Operation Partner Profit? Dissecting The “Natural” Attrition of Critically Ill Clayton Utz

In our eyes, the AFR’s Hannah Low hit a personal high last Friday when she clinically disemboweled sick law firm Clayton Utz. For those who missed it, Low – a very highly regarded legal surgeon journalist – wrote an utterly excellent article that went tantalisingly close to validating medicinal claims made by the Firm Spy about Clayton Utz over the last year.

rush this one into the emergency ward!

With a scalpel in her hand, Low wrote:

Clayton Utz has shed 124 lawyers since January 2009, despite having no formal redundancy program.

Clayton Utz spokesperson Lauren Scott says the drop is due to “natural attrition”. The AFR understands that a significant part of this 13.4% drop affected junior lawyers. In 2009, barely half of Sydney’s summer clerks were offered a full time graduate position at the firm. Some Melbourne graduates also suffered a blow when several contracts were not renewed.

One Clayton Utz lawyer says graduates “were told you can only stay if you can find a partner who can take you”, which left many unable to secure a permanent position. That “is really stressful and unfair and they didn’t know that from the beginning,” the lawyer says, who declined to be named for fear of losing her job.

That’s right – a 13.4% drop in headcount despite no formal redundancy program. We repeatedly published stories over the last year based on claims from our anonymous spies that, far from the result of “natural attrition”, Clayton Utz job losses were the product of a calculated redundancy scheme. But only now, with the benefit of the AFR’s terrific journalism, do those claims have a life of their own:

• Blake Dawson fee earners have dropped from 715 to 662 in the past 12 months – a fall of 7.4% – following a round of redundancies;
• Allens Arthur Robinson’s full-time head count plummeted from 947 in January 2009 to 839 in January 01 0[following a redundancy program], a fall of 11.4%;
• Mallesons Stephen Jaques has sliced 21.2% off its fee earner head count since July 2009, or 227 lawyers. Mallesons also had a voluntary redundancy program which aimed to cut 100 staff.

Three comparable top tier law firms, after formally-announced redundancy schemes, were able to reduce fee earner head count respecitvely  by 7.4%, 11.4% and 21.2%. Yet Clayton Utz over the same period – that is, during the worst financial crisis since the depression – was able to reduce head count by a staggering 13.4% … as a result of “natural attrition”!

When pressed on the issue, Clayton Utz spokesperson Lauren Scott maintained:

“Our priority is and was and continues to be protecting jobs.”

But according to the AFR:

the firm announced it was going to increase payouts to partners.

What about partners decreasing payouts to themselves in order to protect jobs? For example, instead of pocketing a reported $1,600,000.00, 8 partners could have volunteered to take home $1,530,000.00, thereby keeping the 8 reportedly abUtzed Melbourne graduates employed. Or the wages of the grads could have been spread across the entire partnership, meaning partners might have taken home, say, $1,595,000.00. Sounds like a simple surgical procedure to us.

So after reading the AFR article, still dressed in our theatre gowns, we immediately went looking for our copy of the Law Council of Australia’s Model Rules of Professional Conduct. We have transplanted a couple of sections that we think are particularly appropriate for the folks at Clutz still clinging to life the “natural attrition”/”protecting jobs” line:

Standard of Conduct

30.1 A practitioner must not engage in conduct, whether in the course of practice or otherwise, which is:
30.1.1 dishonest;
30.1.2 calculated, or likely to a material degree, to … diminish public confidence in the administration of justice.

Relations with Third Parties

Practitioners should, in the course of their practice, conduct their dealings with other members of the community … according to the same principles of honesty and fairness which are required in relations with the courts and other lawyers and in a manner that is consistent with the public interest.

Is it time to wheel Clayton Utz into the palliative care unit? Is it time to flick the life support switch?

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