In early September 2009 our friends at ALB reported that Jones Day was intending to build its Sydney office into a “full service offering”. To achieve this, the firm recruited the head of Freehills restructuring and insolvency - Philip Hoser. At the time, Hoser told ALB that Jones Day would be ramping up its presence in Australia and so too might other US firms:

Jones Day hands partners some winter gloves

“I don’t think it will happen to the same extent as [when US firms made a move in the late 80’s and 90’s to] London because the market isn’t nearly as deep but it’s absolutely clear to me that Australia, both by itself and as a regional hub, is an important place for these US firms to be … Jones Day has identified that opportunity and made a commitment to building on it.”

Ominously, Mr Hoser also added at the time:

“It takes time to bring people across from other firms so it’s not something that will happen overnight but watch this space and I think you will see [the firm] grow considerably…”

Indeed, the firm has apparently just snared its first major partnership acquisition since Mr Hoser’s September 2009 comments. In a major scoop, the Firm Spy can today reveal the rumour that a highly regarded Allens Arthur Robinson Energy & Resources partner allegedly defected to Jones Day in the last few days.

We received the following comments from an anonymous AAR spy yesterday:

Jones Day has apparently nabbed a senior mining partner from AAR, Tony Wassaf. Don’t know if it rivals Mallesons recent pain, but it does have upper management concerned at what this may mean for the firm as other foreign interlopers upset the cosy Australian apple cart. Jones Day are also apparently paying associates a tidy sum more than at Allens, something the cosy cartel of big firm salary fixers must hate.

Cozy cartel, indeed.  Wassaf is still listed as a partner on the Allens website, so we can’t confirm the move at this stage. Still, as a 20-year partner of the firm, he’s quite likely to be one of the most important members of one of AAR’s more important practice groups. So yes,  upper management would be very worried! Shall we call this one …  an upper management upper-cut?

In the A&O raid on Clayton Utz earlier in the year, several defecting partners also operated in the coveted energy & resources space. So if Wassaf’s departure is confirmed (which will likely feature in rival media before too long), it is quickly becoming clear that international entrants in the Australian legal market have an appetite for energy & resources practitioners.  And that means that the dynamic, pin-striped “mining lawyers” in your office all of a sudden got a whole lot more punching power.

But will they use that punching power to raise the issue of the Jones Day global equity fund which they might get access to upon defecting, thereby potentially receiving an A&O-style triple jump? It would knock the Jones Daylights out of your firm if a group of E&R partners demanded a dramatic increase in their equity share, so perhaps it is time to put on the boxing gloves?

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Prime-ministerial candidate Tony Abbott - a man who once warned women against pre-marital sex despite fornicating with his college girlfriend and consequently having to endure an embarrassing public paternity test - was mocked by media around the country yesterday for the appaulingly inarticulate views he has expressed in relation to the Coalition’s national broadband policy.

vision blurred after Ivan Drago superpunch

While we don’t want to turn today’s post into a political rant, we thought Tony Abbott’s unrefined broadband policy views would make excellent fodder for a contrast with the views expressed by AAR Chief Michael Rose in his recent interview with BRW. So, for today’s post…

THAT’S OUR ACTION CONTRACT.

Through its interview with Mr Rose, the BRW was able to compile an article appearing in this week’s edition of the magazine, entitled Vision Splendid. But was this really an “interview” in the traditional sense, or a painc phone call from Mr Rose?

The article begins with some unedifying drivel about how Mr Rose “doesn’t want to talk about his predecessor” (the inference being in our minds that there was some kind of rift between Rose and AAR’s former CEP Tom Poulton), before leading onto a short statistical grab from last year’s BRW Top 500. The article then finally gets to its point: BRW availing the use of its medium to allow AAR to respond to our post entitled AAR Loses Head (Count) After Short Jab, Uppercut & Knockout Blow.

