This is an interesting one. We could be off the mark here, but on our reading of the below leaked email from Clayton Utz mind speaker Chief Executive Partner David Fagan, there was almost an expectation that the email would be leaked and so covert attempts have been made to score points. For example, a ridiculous number of high-profile M&A transaction are cited.

For this reason, we have used our discretion to edit some small details out of the email. The last thing we would want is for our site to be responsible for any unmerited kudos being directed at arguably Australia’s tightest corporate firm.

you blow my mind David

This from an anonymous Clayton Utz spy last night:

Its going to be a very chilly Christmas for all Clutz staff who received the following email yesterday confirming that the firm, quite outrageously, believes that it is justified in maintaining the current pay freeze.. and a very Merry Christmas to you too Mr Fagan!

As you know, earlier this year the firm made the decision to hold pay levels for all staff in anticipation of a drop in demand for legal services in FY10. In my recent office strategy briefings, I said that we would review this decision in November, based on the firm’s activity levels and following November’s release of the results of the Mercer Legal Remuneration Survey (July 2009). Although we are currently achieving our reduced financial budget, we are still experiencing lower work levels in a number of parts of the firm relative to our position in FY09. As at the end of November, on a year to date activity basis, the firm’s revenue was $11.9M behind last financial year. Plus, we are facing increasing fee pressure from clients. The legal services market remains subdued and other law firms are facing similar challenges.

The AFR (Legal Partnership Survey, published 10 &11 December) states that the major Australian law firms have shed 500 senior associates and lawyers since June 2009. By comparison, Clayton Utz has focused on retaining jobs where possible and continues to take a cautious approach to managing costs. The Mercer survey confirms that the majority of firms (including Mallesons, Allens and Freehills) held pay for all staff across all locations, including for those lawyers moving up a year of professional experience. The survey reports median pay increases in all locations for all career levels was 0%. There are, however, positive signs of improvement and we remain optimistic that the recent increase in work levels will be ongoing. For example, over the past few months we have seen a material increase in M&A activity across the firm including a number of significant and high profile matters. These include: advising XXX on the proposed acquisition of XXX; advising XXX on the sale of entities to XXX and advising XXX on its takeover offer for XXX.

On balance, we believe it would be premature to undertake firm-wide adjustments to legal remuneration now, ahead of the next legal remuneration review in July 2010. However, in line with our desire to pay for performance, we have identified a number (approximately 83) of consistently high performing lawyers who will be rewarded in recognition of their outstanding contribution to the firm throughout FY09 and FY10, in January 2010. We will review Shared Services remuneration as usual in April 2010

I would like to take this opportunity to thank you all for your continuing commitment to the firm and wish you and your families a safe and happy holiday season

Regards David Fagan

Disgraceful lack of speaking your mind there David. Moreover, if there was such a focus on the retention of jobs, and if Clutz proposes to use this as a justification for for the continuance of the pay freeze, explain the repeated reports of Claytons Redundancies. Speak your mind Dave!

Perhaps the most objectionable part of the email are Fagan’s references to what other firms are doing and his deference to the Mercer remuneration survey. If the dollars are in the bank, which they are, then how other firms are acting as all but an impertinence. Act unilaterally. Be a market leader. Speak your mind David!

We thought the following comments, also received last night though from a different Clutz spy, give a good commentary as to how Clutz lawyers feel about the email:

Clayton Utz’s David Fagan has just sent out a firm wide email telling us that there will be no pay review this year. He said: - firm revenue $11.9m behind last year’s performance - bonuses will be paid to 83 high performers, “in line with our desire to pay for performance” (which means that those who don’t get bonuses can assume they didn’t “perform”?) - Clayton Utz opted to retain lawyers where possible instead of making people redundant - increasing fee pressure from clients - “On balance, we believe it would be premature to undertake firm-wide adjustments to legal remuneration now” (except for partners, obviously) - states” The Mercer survey confirms that the majority of firms (including Mallesons, Allens and Freehills) held pay for all staff across all locations, including for those lawyers moving up a year of professional experience. The survey reports median pay increases in all locations for all career levels was 0%.” (forgetting that Mallys staff got bonuses and more annual leave - we get nothing) - states that there are signs of improvement and reasons to be optimistic - “there are, however, positive signs of improvement and we remain optimistic that the recent increase in work levels will be ongoing” (i.e. reasons for partners to be optimistic that they can expect more coin, and reason for us to be pessimistic that we can expect to be doing more work for less money) All in all, not surprising at all, but still… would be nice to at least keep our salaries in line with CPI…

We agree. Do you?

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