Here at the Firm Spy we make an effort not to just hijack the content published on other websites, in particular those operating in the same space as us (namely ALB, Lawyers Weekly, and The New Lawyer). However, in the last week we have read two articles published by our good friends at The New Lawyer that we considered so compelling,  so pertinent, that we have decided to republish them here.

Unsurprisingly, both articles are a slap in the face to the modern-day corporate law firm partner.

The first article was written by a former associate to Michael Kirby. Nick James:

The nature of the top tier law firm has fundamentally shifted in the last three decades, writes Nick James, so isn’t it natural that those most adversely affected would begin to cast around for new alternatives?

OBSERVERS of the legal industry have for a while been describing a new set of behaviors and attitudes displayed by emerging lawyers. Generation Y in particular is described as a challenge and sometimes a problem for the existing law firm model.

The new generations, we are told, are less interested in doing the work required to become a partner and are more interested in:

• profit share at an earlier age
• flexibility
• being given greater responsibility and client access
• experiencing an individual connection with their personal values and the subject matter of their work.

While both Gen Y and X are different from the generations before them, it is important to note that many of the ‘changes’ in attitude ascribed to them are in fact natural responses and adjustment to dramatic changes in the large law firm environments they are inheriting.

Today’s mega law firm juggernaut is a relatively recent phenomenon. The very largest law firms in Australia in 1980 had only just exceeded 30 partners. They also operated under a very different set of conditions. In 1979 an article comprehensively surveying the phenomenon of the emergence of the “corporate” law firm in Australia, noted that “one firm has gone so far as to … specify weekly minimum billing targets for its partners and employee solicitors”. The article continued “other law firms have clung longer to a sense of individual autonomy in the partners”.

As law firms have grown since then, in only a few decades, what once was a system of a community of partners bounded by either personal friendship or acquaintance evolved into a highly impersonal/competitive/corporatised and semi-political structure. Its decision making model: Requiring the consensus of a large group of partner-owners who have a window in their career to collect profits before retirement; has (arguably inevitably) driven management decisions which have over time tended to serve the short-term profit interests of the equity partner-owners at the expense of other important interests, including those of the emerging lawyers and even of the firms’ clients.

The fall-out has been a large factor in the crisis in our legal profession of unhappy lawyers (even in partnership ranks) and dissatisfied clients, not to mention a decline in the general level of community respect for the profession. Increasingly higher fees; higher hours worked by lawyers; behavior driven by billing targets; the overheating of the leverage model; the creation of salaried partner/special counsel roles; and the increasing delay of promotion both to and beyond senior associate; are all a result of the intense focus on profits-per-equity-partner as the fundamental goal sitting at the centre of the top tier firm.

Ultimately these sorts of observations don’t mean much in a business sense unless they necessarily lead to two conclusions:

a) Factors inherent in the current large law firm model actually make the model bad at what it must do in the long term in order to remain sustainable and successful; which is to keep its workforce and its clients happy.

And therefore:

b) The current large law firm model is vulnerable to new structures that can do a better job of giving lawyers a better place to work and clients better service and value while being able to accommodate the scale of needs of modern globalised corporations.

The structure which will win in the long term will need more than the simple advantages of incumbency which make the modern top tier law firms appear invincible at this point in time. Any new structure must, to be successful, rebalance the needs of lawyers for conditions which were once an embedded part of their working life as well as provide a dynamic engine capable of driving the growth of the business. How this is to be done is the task for the next generation of lawyers; those who have inherited a large law firm model which they can now plainly see is flawed and requires rethinking. The urgency of this task is heightened as they increasingly realise they themselves are among the primary victims of its basic dynamic and the cost to their lives as well as their professional enjoyment is too great to continue working within the existing model.

It is important to remember, that emerging alternative visions for the future for top tier practice, like the aspirations of the new generation of lawyers, are not a radical departure from the history of the legal profession. It is instead the overheated, current big firm model which is the aberration. It seems arguable that ‘new’ visions for the practice of law in fact represent a continuation of the sorts of things we have always wanted from our workplaces and which are only resurfacing now because they have been left behind for a while too long.

Nick James is the founder and director of the Sydney-based law firm Optim Legal. He is an alumnus of two top tier firms and was an associate to Justice Michael Kirby at the High Court of Australia. Comments can be left online or sent privately to nick@optimlegal.com.au.