In that post, we extracted parts of an article published by AFR in which it is alleged AAR

staff were told the firm was locked into its lease and the only factor that could be adjusted was people. Many Allens lawyers were called into a meeting with their partner only to be presented with a resignation letter and told to go now with a payout, or be pushed later with no payout… [one ex-AAR lawyer told the AFR that] in order to receive the payout he] had to sign a deed of release promising he would not leak any information about the firm, “and if we did, they would hunt us out and sue us”, he says. The difference of 70 lawyers between the 108 lost by the firm last calendar year and the 38 or so that are accounted for under the voluntary redundancy program, was done by “stealth”, the lawyer says.

We also pointed in our post to rumours we published last year about involuntary AAR redundacies to buttress the remarks from the AFR.

But AAR appears unhappy to take the Firm Spy short-jabs lying down. Yes, it looks decidedly like Michael “Ring-a-Ring-a” Rose has picked up the BRW panic phone, with this week’s BRW article Vision Splendid offering the following passage:

any dramatic loss in [this year’s] revenue was staved off by cost-cutting measures, largely a result of the firm’s voluntary redundancy program executed between June and July last year***… Rose says forced redundancies were not necessary but mandatory four-day weeks were implemented in the Chinese and Vietnamese offices. He rejects the suggestion the firm engaged in a “freezing out” policy - whereby supervising partners would stop distributing work to lawyers, making them unable to meet billable targets.

“I haven’t heard that term used,” he says… “Partners are encouraged to keep lawyers busy. We have an incentive scheme in the firm and the same number of people qualified this year as last year so there hasn’t been a shortening up of work.”

Conspicuously absent from Mr Rose’s rebuttal, however, is any reference to the claim published by the AFR that some lawyers were given an ultimatum to accept a confidential payout to leave the firm, or risk staying on and being “frozen out” and receiving no such payment. Sure, those that opted to “take their chances” and decline the “offer” might not ultimately have been frozen out (we don’t know this to be true, however), but it is a different thing to say that the confidential offers were never made. Perhaps Mr Rose intentionally omitted to address this issue with his BRW panic call, or maybe he just isn’t across the detail like “Phoney” Tony Abbott’s conceptualisation of his broadband policy.

But even more dubious than his reticence with respect to the alleged “ultimatum”, was Rose’s endeavour to attenuate the objective possibility that “freeze outs” occurred by reference to his claim that there had not been a “shortening up of work”. He even attempts to substantiate the claim that work-flows are good by reference to the number of lawyers qualifying for the firm’s incentive scheme. He doesn’t divulge the specifics of the number of lawyers qualifying for a bonus or what they actually received, so let’s turn to the thoughts of an anonymous AAR spy from the Firm Spy Remuneration Survey:

REALLY frustrated about pay review - I regularly bill at 135% of my billable target, work crazy hours and weekends for an extra $5000?!? I had been holding out for ‘better’ times with a firm I previously felt loyal to - but with all the cutbacks, additional enforced christmas leave time, lack of any form of morale boost and now the poor pay increase, I’m very flat and disenchanted.

The message we are getting from management - not a single reassuring word - they still have more lawyers than they need and want ppl to leave

Maybe AAR had an equal number of lawyers qualifying for its bonus scheme but decided to low-ball them. A bit like “Phoney” Tony Abbott’s broadband plan vis-a-vis that promoted by the Labor party.

And as for the claims that AAR hasn’t suffered a “shortening up of work” (which Rose craftily used in the BRW article to create doubt in the minds of readers that freeze outs could have occurred), what about the comments Mr Rose made to the AFR in late June? Rose said:

“We’ve started to see workflows increase in most practice areas. Perhaps the one that is still sluggish is mergers and acquisitions… We are expecting … litigation to strengthen. Resources is looking good although the uncertainty around the resources tax might have some impact on that.”

If Rose’s AFR comments are anything to go by, it certainly sounds to us like AAR experienced a “shortening up of work” that it is hoping to recover from. But concussions tend to linger, don’t they?

Is Mr Rose across all the detail? Or was his phone call to BRW really a “phoney” call?

Send the Firm Spy your news and views!

