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.
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!
Loading...
I confirm that the VRP procedss ran like this: an employee puts an application in, and it is accepted or rejected by the firm.
So, it’s entirely possible that a VRP application was rejected, and lawyers chose to leave without the gravy offered to them in the VRP process.
Not only is it possible, but it did happen.
Many disenfranchised lawyers put their applications in, had them rejected and left anyway. Unsurprising, really.
And I can confirm that many staff at Mallesons were taken into private meetings prior to the VRP and, it is very widely speculated, invited to accept confidential payments to leave the firm.
This process continued for several months until (again, it is widely speculated) it was determined by the partnership that headcount wasn’t being reduced quickly and sharply enough. Hence the VRP.
While the VRP offer was open, some SAs were reminded how hard it would be to become a partner and also informed that the partnership wouldn’t be expanding for the foreseeable future, only replacing retiring partners. This has created a farcical shortfall in SAs across the firm.
Sure, some applicants for the VRP were rejected. This is true. But these were the valued employees, the majority of whom remain with the firm. Many of those employees are cynical enough to believe that the VRP was just a device to allow the partnership to accept the redundancy applications of the underperformers whilst availing to partners the very believable hedge against the departures of high-performers that “business needs require you to stay”.
And as for the non-performers who didn’t volunteer for the VRP? Well, they were very recently on the receiving end of incredibly harsh performance reviews and will probably face the old fashion “freeze-out” technique in the months ahead.
…and meanwhile the post-(so called) pay review exodus continues in the 2-4 year ranks. This is despite a hasty salary “re-review” by the remuneration committee whereby most solicitors received letters announcing an extra 3-4K addition to their salaries last week.
Rather too little too late is the consensus, when based on offers received from rival firms, those salaries are still as much as 20K below market!
My prediction is that Mallesons Partners will live to regret this serious miscalculation as it’s the best performers that will get the most attractive offers to leave.
There was no re-review in the Perth office so which office got the letters???
I would be interested to know how people who volunteered to take a redundancy but didn’t get it are now treated?
Nothing new here really. Same BS year in year out. Good luck to those that received the redundancy. They laughed all the way to the bank with their fat cheques and most laid low for a few months, enjoyed a well earned break and then found employment elsewhere.
Are they happy? Very. Earning more than they did at Mallesons, most definitely. Although it can be said that they do miss some of their colleagues.
Firm population hovered around 1600 in 1999, rose to 2100 around 2005-6 and has now withered to the mid 1300s.
Something is desperately wrong. Crystal ball gazing can see a dimished bottom line and a drop in revenue.
The departure of Kate Rimer must provide some interesting times going forward! Is that a cloud hanging over her head?
Mallies are actively embarking on a campaign to reduce their head count and this is to make them more attractive to a merger and-or to make the partners more profit – either way top news for Mallies partners and not so happy times for Mallies lawyers. This is not so surprising given that the partners openly say that the firm will be smaller in the next 5 years. Mallies wants to be the go to firm for bet the house deals and not for everyday legal work so that means Mallies won’t need as many bums on seats. It’s like an airport departure lounge at the moment, people are leaving in droves and almost all of those leaving are the top performers all going to bigger and better (paid) roles at other firms/in house both here and overseas. But the partners don’t care, it’s all part of their grand plan for the future, although they might care when they end up having to do more (some) work.