Over the last 12 months we have at various times reported on rumours, received by us from anonymous sources, that 2010 would see a stunning exodus of lawyers from major Australian law firms. In particular, we reported that the firms who have stiffed junior lawyers over pay and threats of redundancy would see a considerably higher than normal rate of attrition.

We were not surprised to see those rumours refuted last week by AAR P&D director Susan Ferrier and Freehills HR director Gareth Bennett in an article published by our friends at Lawyers Weekly. There is nothing quite like planting a seed of doubt as to the prevalence of jobs in the market to allay employee motivation to depart. Astute media-watchers will note, of course, that economists were quoted confidently asserting in a Business Spectator article penned a mere 4 days prior to the Lawyers Weekly article that the “peak in unemployment has passed”.

So where will the exodus of lawyers go? Obviously, we cannot answer that question in every instance, but in the case of Mallesons, a firm we consider leader of the pack in terms of exodus potential (very low pay, apparently highest working hours), things just became a little clearer.

This from an anoymous Mallesons spy recently:

Mallesons partners must reconsider their current, stringent view on remuneration, the reported 44% profit margin, and they must do so quickly. I am presently considering a far more generous offer from Gilbert + Tobin to join its new Melbourne office and right now I see no compelling reason to stay at the firm. By market rates, my remuneration is appalling and a Red Balloon voucher, purchased en masse for a discount, does nothing fix the situation. Partners should be advised that things need to change, and quickly, or G+T might just land the entirety of Telstra’s work along with dozens of Mallesons lawyers.

As reported by AFR (11/12/09):

G+T managing partner Danny Gilbert snared a large chunk of Mallesons’ work from Telstra earlier this year after offering to provide unlimited advice for a fixed fee… G+T has appointed 5 new partners in the past 6 months, & its partnership has grown by 7.4%. G+T is also growing in geographic terms. It will open its first office in Melbourne soon. The move is client led - Telstra’s [general counsel] Will Irving is based there… Gilbert says … “Telstra was looking for a broader engagement with the firm across all of activites the firm has expertise in and we were looking for a fee arrangement that had the best prospect of expanding our connections across what is a very large corporation”.

The article goes on to mention more bad news for Mallesons:

G+T also announced last week it had convinced highly regarded private equity specialist [and former Mallesons partner] Peter Cook to join the firm.

Are you considering changing firms? If so, why?

Tell the Firm Spy first!

Please bear with us as we wait for the return of all our affiliate firm spies from annual leave and the like. We expect to be running again at 100% in mid to late February. Of course, check us periodically between now and then for all your corporate gossip needs.

Apologies to the spies who have sent us tips and gossip which we are yet to publish. We will do so in due course, once we have the personnel to work through the considerable back-log.

And please, continue to send us your gossip!

AAR partner Paul Quinn uttered in his Business Spectator column earlier this week that junior lawyers should be remunerated based on performance. As reported by our friends at ALB:

associate salaries have remained on a lockstep structure … and “none of the arguments, in my view, present a compelling case to rule out performance based remuneration for lawyers …  a strong and transparent performance culture is a good thing”.

We can think of a good reason Paul; for example when your firm does not have a “transparent performance culture” and young lawyers do not possess a “champion”.

Late last year an anonymous AAR spy wrote us the following

…Allens Arthur Robinson’smanagement are aware that legal salaries across all levels are below market rate (although this has not been acknowledged or communicated to staff). At some levels, the discrepancy is as much as 20% below market rate. Salary compression at junior levels is also critical. “Thawing the salary freeze” offers the opportunity for the firm to consider a revision of its approach to remuneration. This may result in changes to the calibrated lock-step system currently in place. After the introduction of a forced-rank distribution sytem for performance reviews in 2009, the firm “successfully achieved its distribution curve”. (ie the firm reduced the number of staff achieving an “exceptional” or “very strong” rating and increased the number of staff who received a “strong” or “underperforming” grade). Some partners complained that they felt compelled to impose a grade on staff they did not agree with. Lawyers complained about flaws within the calibration system itself, including the fact that lawyers might be disadvantaged if they did not have someone to “champion” them during the calibration process (ie if they do not work directly with a high-ranking partner).

What do you think is fairest? A performance-based salary where lawyers are open to being dodged by partners, or the current lock-step model?

Send the Firm Spy your news and views!

We reported in late December the revelation that Minter Ellison was intending to lift its pay freeze. At the time, we thought that the thaw was dubious, however, because only particular staff would be given good news in the “letter notifying them of the result of their review”.

Sounds a lot like Minters & Chief Executive Partner John Weber only intend to increase the wages of those members of staff it is fearful of losing.

Over the break the Firm Spy received some disastrous gossip for the small few who genuinely hope to get a pay rise after the review. This from an anonymous - and apparently high-ranking - Minters spy:

recently exiled Minter Ellison partner Simon Alroe has had the criminal charges against him dropped. This must be one hell of a slap in the face to his former, conniving partners Ken “Horny” Horsely and Trent “Porno” Forno. But more than that, the news I recently heard from John Weber that Alroe is intending to sue the firm for north of $15,000,000.00 must be sending shivers up the collective spine of all Minters partners - who, as everyone knows, are already paid at the very low end of the corporate law firm partnership wage spectrum.

Worse still, those lawyers hoping that Weber would make good on his recent promise to lift the firm-wide halt on pay rises can probably now expect their pay to remain steady in 2010.

You’ll recall that former Minters partner Simon Alroe was “voted off the island” in July 2009 for allegedly harassing colleague Trent Forno. Presumably the criminal charges mentioned by the anonymous Minters spy relate to charges of harassment arising out of an incident with Trent Forno. We understand that these charges were the primary rationale for de-equitising Alroe from the Minters partnership.

Accordingly, given that the charges were apparently considered as being without merit by QLD police, does this mean Alroe ought to be reinstated to the Minters partnership? Will Forno now be removed from the Minters partnership for registering charges that brought about the downfall of a colleague, yet were considered by authorities as being without substance?

Send the Firm Spy your news and views!

Get a cup of coffee, brush past a reprehensible colleague, listen to the ranting partners talk of their European jaunts and get angry.

Then, tell us about it!

We’re back. We’re not happy to be back at work and we’re looking forward to doing what little we can to brighten your miserable corporate lives.

But of course, we need your help. So drop us a line, anonymously if you so choose.

Some excellent gossip has filtered through over the break which we will post over the course of this week. Please stay tuned.

Firm Spy