***Since when did the maintenance of revenue become a function of reduced head-count? Shouldn’t profitability go up, but revenue go down, when there is a major reduction in headcount? Or does the alleged consistency in revenue simply point to the needlessness of the firm’s redundancy program?

In a fistful of cinematic scenes that won’t soon be forgotten, boxing underdog Rocky Balboa took viewers  literally step  by step through the elaborate training regimen that prepared him for his celebrated bout with Apollo Creed in 1976’s triple-Oscar-winning masterpeice Rocky. Set against the classic track “Gonna Fly Now”, Rocky Balboa rounded out these training efforts  by sprinting up the 72 stone steps leading into the Philidelphia Museum of Art, before shadow-boxing at the top of those stairs.

the knockout blow

Those steps, now colloquially known as the “Rocky Steps”, are something of a Philidelphian tourist attraction, with WIkipedia noting:

Tourists and local residents often mimic Rocky’s famous climb, a metaphor for an underdog or an everyman rising to a challenge.

Just like Rocky in that epochal moment, the Firm Spy was literally punching the air as we read the pugilistic  brilliance of Hannah Low in her AFR article last Friday (the same article we spoke about yesterday). From the perspective of Allens Arthur Robinson, Low’s journalism can best be described as a short jab, an upper-cut, and then a knockout blow.

The Short Jab

Low starts by giving a quick, punchy overview of corporate Australia over the last year and the kind of utterly reprehensible behaviour that floored juniors workers across major firms:

The credit crunch saw a squeeze in head count… Insiders say that the phenomenon of “freezing” lawyers out - where a solicitor is not given any work from a supervising partner and is unable to meet billing targets as a result - was rife in the profession last year. The focus on “performance managing” employees out was a convenient alternative for firms who didn’t want to announce formal redundancies to the market.

For those judging this bout from outside the ring, you’ll recall that Allens Arthur Robinson did announce a “voluntary” redundancy scheme last year. However, we received a spate of anonymous tips from Allens spies that questioned the voluntariness of those redundancies.

The Upper Cut

Low then proceeds to land a punch flush on the chin of AAR, highlighting a glaring discrepancy between redundancy figures reported in the firm’s formal redundancy program and massive additional losses to fee-earner head count outisde the redundancy program:

Allens Arthur Robinson cast off 114 staff under it’s voluntary redundancy program, but only a third were lawyers. But the AFR Partnership Survey reveals that the firm’s full time lawyer head count plummeted from 947 in January 2009 to 839 in January 2010, a fall of 11.4 per cent.

So if the voluntary redundancy program only netted a reduction of approximately 35 fee-earners, how else did AAR manage to reduce head count by a remarkable 73 (approx) additional lawyers? If, hypothetically, the rumours we reported that some of the “voluntary” redundancies were actually involuntary, it could be that as few as, say, 25 fee-earners truly volunteered to partake in the AAR voluntary redundancy program. In those circumstances, it would seem tremendously odd that some 300% MORE lawyers would soon thereafter voluntarily opt to depart the firm but without a redundancy payment. In boxing terms, this would amount to a monumental upset.

The Knockout Punch

But no modern-day boxer - not even Rocky Balboa in his momentous return to the ring in 2006’s Rocky Balboa - can win a fight without a knockout punch. And so, having found the firm vulnerable after exposing the very peculiar statistics above, Low connected with a right-hook to AAR’s jaw:

Allens has previously said that performance reviews are not being used as redundancy by stealth, but lawyers at the firm say that is not the case. One lawyer says staff were told the firm was locked into its lease and the only factor that could be adjusted was people. Many Allens lawyers were called into a meeting with their partner only to be presented with a resignation letter and told to go now with a payout, or be pushed later with no payout, the lawyer says. He cannot reveal his identity because in order to receive the payout, he had to sign a deed of release promising he would not leak any information about the firm, “and if we did, they would hunt us out and sue us”, he says. The difference of 70 lawyers between the 108 lost by the firm last calendar year and the 38 or so that are accounted for under the voluntary redundancy program, was done by “stealth”, the lawyer says.

