We have edited the following post to protect the identity of the anonymous spy. Thanks very much to the spy for sharing your thoughts and good luck with your recovery.

I’m writing a response in regards to a “Blake Dawson; A Depressing Reflection on the Legal Industry?”. While I do not work at a legal firm, I do work at [Big4 Accounting Firm] having started as a graduate two months ago. I have suffered depression for a few years now, but recently had a severe depressive episode which resulted in me having to go to hospital and take extensive time off work. Given job stability in the current state of the economy, coupled with the fact that I have not passed the probationary period, I was unsure of how this would affect my career. However, the firm’s response surprised me. I was not only contacted by my manager after being dischared from hospital, HR later contacted me to discuss how they could be of assistance and support. They stressed that my wellbeing was of utmost importance (which is contrary to how you’d expect a big firm to usually operate!) and gave me as much time off as required to get better along with the option of returning to work gradually through working part-time. This surprised me because busy season in my division is just about to hit. Plus, being under the probationary period, I have such little experience that they could’ve easily dismissed me. I am writing this, because I am deeply impressed by the support that I have been given. As an avid reader of firmspy, I know there is a lot of coporate bashing, but I hope to give a balanced opinion in regards to the issue of depression in professional services firms. NB: I am sharing my story on my own accord and by no means am representing [Big4 Accounting Firm]…

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Recently de-equitised Minter Ellison partner Simon Alroe, the subject of an apparent Survivor-style ‘voting off the island’, has created his very own blog.

keep your eyes on the dagger

Alroe, who the Sunshine Coast Daily reported is set to open a new art gallery, has used the blog to hit back at critics. In a scathing, but probably fair, assessment of society and the legal industry, Alroe writes:

Ever since I had the audacity to put my head above the parapet by daring to be more than just a lawyer by writing a play, opening an art gallery and performing music in public I have attracted more slings and arrows than Hamlet on a bad hair day. This society which we love and hate so much is seriously sick. Let’s face it. It breeds people who viciously and secretly attack anyone who dares to hold a mirror up to its racism, sexism and homophobia. To its fear of being different and honest and true to oneself. If these people want to live outside the law (of defamation and contempt of court) they could at least tell the truth and state their real names instead of hiding behind lies, pseudonyms and blogsites (like 4350water blogger).

‘Normal fear motivates us to improve our individual and collective welfare; abnormal fear constantly poisons and distorts our inner lives. Our problem is not to be rid of fear but, rather to harness and master it’: Martin Luther King Jr.

I’m looking forward to the real truth coming to light and to these internet vampires disintegrating with their lies.

Simon Alroe

The Tristan Jepson Memorial Lecture & Conference is an event aimed at improving attitudes toward, and bettering the response to, the prevalent issue of depression in the legal profession. After a long battle with depression, 26 year old Tristan Jepson took his life in October 2004. His parents created this event to galvanise the legal profession into action.

if you feel you might need help, call 13 11 14

At the conclusion of this year’s event, questions were raised about how far the profession has come since the initiative took off in 2006. The ABC reported that one young lawyer in attendance at the lecture stated:

Recently, my brother is suffering from leukaemia and I had to take two weeks’ annual leave in the new financial year to go and look after him… And I got into trouble because I was under budget.

With these comments, and at a time when a climate of fear and anxiety has descended over corporate firms across the nation as a consequence of the parlous state of job security, it is fitting that we contrast comments made by law firm partners at ‘pre’ and ‘post’ boom Tristan Jepson Memorial Lectures to see if the firms are just paying lip service to Tristan’s legacy.

In October 2007, Law Society Journal reported that the following comments were made by partners from major Australian law firms at the 2007 Tristan Jepson Memorial Lecture:

Clayton Utz Managing Partner Craig Pudig:

A competitive edge between four firms such as ours, or any of the major firms in any city or, in fact, this country is just, in this area, wrong. And the four of us have, in fact, been speaking about it, and we want to do something about that, to … work together as firms… We have to get away from ‘shake yourself out of it’.

Freehills Managing Partner Peter Butler:

This is not a matter of competitive edge between professionals, whether barristers or solicitors or warring firms … this is a matter that the profession needs to work on jointly… I’ve seen the [devastating effects of depression] in my family. I’ve seen it with my friends and I’ve seen it with my own firm. I want to do something about it. All of us do. We need to bring this issue of depression to the forefront of our thinking. Not as something that is embarassing and we don’t talk about it; it should not be like that … [we need to] develop a culture where for someone to say to someone else - a friend or colleague - ‘I’m depresssed’ is seen in the same way as any other illness, worthy of no more embarrassment or awkwardness than ‘I’ve got a fever’ or some other problem.

