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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