallesons to its staff:

Firm Spy, a few weeks ago the heads of each Mallesons practice group travelled to each center to deliver a snapshot of how the firm is travelling year-to-date. Although the numbers were confusing, the one message that seemed very clear in the presentation was that the partners have apparently earned 7% less than at this point last financial year. There were also some statistics on how lawyer utilisation numbers are down.

However, the partner who delivered my group’s presentation did a very poor job of clarifying that the figures we were shown included each of the lawyers who took the voluntary redundacy package. So it should come as no surprise that utilisation rates are down, and year-to-date revenue compared with last year. But with overheads lower, I can see no reason how the partnership can justify a less than excellent pay review in July. I wonder if all practice heads delivered their presentations similarly?

Yes, we wonder too! Sounds very shonky to us!

Of course, it is not a partner’s job to adhere to “traditional journalistic principles”, but is it fair to conjure up a range of statistics (if that’s what happened) that might arguably set staff up for downgraded expectations in their annual pay review? Or is it shonky?

Send the Firm Spy your news and views!

On Friday, the AFR published yet another article speculating on an imminent announcement of a merger between Mallesons & Clifford Chance. This follows articles we published in mid and late October 2009 which also speculated that Cliffords would finally take a chance in Australia.

Mallesons partners in a CC video hook-up

In Friday’s article, the following things were noted:

Mallesons is … in discussions with international counterparts over [a] potential merger or strategic alliance… Beaton Research & Consulting confirmed [it] was involved in advising on merger talks between some of Australia’s leading firms and “magic circle” firms in the UK… Mallesons‘… Robert Milliner said [the firm] “maintains an ongoing dialogue with a range of firms on both sides of the atlantic and regionally… we’ll move if and when the time is right in terms of our strategic objectives”… A … merger would force Mallesons into further cuts to staff numbers, having already completed a redundancy program last year to shed some 110 staff.

We received the following comments from an anonymous Mallesons spy on Friday (our comments appear in square brackets):

Mr Milliner sent us the following email this morning –

“A story appears in today’s Australian Financial Review that speculates on merger activity involving leading Australian law firms [FS: note, this is not a denial]. Contrary to the excitable tone of the story and the focus on Mallesons, a merger is not imminent [FS: so it’s going to happen, just not next week?]. The story is irresponsible for suggesting otherwise.

Like some other firms referenced in the article, we maintain an on-going dialogue with a range of firms globally [FS: note, this is not a denial that merger talks are afoot] but it is as simple as that [FS: as simple as what?]. Additional speculation in the article about staffing levels in the event of a merger is ill informed [FS: but not incorrect?].”

I would ask the Firm Spy to place the following question on your website – why should we prefer Mr Milliner’s email to the article published by the Financial Review when the authors who wrote the article were part of the same legal affairs team that Mallesons advised of the voluntary redundancy program before any staff had been informed of it? Is this just another case of the Financial Review being tipped off ahead of any of us?

The language chosen by Milliner, which calls to mind the anomalously transparent mud review, plus the revelation that the firm allegedly tipped the AFR off to its voluntary redundancy program ahead of its own staff, would ordinarily compel us to agree that perhaps there is more to this overwrought story than first thought. However, we received the following compelling comments on the weekend from another anonymous Mallesons partner spy:

Firm Spy, as our last reasonably objective editorial, can you please do your bit to set the collective minds of Mallesons staff at ease. There is no merger currently contemplated with Clifford Chance or with any other international firm. Neither Robert Milliner, nor the board has the power to unilaterally declare that a merger will take place. Rather, a long period of consultation must take place, over which period partners might be invited to consider expert, independent views and reports on the merger. A a partnership vote must then be taken. This consultation process was in operation in 2008, when it was last reported that a merger would take place. I was a part of it then. I am not a part of it now. This is because the consultation process has not yet begun. Nor is there any suggestion that it will begin any time soon.

So if it is true that Beaton Consulting has been involved in advising on an international merger, and that merger doesn’t involve Mallesons & Clifford Chance, then who is it? Do you know? Tell the Firm Spy first!

Send the Firm Spy your news and views!

We reported yesterday the rumour that AAR recently informed staff that frozen pay would be thawed as of July 1. If true, this move would bring it into line with its competitor Blake Dawson. We went onto add that, if that rumour were true, Mallesons would be the only major Australian firm not to have lifted its pay freeze.

Well, it appears that Mallesons informed staff yesterday that the pay freeze is officially at an end. Sort of, anyway.

In order, we received the following comments from anonymous Mallesons spies yesterday:

Actually Mallesons has told professional staff at lawyer/partner lunches that the salary freeze will be lifted and pay will be reviewed based on “market” as part of the normal performance review process with pay increases to come on 1 July. The obvious question for underpaid junior lawyers is how much will the increase be? There is common knowledge amongst staff that they are underpaid compared to their peers, even taking into account the 3% bonus and the [more general market]  pay freeze.
In the last week Mallesons has secretly given pay increases to those lawyers who are performing well above budget. These increases were around a 5% increase in salary backdated to January 1. For those overworked the discontent remains - but a small rise gives hope of a bigger bounty to come in July.
The problem with Mallies is that you have a “two speed firm” - sections of lawyers busting their bums well above budget for the year and others billing well below. Those busting their bums expect good bonuses and pay rises or watch the mass exodus to the other large nationals knocking at the door

Then this:

anomaly reviewing action shot

FS - thought this was interesting - my friend (a Senior Associate at Mallesons) was yesterday approached out of the blue by a partner and given an envelope with a 6% pay rise backdated to January, and with another pay review promised in July. She apparently had been singled out along with a handful of the firm’s ‘high achieving’ lawyers to receive this pay review. Perhaps the Mally’s pay freeze is lifting??

And then finally, the following scathing critique (excellent work!):

In a firm-wide communique apparently penned in response to your post today, his Highness Robert Milliner informed staff that the pay freeze was “officially at an end” and that Mallesons partners are “committed to being transparent about pay”. He then went onto say that the firm had conducted an “anomaly review” in which partners had compared our salaries with those prevailing in the marketplace. Very transparently, Milliner then said that where there was a “significant” anomaly between market and Mallesons pay rates, adjustments had been made.

Firm Spy, does anyone in your team happen to know what “significant” means for these purposes? If we’re paid 25% under market rates, is this a “significant” difference that would warrant, say, a 5% increase in pay?

Excellent questions! We’re not sure of the answer, but if a few dozen lawyers declined to return to work after the Easter break, our guess is that the partnership would take significant steps to clarify precisely how vast the disparity is between Mallesons wages and those in the market.

But getting back to the anonymous comments themselves, if we’re reading them correctly, and if they are truthful, Mallesons has trumpeted its remuneration transparency, conducted an “anomaly review” which is about as clear as mud, and awarded back-dated pay increases to a handful of high-performers. Doesn’t sound to us like lawyers have any reason to question the integrity of the oh-so-transparent “anomaly review”.

And if the pay freeze is lifted, or will be on July 1, it appear to be a fate far better than that of cross-town rivals AAR. In an update to comments we revealed yesterday, comes this from another anonymous AAR spy:

Allens certainly have not lifted the pay freeze! Some graduates-2yr lawyers were granted small pay rises at Xmas, but they are still paid substantially less than Allens lawyers at the same level in years prior! Not only have AAR not lifted the pay freeze but there is some strong indication that salaries will be further based on a bell curve, calibrated grading/bonus system that noone has any faith in and lowers morale…

We would be indebted to any spies who would care to clarify whether AAR has confirmed it will lift frozen pay on July 1.

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