Blake Dawson Managing Partner John Atkin:

[Law firms have] lost our sense of professional purpose. We have let ourselves just be regarded as businesses. [We should be] emphasising that we stand for the professional values of the law and that in doing that, we recognise we have a social obligation, which is first and foremost; it’s before our obligation to the client and certainly before our self-interest in terms of whatever remuneration we might derive out of our occupation. [Partners’ meetings that only consider] what’s the impact on profits [are wrong]. You’ve got to acknowledge this is just an intrisic part of what you are doing.’ [BDW is participating in psychological research designed help people in high-stress jobs and] to build their capacity and cope.

The following comments are reported to have been made at the 2009 Tristan Jepson Memorial Lecture:

Freehills Managing Partner Peter Butler:

Every lawyer in these firms would go through a program very early in the time they started and deal with three things. One is give them some information about anxiety and depression. Secondly, to give practical ways to manage stress and anxiety. And thirdly, to give them techniques for building personal resilience, including cognitive and physical strategies… Is it just the case that it’s an idea whose time has come? It deserves to be… We were going to openly share what we were doing in this space to make it better

Mallesons Stephen Jaques Partner Stuart Fully says his company has set up a health and well-being program:

It’s through health checks, it’s through gym memberships, it’s through yoga and pilates. So at any time in the firm if you get to 5:00pm, there’s people walking around in pilates gear.

Allens Arthur Robinson Chief Executive partner Michael Rose said:

Older practitioners, they understand that depression is a real thing [but] they often don’t accept that it’s a communal thing, as opposed to a private thing. They don’t necessarily accept that it’s an issue that belongs in the wider community of our firm, as opposed to in the private lives of the people who are affected.

So how far have we come? Are law firms doing enough to protect 15% of the lawyers surveyed by Beyond Blue and Beaton Consulting who are reported to suffer moderate to severe depression? Do law firms have a role to play in responding to the 40% of law students who are reported to suffer ‘distress severe enough to warrant medical assessment’?

It seems that some in-roads have been made at least at Freehills and Mallesons, with practical and positive efforts made to confront the issue of mental illness within the profession. But has the Tristan Jepson event fostered the institutional change that was the original reason for its inception?

Perhaps the earlier comments of Blake Dawson partner John Atkin and the subsequent conduct of his firm offer the best evidence of how firms are delivering on what he termed a ‘social obligation’ which is to be placed ‘before our obligation to the client and certainly before our self-interest in terms of whatever remuneration we might derive out of our occupation’.

Top equity partners at Blake Dawson are reported to have taken home $1,200,000.00 in 2008/09. These results come after the firm sacked 89 employees in March after advising all staff that sackings were imminent several weeks earlier. One imagines that the harbinger of sackings, not to mention the torment of the announcements themselves, would have presented a challenge to the mental fortitude of even the most hardened Blake Dawson employee. Those resilient workers that made it through to the other side and who are reminded of previous comments made by a Blakes partner that the firm would be placing social obligations ahead of remuneration, yet are shown the incredible seven-figure salaries of some partners, must now be questioning the moral conscience of the firm.

Are firms doing enough to combat this very real issue? Or are the grand statements we have heard just lip service produced for syndication across major news media?

If you want to support the Tristan Jepson initiative, you can donate to the Tristan Jepson Memorial Fund.

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It emerged yesterday that an elderly home-invader found it necessary to berate ex-Foreign Affairs Minister Alexander Downer for failing to save Schapelle Corby from hard time in Kerbokoban prison.

This hilarious episode inspired us to do some berating of our own, starting with an appraisal of some apparently fallacious comments made by Minter Ellison partner John Weber earlier this year.

found at Minter Ellison

In announcing a firm-wide pay freeze, Minter Ellison chief executive partner John Weber said:

… we are not generally proposing salary increases this year… Limiting salary increases was not an easy decision, but it was one that we felt was appropriate, given the prevailing market conditions and to preserve jobs. Partners will also be lowering their earnings next financial year.

According to the AFR Law Firm Profit Survey, Minter Ellison:

… paid a bonus to many partners last year, for the third year in a row. The very top equity partners took home $1,450,000.00, while about 40% got $1,100,000.00, inclusive of bonus, last year.