The second article was written by Michael Bradley. Bradley, you’ll recall, has previously been the subject of some Firm Spy criticism. Until now, we thought Bradley was some kind of space cadet. We censured him over forcing graduate job applicants to his firm Marque Lawyers (named after a wallet) to write a 500-word application essay featuring the word “jazzy”. We wrote our own application and published it. We also criticized Bradley over the advice he gave to seasonal clerks on how they should comport themselves at their job interview.

We thank Bradley for having the courage to write an article which broadcasts the problems of the modern-day partnership, and necessarily implicates his former firm Gadens where he is an erstwhile managing partner.

Being a partner no longer means having a say in how the business is run, among other things. Michael Bradley asks, what is partnership now, anyway?

“…I looked around at the partners and I thought, ‘I don’t want your life’.” So the senior associate from a very large firm told me in describing his reasons for leaving secure employment and the path to partnership. That’s of course a very personal thing. There are plenty of lawyers who are at least prepared to live that life for the reward of partnership. But what is partnership these days?

It used to mean ownership, a direct financial stake and a say in how the business was run. But in most large firms, the role of the “partner” has had its scope defined progressively more narrowly over the past 30 years to what is now pretty much a single dimension.

The risk/reward proposition in private practice never really stacked up. The available pay per hour worked is, even at the most profitable firms, paltry by comparison with some alternative career paths. The trade-off was the addition of job satisfaction – intellectual, emotional, proprietorial. You could aspire to own a real piece of something special, and enjoy the benefits that went wit h it. These included loads of social status and a soft landing at the back end of your career – a leisurely slide out with a corner office and some board seats, supported by the next generation of partners who were in a carriage further back on the same perpetual train.

It became noticeable by the early 90s that this system had an inbuilt defect, due to the lawyer’s natural imperative to think myopically. The spectacle of ageing partners living off the fat for years after their prime became rapidly annoying and ultimately intolerable for the young Turks. Firms responded by, first, implementing a gracefully staged slide down the equity pole. This quickly escalated into an entrenched “up and out” philosophy throughout the profession which dictates that every partner will progress upwards in power and profitability until they can go no higher; and then they are taken out the back and shot.

It’s a classically human mode of organisation. Human, but not humane. Law firms have accepted that they are not places for the faint hearted, which might be okay if the slices of pie had gotten bigger to compensate for the loss of long term job security. But it hasn’t. Partners still derive all their income during their stay at the firm; they have no access to capital gain and no opportunity to cash out (unless they float the firm). And their incomes, while still high, haven’t climbed in the exponential way that, for example, public company CEOs’ salaries have.

At the same time as finding themselves participating in what is now quite literally a rat race, partners have progressively given up most of their traditional role. Driven by the two complementary theories that “good lawyers make bad managers” and “partners should stick to their knitting”, the era of “professional management” in law firms has arisen and is now firmly in control. Whether or not the guy (yes, it’s a guy) at the top is or isn’t a lawyer, there is a phalanx of COOs, CFOs, HR, BD and KM Directors in complete charge of every aspect of the management and administration of the firm.

The partner’s role is now reduced to this – ensure that (a) you and every member of your team/cell/unit has the requisite number of chargeable hours on their timesheet every day; and (b) the fees under your “control” (however that’s measured) are adequate to justify your continued progression up the greasy pole. How you achieve that is not so centrally controlled, but the consequences of failure certainly are. Pressure? Yeah, just a bit.

It’s efficient, definitely. But for the partner in the trenches, is it what you bargained for? I’d argue that, if you have no real say over hiring, firing, remuneration or progression, and you don’t frequently participate in an open forum with your partners to talk about your business in whatever terms and on whatever agenda you choose, then you are an owner in nothing but name. It shouldn’t be a huge surprise that not everyone wants to be you anymore.

Will we see a day when a group of corporate lawyers/accountants assemble together and simply say to partners “give us a bigger slice of the pie or we’ll leave and your firm will disintegrate”?

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Last Friday, the AFR reported in an excellent article profiling the Clayton Utz/A&O partnership defections that Clutz would, as part of its response to the shocking departures, open an office in Hong Kong. Although it was reported that the decision to open the office was made months prior to the A&O defections, the Clutz partnership is understood to be hopeful that the international office will alleviate what the AFR considered disenchantment within the Clutz partnership that the firm had no exposure to Asia.

But it will come at a major cost. It is a major risk for the firm, especially when several other local firms (Mallesons is an excellent example) have entrenched ties with clients in Hong Kong, not to mention a multitude of international firms.

