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.

The Firm Spy Downlow

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!

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