Minters also reported 4.5% growth in revenue. These results came despite the firm’s headcount contracting by 4.5% over the last financial year, which included the departure of a highly regarded senior associate and apparently a:

property lawyer three months after the mother of five children was promoted to senior associate and six months after she was recruited to the firm from a state government position.

For the Minter Ellison lawyers still subject to a pay freeze, questions are no doubt being asked about partner pay packets ($1.1m+ for over 40%!) and whether partners indeed took a pay cut over the last financial year, consistent with the promise made by John Weber in April.

For the mother of five apparently made redundant 3 months after being made senior associate and now looking for new ways to provide for her family, questions are probably being asked about the morality of a firm that can record such incredible profit, yet act with such utter corporate impunity.

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Following yesterday’s post profiling the Mallesons voluntary redundancy program, we received these comments from an anonymous Mallesons spy:

middle earth

…for a few hours this morning the entire productivity of the firm [Mallesons] came to a screeching halt as all employees - well, at least those still with us - scoured the intranet searching for the names who ‘left the firm on 23 September’. This information was online for a few hours, before being shut-down… I personally counted over 150 employees in this time but I understand that not all those who have taken the VRP have left yet, so presumably the figure across the firm is closer to 200…

If this is true, Mallesons’ workforce will have shrunk from a total of 1,842 to 1,642 - a loss of 11%.  To put the gravity of this loss in perspective, Mallesons reported a reduction of 5% of its headcount between July 2008 and July 2009 - ie before the voluntary redundancies were finalised. In the same period, Mallesons revenue rose by 1.5% - not a bad performance given its a considerably smaller workforce.

However, according to our calculations (and based on the comments above, the veracity of which we are uncertain), Mallesons’ workforce will now have shrunk from a total of 1,936 to 1,642 in 15 months; a loss of 16%. If this figure is correct, Mallesons now has less employees than its two nearest competitors in terms of revenue (196 less than Minter Ellison and 112 less than Freehills - or 11% and 5% less respectively). Yet Mallesons reported revenue that was $58,000,000.00 higher than these competitors in 2008/09.

If Mallesons reports higher revenue in 2009/2010, and its charge-out rates remain steady, it will mean (according to our rudimentary calculations) that lawyers at the firm will have worked on average 10%-13% harder than in 2007/08 (boom times).

Did 75 billable units just become 85?

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Harmers Workplace Lawyers partner Shana Schreier-Joffe has sent a blunt warning to corporates downsizing and restructuring; tell your staff what is happening or face the prospect of legal action.

As noted by the Daily Telegraph, Schreier-Joffe believes businesses:

lay them off at your own peril

…that withhold information about plans, especially any potential restructuring or difficult financial circumstances, could face legal action from misled employees… misrepresentation by omission’ was a risk for all businesses recruiting in this economic climate, with the potential for employees to claim damages for lost income or commissions… If … changes were envisaged by the company at the time of recruitment and not disclosed to the employee, the employee may well have some legal recourse.’

Ms Schreier-Joffe said most employers were used to talking up their business to potential employees and did not realise how important it was to be candid during uncertain times. “My advice to employers who are currently hiring is that they should err on the side of disclosure with candidates,” she said. “While I can understand why employers might be reluctant to discuss potential changes that may occur to their business, or the difficult financial position of the company, they must also recognise that most candidates are giving up secure jobs elsewhere on the basis of the new role and workplace as described to them during the recruitment process.”

Based on this, Deacons lawyers probably might want to consider reviewing the following claims on its graduate website:

As a law graduate you’ve earned the right to have a stimulating and evolving career. If you’re looking for a people-focused, performance-driven law firm that will give you genuine opportunities quickly, then please apply for a position at Deacons.

Did the 9 graduates (out of a total group of 17) rumoured to have been made redundant at the conclusion of their graduate year receive ‘genuine opportunities quickly’? Was their redundancy contemplated by the firm prior to the graduates’ commencement with the firm?

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Southern Cross University Law Lecturer Megumi Ogawa exposed her ample derriere at a judge at the conclusion of her trial on

the ass end of the law

charges of using a carriage service to harass and using a carriage service to threaten to kill Federal Court of Australia officials.

Judge Durward charged Ogawa with contempt just moments after a jury found her guilty… She… flashed her bottom on one occasion when she was being dragged into court.