But the costliness of the Clayton Utz response to its flailing fortunes of late does not stop there. In an apparent win for the long suffering lawyers/support staff at Clutz (some of whom have apparently been repeatedly dodged on pay), it was reported yesterday that the firm has unfrozen wages. As noted by ALB:

Clayton Utz has brought forward its remuneration review… Now all staff will have a salary remuneration review at the beginning of April [from July 1]. “Remuneration will be set in an accelerated fashion”.

The announcement made it very clear however, that staff will be “eligible” for a raise in wages, signalling that the partners, with a rumoured history of pay-dodginess, will retain the discretion to say “no, we’re not concerned about losing your services, so your wage can remain steady”. As for the staff it hopes to keep, it is unclear whether the “accelerated fashion” with which pay will be set means that lawyers will effectively have their wages set two years in advance of its current level to offset the year of frozen wages.

As you can therefore see, the announcement is opaque and the freezer hasn’t quite defrosted yet.

In other news, the Firm Spy received the following comments last night about new Clayton Utz partnership announcements:

Clayton Utz has made up 6 partners. A decision was made over the weekend by the Clutz partnership, in yet another ‘emergency meeting’ that 6 new partners would be required to fill the void left in the Sydney offices by the A&O defections…

Given that it cannot be expected that these new partners will initially generate the same revenue as their defecting brethren, and in light of the massive cost of opening an office in Hong Kong, can junior lawyers really expect that partners will approach the April 1 remuneration review with bona fides?

We think not.

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Last week we reported the news that in between his duties as a Minter Ellison lawyer, Eren Myers has apparently carved out a niche’ in after-hours personal training. Not only that, but he also apparently finds time to offer advice to high-profile alleged rapists

We sought some clarity from Minters on whether Mr Myers was acting on behalf of the firm when he gave advice to sacked St Kilda footballer Andrew Lovett about his recent alleged rape, and whether Minters is currently dabbling in criminal law.

This is what we received from an anonymous Minter Ellison spy yesterday:

Dear Firm Spy

Minter Ellison does not practice criminal law, much less do any of its lawyers openly profess to being qualified to offer criminal law advice to alleged rapists. First year lawyer Eren Myers is in a league of his own on that front.

For your information, the rumours I am hearing is that Eren very nearly lost his job over this incident, but managed to wrest back from the Herald Sun a semblance of dignity by saying “they misquoted me” and “the photo was cropped”.

However this did not stop Eren being placed into lockdown (literally, he was told not to leave the office) when the next day a group of Herald Sun paparazzi descended on the Rialto Towers vying for a photo of Eren. They were apparently seen clamouring in the foyer with large cameras.

I understand that had they captured his image on this day, he would not have been singlet-ed, but rather wearing a shirt and tie.

Thanks to the Minters spy for clarifying the matter. We wish to congratulate the Minters partnership on exercising some restraint in allowing Myers to continue on with the firm.

Consensual sex, anyone?

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Fresh from apparently going into bat for Black Saturday icon Sam The Koala, Tresscox A-List partner Nic Pullen is ‘pullen’ on the gloves again, but this time for the man dubbed “The Human Headline” Derryn Hinch.

As reported by our good friends at Lawyers Weekly:

Hinch faces five charges for breach of suppression orders under Victoria’s Serious Sex Offenders Monitoring Act 2005 [which he hopes to fight in the High Court]… According to Pullen, Hinch’s case seeks to challenge the act based on various constitutional issues, claiming that it provides for unequal treatment and protection of convicted serious sexual offenders, that it’s contrary to the Constitution’s implied freedom of speech and that it subverts the common law doctrine of open courts.

Pullen said Hinch’s real contention in relation to this is that the act “protects the worst of the worst, when it comes to sexual offenders - repeat serial pedophile offenders … the ones who are most likely to reoffend are protected… If you’re a, so to speak, run of the mill pedophile, or any other criminal for that matter, it [the act] doesn’t apply,” Pullen continued.

At this stage it is unclear what distinguishes a run of the mill pedophile from  any other pedophile, though we fear Tresscox’s Mr Pullen might be involving himself in criminal affairs outside his area of expertise (like our friend Minter Ellison chest-waxer lawyer Eren Myers). What is even less clear, however, is how Derryn Hinch, a reformed wine-o who once confessed to “drinking four bottles of white wine per day”, was able to author a book entitled “The Derryn Hinch Diet”.