The Ten-Count

Of course, every fallen giant will try to rise from the canvas. Ivan Drago, for example - the  imposing Russian boxer  played by Dolph Lungren in Rocky IV who boasted a super-punch of 1850psi - tried valiantly, though unsuccessfully, to regain his footing in the 15th round against Rocky. Here, so too does AAR spokesman Chris Fogarty. But could the referee rouse AAR prior to the ten-count?

… Allens spokesman Chris Fogarty says the difference is simply lawyers leaving the firm for local and international roles because the jobs market has picked up. He maintains that turnover “remains at decade low levels” and says the anonymous claims are a mix of complete fabrication and deliberate misrepresentation.

Sorry Chris, but a lightweight is no match for a heavyweight “rising to a challenge”. One, two, TEN!

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A couple of weeks ago we reported that things were “ugly” at top-tier firm Allens Arthur Robinson after we had received the following rumour from an anonymous AAR spy:

a baby boomer house

allens melbourne has now lost 6 juniors (and a junior SA) from its corporate team in a month. Morale is so low partners have been individually talking to lawyers to discuss what can be done to improve the situtation.

Soon after publishing that rumour, we received the following anonymous comments from another AAR spy:

Story about AAR is wrong - only a couple of people have left- you should correct your story.

We of course were left pondering which anonymous spy was telling us the truth. Had a swathe of juniors departed, or just a couple? With thanks to the AFR Partnership Survey, we now think it can safely be assumed that the former spy was being truthful.

In the AFR Survey, the following is reported:

While partnerships at large firms were decreasing, [AAR chief executive partner] Mr Rose said opportunities would arise for senior associates as big swathes of baby boomers who became partners in the 1970’s and early 1980’s retire.

However, earlier in the AFR Survey, the following is reported:

The downturn “has caused a shock to the system and that is causing everybody to reassess the fundamentals of the business model”, said Allens Arthur Robinson chief executive partner Michael Rose. “For the last 20 years we have been able to rely on revenue growing, the size of the firm growing, stable partnerships, pretty predictable staff turnover and regular rate increases. I think all of those things have changed.”

So what about the operating assumption that … senior associates will eventually be made up to the partnership?

In the AFR Survey it is reported that AAR has 254 SAs compared with 186 partners, a ratio of 136.6%. This ratio is worse only at Blake Dawson (by 1%), meaning that only one other major law firm has more SAs compared with partners than AAR. The conclusion (we think) that can be drawn from this statistic is that AAR has many more SA waiting for the assumed passage of SA to partnership to take effect. But will it?

The AFR Survey reports that the AAR went from a partnership of 193 in July 2009 to 186 in July 2010, a reduction of 3.6%. This compares with reductions of 5.8% at Mallesons and 11% at Clayton Utz.  So when AAR CEP Michael Rose that opportunities of partnership ascension will present to expectant SA’s at some distant, vague point in the future, should SA’s be concerned that the partnership will instead take the opportunity to further reduce the partnership (like competitors) and thus preserve the value of its equity points?

And what about the conflicting reports that many AAR lawyers, including an SA have left the firm, compared with only “a couple”? We think it is more likely that “many” young AAR lawyers are starting to see the writing on the AAR wall.

Send the Firm Spy your news and views!

In an excellent article, aptly entitled Fears over performance pay, the AFR (4/6) gave an overview of the apparent shift in international legal circles from lock-step remuneration, based on experience, to performance pay. It is speculated in the article that major Australian law firms will soon also largely embrace a performance pay model.

performance pays on the catwalk

In the article, Allens Chief Executive Partner Michael Rose - who at the time was probably preparing for his annual “I’m-a-make-believe-derelict” sleep-over with 700 CEOs* - is quoted in the following way:

Allens Arthur Robinson expects to implement a performance pay regime before the end of 2011. Managing partner Michael Rose insisted the move was in line with client’s expectations. “Clients are not convinced that ratcheting lawyers salares and lawyers rates solely by reference to seniority is sensible,” he said.

