How Much Do They Earn? Freehills Partner Salaries Exposed

Over the last few months, the PR teams at a couple of major law firms have taken to emailing Firm Spy with various propaganda media releases ostensibly aimed at generating positive media sentiments from us. Either that or they’re having a laugh. We won’t mention the names of the firms in question for fear of giving our readers a line of inquiry to investigate further, potentially resulting in the said positivity.

your partners hometown?

However, we thought it was an opportune moment to mention the receipt of the media releases to preface the idea that, when we say little or nothing about a major corporate firm, it is probably because it is not too bad to work there. Comparatively, of course.

Which brings us to the third installment of our Partnership Profit Series focussed on a firm about which we have had famously little to report in the last 12 months. That firm, ladies and gentlemen, is Freehills.

Freehills was awarded the Firm Spy Corporate Firm of 2009. Without revealing too much, the firm has not won the award for a second year running, but for the reasons that follow, it is certainly deserving of our (cautious) commendation.

The Stats

Freehills was the third largest law firm by revenue last financial year. According to BRW, the firm recorded the following stats:

• Revenue: $477million
• Revenue Reduction: -3%
• Employees: 1,754
• Employee Reduction: -0.3%

Whereas the AFR reported (25/06) that Freehills’ nearest competitor in terms of revenue (Mallesons) had purged 21.2% of its non-partner fee-earner headcount in the year to July 2, it observed of Freehills that it had:

reduced [non-partner fee-earner] headcount from 958 to 941 since January, but it is up by 0.6% year-on-year.

This alone is a glaring statistic for anyone considering what it must be like to work at Mallesons or Freehills and whether a cultural difference truly exists between the firms. Moreover, as we reported last week, Mallesons has (as Ian Paterson would say) “chopped” something like 25% of its non-partner lawyers in the last two financial years, while Freehills, itself the subject of falling revenue, has seen fit to sack only 1.5% of its staff over the same period.

The cultural conclusion that we think can be drawn between the two firms is that Freehills partners evince a greater preparedness to “take a hit” than do their cross-town rivals Mallesons. Culturally, we think Freehills partners are less tightwaddded than many of their competitors and we think this is a great thing.

Profit Survey

It is especially great if the partners can remain culturally non-tightwadded and still draw well over seven figures in profits. And on that note, onto the AFR Profit Survey:

• Estimated Profit Margin: 40%
• Estimated Profit: $190.8million
• Protit Per Non-Partner Fee-Earner: $220,000
• Profit Per Equity Partner: $930,000
• Revenue: $477million
• Revenue Per Partner: $2.32million
• Revenue Per Equity Partner: $2.32million

• Partnership Remuneration System: Performance-based. Full-equity partnership.
• Partner Pay for 2009-2010: Top partners, on 120 points, received between $1.5million and $1.6million. The bulk of partners are on 80 points and are thought to draw about $1million before a bonus; about 35 partners got one bonus last year. Entry-level partners start on about $380,000.
• The Verdict: Chief Executive Gavin Bell said litigation and employment groups were still strong, but with general business activity the outlook for M&A remained uncertain, although it should recover in the medium term. The rise in litigation was modest and came largely through insolvency, regulatory and class actions.
• Comment: Freehills decided to carry staff through the quieter periods, dampening staff profit as a result but winning staff loyalty. The firm has adopted a more discreet position in the market and remains cautious. But the return of Mike Ferraro from BHP Billiton, who is assisting in an operational review, may help it take advantage of a rising market.

Culturally Non-Tightwadded

We also liked the following no-nonsense comments made by CEP Gavin Bell to AFR (25/06):

Is it becoming harder to become a partner in a top firm?

I don’t think so. I think its hard to become a partner at a top firm. I don’t think its become materially harder over the last decade, for example. The numbers of partners being made are about the same as they were aroound a decade ago, allowing for economic cycles and so forth. You obviously admit the best so there is a high test, but certainly our approach has been we need to keep admitting good numbers to replenish stocks but also to provide that sort of opportunity to keep the very best people here.

This statement is backed up by statistics which show the Freehills partnership grew from 204 in January 2010 to 206 in July. The partnerships of Blake Dawson, AAR, Mallesons, Clayton Utz, and Corrs all declined materially over the same period. Again, Freehills partners distinguish themselves from competitors by being culturally non-tightwadded.

But Freehills also distinguishes itself on the very important issue of junior lawyers salaries. Based on our anonymous polling, Freehills consistently pays top of the market to its graduates and first years; a pattern which we believe continues as young lawyers gain valuable PQE.

So there you have it. Freehills in our mind is the best of a bad bunch is doing what it can to give junior lawyers the respect they deserve.

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