Stay tuned for more news as this saga unfolds.

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After a very long hiatus, we received some welcome comments from an anonymous Middletons spy over the weekend:

Managing Partner at Middletons must have misspoke in a recent ALB article:

Nick said that, despite a downturn in business over the past 12-18 months, the firm did not institute any measures such as salary or hiring freezes 

Nick seems to think that the firm didn’t make any hiring or salary freezes. That’s going to come as a bit of a shock to the firm’s lawyers and SAs, who haven’t seen any movement in their pay for a long time (even if they got a promotion in 2009/2010).

The salary freeze was discussed at length by Nick in other contexts so it’s hard to understand why he’s forgotten about it now.

Yes, this does seem odd, particularly when considering the “careers” page of the Middletons website which asks potential applicants:

Are you a straight talker? Middletons is a national commercial law firm whose lawyers pride themselves on their straight talking approach…

Is your boss a straight talker?

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Following our first swipe at the allegation of Pied Piper Alderman departures of juniour lawyers last week, came the following scathing comments from an anonymous PA spy over the weekend:

The recent story on Piper Alderman is nothing but the truth. To add insult to injury, those who leave the firm within 2 years of starting are required to repay the $6,800 the firm pays towards the College of Law, which is extracted through strong-arm tactics and threats by their Human Resources Manager in Sydney. If anything, the biggest problems at Piper Alderman are being caused by the HR manager, who, in a common theme, was also promoted
very early on her career.

In regards to promotions, the lawyer promoted to Senior Associate after only 2 and a bit years PQE is in fact the sister of the firms most profitable partner …

Hmmm - these rumoured “strongarm tactics” tactics sound familiar. Does anyone recall the medieval story of the Pied Piper? Legend has it that:

 when citizens refused to “pay the piper” for the service [of catching rats with his magic pipe], he retaliated by turning his magic on children, leading them away to their demise…

There is nothing quite like hardballing a junior, is there?

Does your firm enforce debts with strongarm tactics?

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A couple of weeks ago, law firm Piper Alderman received the welcome news that a former partner, John O’Callaghan, had been appointed as a Magistrate in Victoria. Magistrate O’Callaghan, who was appointed partner at Piper Alderman in late 2008, will now hear civil cases.

Less welcome was the news, syndicated by nearly every major Australian news website, that O’Callaghan had to front up to the Magistrates Court himself on drink driving charges, of which he was found guilty. For the PR machine at Piper Alderman, this no doubt gave rise to some concern that the firm would be perceived by outsiders as fostering a climate of boozing and/or being tight on taxis home.*

And now, in something of a double-swipe at the Pipe, we today publish comments received by us last night from an anonymous Piper Alderman spy:

Mid tier firm Piper Alderman has not done anything to correct frozen pay for most lawyers.

In other news, the latest round of propotions which became effective on 1 January 2010 shed some light on the Piper Alderman Promotion procedure, or lack thereof.

10 promotions, mostly in dispute resolution, were announced in December 2009. Among them was the record breaking ascension of an associate to senior associate, with only 2.5 years pqe. That round of promotions also saw other dispute resolution associates and lawyers promoted to higher levels.

As a result, there has, over the last 3 months been an exodus of junior talent from Piper Alderman, particulalry in the area of corporate and property services, who were denied pay increases and promotions.

It is understood that the threat of more losses has resulted in perfomrance reviews of those who missed out on promotions to reassure that their turn is coming.

If true, this promotion scheme would be an entirely novel means of reducing headcount in under-utilised practice groups.  If the move is based on billable targets, this must call into question the practice of the firm in remunerating staff pre-GFC and whether the love was spread to corporate and property (our guess is no).

It is always nice reading the inside word on a firm, like that reported above, and then contrasting it with some of the rubbish prepared by the firm’s PR outfit for university guides. We found PA’s one last night (available here) which notes:

As a law firm our lawyers and the service they provide are our “product” and as such they embody Piper Alderman in terms of values, vision, branding and objectives. This attitude has created a unique culture, culminating in a successful law firm with a harmonious working environment.

Harmonious much? We think it is time to break out the peace Pipe, then wash it all down with a few bottles of red (Piper Alderman has… regular drinks nights), before driving home!

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*It should be noted that the drink driving charges pre-date O’Callaghan’s appointment to the Piper Alderman partnership

[ED - No less than five, yes FIVE, anonymous Minter Ellison spies alerted us to this masterpiece, appearing yesterday in Melbourne newspaper Herald Sun. Thanks in particular to the spy who scanned and emailed us the article.]