We’re not sure which “clients” Rose has purportedly been speaking to, but we would anticipate that either:

• they are not lawyers; or
• they are not lawyers who have worked in a major corporate law firm where billable units are commonly reverse engineered several days, or weeks, after the fact.

In particular, we would anticipate that these “clients” have no notice that Allens Arthur Robinson was the target of one of recently retired Victorian Supreme Court Justice David Byrne’s most strident swipes at corporate law firms. Reporting Justice Byrne’s last interview as a judge, The Age noted (29/5):

In a case that still makes Byrne seethe, he lambasted Allens Arthur Robinson’s $3.7 million bill for costs in a case that ran for six years before it went to trial. The final bill was expected to hit $8 million, but this sum could not be recovered anyway because the opposing party sank into receivership. At the time, Byrne described AAR’s bill as ”a great reproach on the legal system” and said ”some restraint, some proportionality and perhaps less greed should be shown”.

Just a bit less greed, hey?

Would the removal of the “ratcheting” of the salaries of the lawyers responsible for this $3.7 million bill encourage more expedient, less greedy justice? Or would it encourage lawyers whose performance is measured on utilisation rates to chase a rabbit down every conceivable hole in order to place upward pressure on their utilisation and, hence, strengthen their greed claim for higher “performance pay”?

And how does the prospective unratcheting of lawyer salaries tie-in with the momentum we have seen from some clients toward fixed-fee billing?

We would argue that the “uncapped lawyer bonus plan” promulgated by Freehills, as well as the “unratcheted performance pay” in the Allens Arthur Robinson pipeline, is at odds with:

1. the generally enlarged inhouse legal teams across major Australian corporates;
2. the related move toward tendering and fixed-fee arrangements;
3. the rife disenchantment among junior lawyers of non-existent work/life balance; and
4. the overarching perception in government, the judiciary and society that major corporate law firms are “money-making machines”, presided over by a handful of uber-greedy corporate types, that make access to justice something of a running joke.

The AFR article made the following pertinent point:

Performance pay solely based on KPIs would result in lawyers working many more hours, NSW Young Lawyers president, Puoyan Afshar, said. This would leave the door open for the billable unit to increase its domination over lawyers’ lives. Work life balance is a key issue for junior members of the profession, with many jumping ship after two to five years, citing burn out and depression as reasons.

Is performance pay a step in the right direction, or will it leave corporate lawyers even more morally derelicte?

Send the Firm Spy your news and views!

*If you want to support the St Vincent De Paul’s CEO Sleepout - which we think is a fantastic charity (hat tip to Mr Rose for taking part) - click on this link.

Considered Clint Eastwood’s greatest cinematic triumph, the 1966 classic spaghetti Western The Good, the Bad and the Ugly is a story (says Wikipedia) of three gunslingers competing to find a fortune in buried confederate gold amidst the violent chaos of gunfights, hangings, Civil War battles and prison camps.

armed with PENS AND PAPER

The team here at Firm Spy thought this a fitting backdrop - highly analogous to the corporate legal landscape in which many of our readers work - to frame today’s post. The post considers the different ways three modern day gunslingers - Blakes, Mallesons & AAR - are competing to find their own buried gold.

The Good

Firstly, at the risk of publishing something created by the firm’s media affairs team, we turn to the “good” of the three. If the following comments anonymous comments from a Blakes spy are to be believed (and we recommend our readers adopt a higher-than-normal level of scepticism, given the positive tone used), Blakes is going the right way about trying to keep staff motivated amidst the “violent chaos” that is everyday corporate life:

Spirits look like they are set to rise following the upcoming 2010 pay review at Blake Dawson. Reliable sources have indicated that the firm, which markets itself as a salary leader in the top-tier marketplace, is ready to reward those employees who have stayed loyal to the firm, despite its pay freezes and internal cut-backs, with top-of-the-market remuneration packages. This will come as better-late-than-never news to many junior lawyers who have remained to pick up the slack while their peers left for higher-paying, less demanding in-house jobs. Good to see that Blakes will finally put its money where its mouth is and honour the claims it made to recruit juniour lawyers 1-3 years ago. Failing that, junior lawyer retention rates could slide further south.

