But the worst part is … it appears that A&O’s Aussie partners have been more heavily reliant on the performance of overseas-based partners because of their own lacklustre efforts.
We were sent the following comments from an anonymous A&O spy a couple of days ago:
I am at A&O and they have been trying to make their own news recently in order to cover up some negative publicity they have been receiving over kiddy porn allegations against a partner and the grotesque profits that they have made so soon after sacking so many associates. One of the recent ”newsworthy” items that they have been trying to flog in the market is about Morley going for a junket for a couple of months in Asia. Let’s not be distracted by these antics and instead stay focused on what really matters – those innocent victims of child pornography and the lawyers who fell victim to sheer greed. The whole thing has made me so sick I am looking to leave!
Sickening indeed. True it is that the A&O partnership recently reported “grotesque” profits. According to the AFR:
Revenue rose 6.5% from the previous year to £1.7 billion and distributable profit increased 6% to £455.8 million.
And there is nothing quite like an increase in revenue and profits after a massive round of redundancies. However, likely to the chagrin of the firm’s domestic head Grant Fuzi, A&O’s offering in Australia has not yet contributed to the firm’s global profit. As reported by the AFR:
While [global managing partner] Mr Dejonghe declined to specify how much revenue and profit was attributable to the Australian A&O offices… he said they contributed to substantial revenue growth in the Asia Pacific Region… Finance director Jason Haines said while Australian offices had produced high revenue growth, there had not been much profit growth as they were still in an “investment period”.
Firm Spy understands that A&O was able to induce the defections of each of the partners establishing the firm’s two Australian offices in March last year with the lure of a fixed profit share (and performance-based bonuses). This appears to be supported by the recent AFR report:
All the Australian partners are “full partners”, Mr Dejonghe said. This year the firm’s full partners received a profit distribution between £642,000 and £1.6million … [with] average profit per full partner at £1.1million.
So if the Australian-based A&O offering is currently running at a loss, we would assume that offshore partners have had to contribute more than their fair share to pay the fixed-share entitlement of unprofitable Australian “full partners”. And of course, one of the partners chipping-in to make up the shortfall would be none other than alleged child-porn consumer Edward de Sear. Oh to be enriched by filth filthy rich!
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Regardless of the comments of the “anonymous A&O spy”, it is beyond belief that you think it is relevant or appropriate to link terrible criminal charges in respect of an individual to a report on a firm’s revenues and profits?
Your flippancy is disgusting. Your editoral policy needs a review.
I don’t think there’s any need to tie the child pron with the unprofitable status of A&O’s Australian office.
This post points out one of the primary issues associated with a global merger. Firms like Blake Dawson who are considering an international merger would be well advised to do diue diligence on the personalities within the partnership they are looking to share profits with
An interesting take on the inherent issues of a very large partnership
Firm Spy has at least one talented writer on its staff. Apparently they have the day off today!
here is a theory. UK firms swallowing up Aust firms will have the same disastrous ending as the UK firms did with HK firms in the nineties. UK partners have paid far too much for Aust lawyers (just as they did with HK lawyers) and the whole thing falls apart in three years when they arc up over subsiding the australians. Assuming the UK firm equity model is based on profits equal what you control, there is no economic incentive in allowing matters to be controlled in Aust. car crash coming .
Really plumbing new depths, FS.
I would be disgusted to learn that a portion of money paid to subsidise my salary, however small, was earned by a pedophile. I don’t think there is any real controversy with this post – partnership profits are shared amongst partners – it is just bad luck for A&O partners in Australia that they’ve had to rely more on overseas partnership profits than other global partners. It would be controversial if firmspy imputed the pedophiliac tendencies of de Sear onto Australian partners, but that hasn’t been done. I’ve heard that one of the reasons the Brisbane based DLA partners recently defected to Thompsons was precisely because damaging allegations like these can arise in a distant office and yet have a significant local impact. Wise lawyers, in my opinion
No suggestion A&O earned money from child porn. A&O partner who earned the other partners money was into child porn – but what did this have to do with his legal work?
The most you can say is that A&O have poor choice and vetting of their partners – but this kind of behaviour is hard to discover.
A very commendable piece, FS.
Your ability to link crucial, relevant and pressing factors in a non ‘far fetched or fanciful’ (see Wyong Shire Council v Shirt) manner is the thoroughness corporate Australia likes to see in its lawyers.
Which one is it FS, you bag Clutz with headlines like “14 very profitable, well respected partners defected from Clayton Utz to build two Australian offices of Magic Circle firm Allen & Overy” and now they’re duds when it suits you?
@Meh. They were duds all along.
@DD – I hate to say it, but if you work in a large organisation, there’s a good chance that someone in there is a pedo. Unfortunately, you never know who it might be.
“I would be disgusted to learn that a portion of money paid to subsidise my salary, however small, was earned by a pedophile”
How utterly ridiculous. I’m happy to cash my pay cheque from A&O each month and don’t give too hoots if a deviant partner in a far-away contributed to it. It doesn’t taint my bank balance in the slightest.
A&O is bog standard.
The fact that A&O Australia has not contributed much to the global profit pool does not necessarily mean the partners are duds. They actually appear to be making a mint in revenue. I suspect the reason this revenue has not translated into profit is that the Australian offices are also spending huge amounts of money poaching lawyers from other firms and fitting out the new offices.