In the Brisbane Court of Appeal today, Ogawa’s lawyer Angelo Vasta asked for the contempt convictions to be set aside on the grounds that Ogawa was denied the opportunity to have a proper trial by jury on the contempt charges. ‘The failure to allow a jury rather than the judge denied her to say she had an impairment to her mental capacity,” Mr Vasta said. “The question of her behaviour in court should have been tested by a jury under separate proceedings.”

He is also appealing Ogawa’s other convictions, arguing inadmissible and irrelevant evidence given in the trial led to prejudice and a trial miscarriage.

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You’ll recall the announcement on July 30 that Mallesons was calling on employees to volunteer for redundancies. That announcement was accompanied by a categorical statement from Chief Executive Warlock Partner Robert Milliner that “despite contradictory reports”, the market for legal services would “remain subdued” into the future.

Gandalf preparing to cut the staff

Those “contradictory reports” appear to have been the comments from an impertinent little hobbit going by the name of Glenn Stevens that the economy was getting better. Stevens also happens to be Governor of the RBA.

We subsequently received comments from an anonymous source that such was the incredible popularity of the voluntary redundancy scheme that the firm in fact had to reject many applications.

A sign that even the relevant employees could see an economic uptick and an easing job market, perhaps?

The AFR reported last Friday that the redundancy scheme affected “about 110 staff, or 5% of the workforce”. That estimate seems dubious, however, when considering the following anonymous comments we received from a Mallesons spy yesterday:

Dear Mr Firm Spy,

I’m one of the Mallies employees who took the VRP [voluntary redundancy package] and I thought that because I have enjoyed reading you so much over the last few months I would give you an insight into the state of affairs here in the Melbourne office.

….there has been much speculation about the number of employees who have taken the VRP but until today, everything has been kept completely confidential. Tomorrow everyone will be able to check the intranet to see who has left… Approximately 65 employees (over 10%) in the Melbourne office  took the VRP… many of my colleagues who … chose to stay on are now worried that there wont be enough people left to handle all the work coming in…

With all this rumoured work coming in, is this a case of cutting too deep, too late?

David Fagan, the chief executive partner at Clayton Utz, would certainly say yes. Fagan told the AFR last Friday:

Over the last few months we have seen a significant increase in activity across the firm and we are optimistic about the outlook heading into 2010.

At the same time, our favorite necromancer Mallesons spokesman Robert Milliner said:

Now is perhaps the least productive time as you wait for the market to improve and clients are more cost conscious.

Hmmm - Milliner the “bear” and Fagan the “bull” - surprising that the partners have such a divergence of opinion when senior equity partners at both Clayton Utz and Mallesons are reported to have taken home the same wage of between $1,400,000.00 and $1,600,000.00. Both firms also reported fantastic increases in overall revenue.

This begs the question, why would Mallesons chief executive soothsayer partner Milliner give such a comparatively pessimistic opinion on the state of the Australian legal market? John Weber CEP of Minter Ellison is ‘cautiously optimistic’ about the next financial year (AFR 18/09), while Freehills CEP Gavin Bell ‘said there were increasing signs of confidence in the market’ (AFR 18/09). But what of Mallesons’ Milliner? Is he trying to sell his voluntary redundancy scheme to the media?

Finding the answer to this cryptic puzzle is made easier by other comments quoted in the same AFR (18/09) article where Milliner says:

Law firms always lag the market into recession.

Always? Has Mr Milliner established a behavioural pattern out of the two or three recessions that the world has experienced in the last 100 years? Was the corporate duplex of Gandalf there on Black Tuesday in 1929 when The Great Depression kicked off? Was he was there in 1981 and 1990 too? Or, like his immortal middle-earthman brother Gandalf the Grey, has Gandalf the Corporate actually been deathless for thousands of years? If so, one imagines that Milliner would cultivate a formidable appreciation of economic patterns, and perhaps we shouldn’t doubt his bold assertions about recessional behavioural patterns.

But the similarities with Gandalf certainly do not stop at this incredible longevity.

On Gandalf’s wikipedia-page for example, a quote direct from J.R.R Tolkien describes our favourite wizard as:

the last to appear in middle-earth who … seemed the least, less tall than the others, and in looks more aged, grey-haired and grey-clad, and leaning on a staff”

Yes, even the great wizard leans on staff! And If the comments from the anonymous Mallesons spy above are true, the few of remaining staff will doubtless be leaned on increasingly by Gandalf the Corporate in the weeks and months ahead.

Shall we call those left behind The Fellowship of the Very Hard-Working?

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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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