This is good news, but we will wait to see the fine print. Blakes have a history of trying to make strawberry jam out of cow sh*t. We are particularly keen to see whether this news translates to double-banded salary raises, meaning it could be the first to receive Firm Spy Satisfactory Salary certification.

The Bad

Next we turn to the “bad” cowboy Mallesons Stephen Jaques. The following comments, if true, are yet more evidence of a firm that is prepared to “trade off its name” to retain staff, rather than actually making proactive steps to keep overworked, underpaid lawyers in their offices. The comments were received from an anonymous Mallesons spy last week:

I’d just like to complain about the fact that even though the GFC is over and the partnership is doing swimmingly, Mallesons only provides fruit for their employees once a month! And it’s all gone within the hour. This is in addition to making the weekly morning tea a rotation system so that each floor only gets it about once a month as well. I know other firms provide their employees with fruit twice and week and morning tea once a week which seems reasonable. Why so stingy guys? If you expect employees to do long hours at least provide them with something to gnaw on!

Yes, something other than the feted “possum poo” the firm is currently serving up!

The Ugly

Finally, we turn to the ugly. Last year’s Down Low Medal winner is apparently at it again. We received the following comments from an anonymous AAR spy last week:

allens melbourne has now lost 6 juniors (and a junior SA) from its corporate team in a month. Morale is so low partners have been individually talking to lawyers to discuss what can be done to improve the situtation.

How is your firm handling the renewed legal jobs market? Are they taking proactive steps to keep morale high and lawyers motivated? Or are they up to their old gunslinging Confederate trickery?

Send the Firm Spy your news and views!

It was a while ago now, but you may recall in late 2008 we reported the alarming news that Allens Arthur Robinson had

youll save CAAAAAASH

‘We didn’t think it was an appropriate time to celebrate when so many of our clients are suffering.’

We later calculated that cancelling Christmas would have yielded a net saving of 0.06% of profit for the Allens partnership.

Accordingly, we were interested to read what appeared to be a “homage” piece, written in last week’s AFR, about AAR CFO Rod Fielding:

Rod Fielding, director of finance at Allens Arthur Robinson, said the [global financial] crisis made it vital to instill financial discipline in partners, as owners of the business. This involved one-to-one instruction on the financial impact of pay freezes, reduced staff hours, fee discounts for clients in a “static rate environment”, and occupancy and computer licensing costs. “the GFC brought finance to the fore,” he said. “It was absolutely paramount people had confidence in the numbers.”

An accountant for 20 years, Mr Fielding was a tax partner at KPMG before becoming Corrs Chambers Wesgarth’s chief financial officer in 2005. He moved to Allens in mid-2008 - about three months before the crisis began. “In the accounting profession, because of the nature of the beast and partners being accountants, there is more of a natural business and financial understanding,” he said. “Whereas perhaps that wasn’t as advanced in the lawyers.”

And whereas perhaps it is an inherent quality of the “beast” to understand business and finance, maybe the understanding of how to manage people and instill motivation in staff is not as advanced in the accountants.

Can you put a price on employee disenchantment? Is your boss beastly?

Send the Firm Spy your news and views!

We reported yesterday the rumour that AAR recently informed staff that frozen pay would be thawed as of July 1. If true, this move would bring it into line with its competitor Blake Dawson. We went onto add that, if that rumour were true, Mallesons would be the only major Australian firm not to have lifted its pay freeze.

Well, it appears that Mallesons informed staff yesterday that the pay freeze is officially at an end. Sort of, anyway.

