Gaden’s chairman Paul Spiro says … the reason his firm posted 14.9 per cent growth last year [is because] “People are looking for economies and one economy they can achieve easily is reducing legal spend … We are a cost-effective alternative to the larger firm.”
Certainly, it’s true that Gadens is a cheaper alternative to the major Australian law firms, but some clients are known to express concern that by taking work away from a “top-tier” firm to a “mid-tier” firm like Gadens it might compromise the quality of the legal advice they receive. One of Gadens’ clients appears to have recently learned this valuable lesson the hard way.
To that end, we received the following comments from an anonymous Gaden spy a few days ago:
Yesterday 1/12/2011 Justice Pembroke delivered an ex tempore judgment in Learn & Play & Ors v David Lombe and BankWest.
Harry Cormack of Gadens did the facility documents. Justin Bates of Gadens ran the defence for Lombe, a receiver, and for BankWest.
The Judge held the charge lodged by Gadens was invalid, the receiver was invalidly appointed, Cormack “gambled” that certain events would happen. The charge was signed by a man Gadens knew was not a director or officer of the company and they failed to follow up and confirm his appointment.
Basically Bankwest has lost a two million dollar security through very sloppy legal work. God knows why it acted in defending the claim!!
PS Cormack thought because a charge was only stamped for $1.1 mill it was a $1.1 Mill charge even though it said $5 Mill.
The tipster sent us a copy of the judgment ([2011] NSWSC 1506) together with the following comments:
Your readers might be interested in paragraphs 10 and 13
Mr Cormack, partner at Gadens, didn’t quite perfect security for BankWest even though his junior solicitor had her finger on the pulse.
Hope Deloittes arent too unhappy at being removed.
Indeed, the judgment doesn’t make great reading for fellow Gadens partners and more broadly for the firm’s clients hoping that straightforward finance instruments can be correctly drafted and executed by the company. And let’s not forget all those prospective clients “looking for economies”.
In the judgment, Justice Pembroke stated in relevant part:
The issue in this case is whether a fixed and floating charge and a guarantee and indemnity dated 17 June 2008 purportedly given by (the company) in favour of Bankwest are valid. Both documents were executed by a person who was not a director or officer of the company at the date of execution. He had no actual authority, whether express or implied, to execute those documents…Mr Cormack was the [Gadens] solicitor for Bankwest. He made clear that he was well aware that Mr Ward was not a director or officer of the comany at the time of execution of the guarantee and charge. He took a … risk on behalf of Bankwest… Mr Cormack only has himself to blame. As I observed, on 6 May 2008, an employed solicitor working under his supervision prudently informed the solicitor for Mr Ward that she required copies of the documents evidencing the transfer of shares and the resignation of the director, the minutes of the meeting and the ASIC 484 forms… Mr Cormack was simply content to receive the guarantee and charge executed by Mr Ward on behalf of the company on escrow. In other words, he knew that they were ineffective unless and until Mr Ward became the sole shareholder and the director and caused the company to ratify them.
Do you take risks at work? Are you looking for economies this Christmas?
Send the Firm Spy your news and views!
UPDATE: 12/12/11
Gadens Chairman Paul Spiro told The Australian on Friday (9/12/11):
The firm is very much oriented towards the property industry – always has been, always will be – and is keen to service middle corporate Australia… When you are doing well in the resource area and the receivership area you have got to plough some of that money back into countercyclical opportunities and build up your property groups and support your corporate groups for when times change.
Apparently Gadens is doing well in the receivership area!
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It’s the BDO of law firms.
Gadens is seriously pathetic. At clerkship recruitment functions, they try to position themselves to the candidates as a top tier firm, constantly reiterating that they are a ‘top ten’ firm. Yet, they market themselves to prospective clients as a cheap alternative to the top firms.
to be a cheap alternative, they still need to at least be an alternative. They aren’t.
Worst. Firm. Ever.
Guys, this is a bit rich. We’ve all made mistakes -or are we to understand the FS team hasn’t? How many of those led to your name being plastered all over the Internet?
I’d also be interested to know if you requested a comment from Gadens or the partners involved (as per your editorial policy). Even if you did, this is a cheap article.
Every time FS takes a few steps forward to being recognised as an important industry voice (eg the features on law students and recruitment or the interview with Robert Millner), it takes a giant leap back with a smearing article like this on a nothing issue. Just another one of many undermining the good work that you (decreasingly) do.
There’s no need for it.
@ Really?
Appreciate the feedback. We make mistakes all the time, no doubt about it. We thought this story was warranted after we spied a stern-faced Paul Spiro emblazoned on the front page of The Audtralian’s Legal Affairs section last Friday. We think we’re an important check on the firm-friendly articles we often read in alternate legal affairs media, like Friday’s article.
Let’s not forget that Gadens promotes Mr Cormack on its website as having over 25 years experience. This sort of clanger is deserving of an FS article in its own right. We don’t think it’s a cheap shot, certainly not from a firm that is professedly “doing well” in the receivership area.
In terms of our editorial policy, Gadens ate currently out in the wilderness. A few weeks ago we asked the firm’s head of PR Claire Buttner – an individual with whom we have a bit of a strained relationship – for a comment on the allegation that Gadens was fudging its pro bono work output. She didn’t respond to us. We’ve made it pretty clear we don’t like being ignored, so we declined to give the firm the opportunity to comment on this and our last story.
“Certainly, it’s true that Gadens is a cheaper alternative to the major Australian law firms, but some clients are known to express concern that by taking work away from a “top-tier” firm to a “mid-tier” firm like Gadens it might compromise the quality of the legal advice they receive. ”
This is the kind of arrogance that drives clients to people like Gadens, and other profiteers. Fact is that there are sole practitioners and boutique firms that offer better service in lots of spaces than the “top tier”. Primarily because you get service from an experienced solicitor and not the first grad off the rank.
Agree with really? And with anon. Sorry spy but not offering comment is amateur hour.
As an ex-employee of 3 years believe what you read here. Once I had given my notice, I was treated like an outsider and bullied by HR. The reason they offer cheaper services is they use juniors with little experience, don’t have performance appraisals, pay rises etc.
Gadens uses paralegals to do most of their laborious procedural work, a friend of mine, an admitted solicitor desperate for a job, was recently taken on as a paralegal, with the distant carrot being one day potentially becoming a lawyer.
It’s no wonder with this and other retarded cost cutting policies that they would sooner or later come a cropper. It’s surprising that it wasn’t sooner
All you ever hear about Gadens is how shit a place to work it is. Either the most effective smear campaign in history is being run by other mid-tier firms, or it’s a shit place to work.
As for this bloke who f***ed up the security – that’s just professional cowboy behaviour and If I was a client I’d be very cautious about steering him any more work. He might come in at half the price of a big-six partner but the extra couple grand in front end fees seem kinda worth it if it means your security is properly prepared.
Seems Firmspy doesn’t understand the difference between front end lawyers and the ones acting for receivers?
The comments printed in the Australian about acting receivers are completely irrelevant to a story about a front end lawyer buggering up a security.
Interesting story. Poor reporting by Firmspy.