It is unclear how Minter Ellison lawyer Eren Myers finds time juggle his work at Minters with the heavy burden of his very own personal training business, providing ex-AFL footballer Andrew Lovett with fitness advice, and doling out legal advice to alleged sex offenders. However if his photo in yesterday’s Herald Sun is any indication, one thing appears likely: he apparently subscribes to the “it is ok for men to wax their chest” school of thought.

In yesterday’s Herald Sun (page 81, for those readers still retaining a copy), the picture of Minters lawyer Myers appears beside disgraced ex-St Kilda footballer Andrew Lovett (who was recently alleged to have raped a female and who yesterday was sacked by his former AFL football club St Kilda) with the following abbreviated article:

…[Lovett] looked relaxed as he posed for photos [at Melbourne’s St Kilda festival] with friend Eren Myers… Myers, a lawyer with Minter Ellison, has been giving Lovett advice on the rape case. And he has also been acting as a personal trainer to the footballer since the 27-year-old’s indefinite suspension by St Kilda.

Myers, who has his own personal training business, has been putting Lovett through a rigorous regimen.

At this stage it is unclear whether Minter Ellison has opened a criminal law practice, whether Minters has taken on Lovett as a pro bono client, or whether Myers is acting in a personal capacity dishing out advice on the nuances of consenual sex.

We await further clarification from Myers and Minters.

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We understand that you’re probably sick of reading about it - we’re certainly sick of writing about it - so unless something explosive happens, we’ll make this our final post about the Clayton Utz partnership defections to Allen & Overy.

This post clarifies further the Clayton Utz machinations giving rise to the defections. We have extracted some excellent info from the AFR 12/2, shedding light on how former Clutz Banking & Finance head partner Grant Fuzi was the protagonist in the Clutz partnership defections:

It is Mr Fuzi’s history with Clayton Utz, and his long-time association with Mr Trahair, a fellow Australian, that was instrumental in facilitating A&O’s bold and sudden arrival here. As one partner said about Mr Fuzi this week: “The mistake we made was taking him on again.”

Mr Fuzi and Mr Trahair were poached by A&O in 2001, with Fuzi stationed in Hong Kong where according to the AFR he:

learned the ins and outs of A&O’s Asia practice.

 Several years later, Fuzi returned to Australia and to his old firm Clayton Utz. In 2005, speaking of Clutz’s absence in Asia, Mr Fagan told AFR that the firm:

did not see the client demand nor the business case for opening an office in Asia.

The AFR considers that this is a view that may have sat at odds with those who had tasted the global law firm life in Asia.

The AFR went onto note last Friday that:

Mr Fuzi resigned in December, after the announcement of Mr Fagan’s retirement, after a nine-year stint, from the role of chief executive in November. Mr Fuzi was a strong contender to replace Fagan, but lacked the numbers in the partnership vote.

“…obviously if I had been made chief executive partner I would not have left.

Fuzi would not have left if made CEP and, apparently, some of the defecting partners may not have left if Clayton Utz had an bigger Asian presence. If you Fuz snooze on these global opportunities, evidently you lose…

So now we know who, what, when, how and why. That’s a wrap on certainly the biggest Australian legal story of 2010.

Let the Firm Spy - your Firm Spy - know first when the big stories break.

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Thanks to the anonymous Deacons/Norton Rose spy who sent us the following tip last night:

After freezing our salaries last year, Norton Rose has decided to thaw them. We all got an email from Don Boyd this afternoon saying there had been a review and the outcome “will result in salary increases for most of our lawyers.” The increase will be back-dated to Jan 1. I will be checking my payslip very carefull on Monday.

Uh oh! Not the now tried-and-true use of opaque language like “most of our lawyers”! Does this mean 51% will get increases in pay? Who will miss out? Sounds to us like Don ‘Dubya’ Boyd might have another major gaffe on his hands.

This thaw, if true, comes after similar moves by Freehills and Minter Ellison (who promised staff a thorough ‘review’, whatever that means) last year. By our count, this leaves Mallesons, AAR, Clutz and Blake Dawson as the major firms remaining to act on frozen pay.

Do you think the arrival of a major Magic Circle competitor, who is brazenly in the hunt for good legal talent, should prompt major firms with frozen pay to do something to encourage top-performers to stay?

Has your firm acted on pay? Let the Firm Spy know first!

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