In order, we received the following comments from anonymous Mallesons spies yesterday:

Actually Mallesons has told professional staff at lawyer/partner lunches that the salary freeze will be lifted and pay will be reviewed based on “market” as part of the normal performance review process with pay increases to come on 1 July. The obvious question for underpaid junior lawyers is how much will the increase be? There is common knowledge amongst staff that they are underpaid compared to their peers, even taking into account the 3% bonus and the [more general market]  pay freeze.
In the last week Mallesons has secretly given pay increases to those lawyers who are performing well above budget. These increases were around a 5% increase in salary backdated to January 1. For those overworked the discontent remains - but a small rise gives hope of a bigger bounty to come in July.
The problem with Mallies is that you have a “two speed firm” - sections of lawyers busting their bums well above budget for the year and others billing well below. Those busting their bums expect good bonuses and pay rises or watch the mass exodus to the other large nationals knocking at the door

Then this:

anomaly reviewing action shot

FS - thought this was interesting - my friend (a Senior Associate at Mallesons) was yesterday approached out of the blue by a partner and given an envelope with a 6% pay rise backdated to January, and with another pay review promised in July. She apparently had been singled out along with a handful of the firm’s ‘high achieving’ lawyers to receive this pay review. Perhaps the Mally’s pay freeze is lifting??

And then finally, the following scathing critique (excellent work!):

In a firm-wide communique apparently penned in response to your post today, his Highness Robert Milliner informed staff that the pay freeze was “officially at an end” and that Mallesons partners are “committed to being transparent about pay”. He then went onto say that the firm had conducted an “anomaly review” in which partners had compared our salaries with those prevailing in the marketplace. Very transparently, Milliner then said that where there was a “significant” anomaly between market and Mallesons pay rates, adjustments had been made.

Firm Spy, does anyone in your team happen to know what “significant” means for these purposes? If we’re paid 25% under market rates, is this a “significant” difference that would warrant, say, a 5% increase in pay?

Excellent questions! We’re not sure of the answer, but if a few dozen lawyers declined to return to work after the Easter break, our guess is that the partnership would take significant steps to clarify precisely how vast the disparity is between Mallesons wages and those in the market.

But getting back to the anonymous comments themselves, if we’re reading them correctly, and if they are truthful, Mallesons has trumpeted its remuneration transparency, conducted an “anomaly review” which is about as clear as mud, and awarded back-dated pay increases to a handful of high-performers. Doesn’t sound to us like lawyers have any reason to question the integrity of the oh-so-transparent “anomaly review”.

And if the pay freeze is lifted, or will be on July 1, it appear to be a fate far better than that of cross-town rivals AAR. In an update to comments we revealed yesterday, comes this from another anonymous AAR spy:

Allens certainly have not lifted the pay freeze! Some graduates-2yr lawyers were granted small pay rises at Xmas, but they are still paid substantially less than Allens lawyers at the same level in years prior! Not only have AAR not lifted the pay freeze but there is some strong indication that salaries will be further based on a bell curve, calibrated grading/bonus system that noone has any faith in and lowers morale…

We would be indebted to any spies who would care to clarify whether AAR has confirmed it will lift frozen pay on July 1.

Send the Firm Spy your news and views!

As demonstrated by our current weekly poll, only three top-tier Australian law firms appear to still have pay freezes in place.

Since we broke the news that the Blake Dawson partnership needed to “take time” to consider lifting its pay freeze, and would do so on July 1, the firm spoke out in media and confirmed that pay would thaw on that date.

Mallesons staff attend firm presentations

Meanwhile, we received the following comments from two anonymous AAR spies last week:

FYI re your poll! AAR has removed the pay freeze since last week!

And then this:

We were informed earlier in the week that the Allens Arthur Robinson partnership will lift the pay freeze in the new financial year. After the most offensive theft of my annual leave over the Christmas break, partners should be commended for moving in the interests of its long suffering employees, albeit many months too late.

If the anonymous AAR spies are to be believed,  then it appears that Mallesons is the only major Australian law firm to announce the lifting of its pay freeze. And if the comments from our anonymous Mallesons spy below are true, early indications are that the firm will be a very reluctant mover on pay:

Mallesons to axe leave loading. Presentations are currently underway to those staff entitled to leave loading. It appears that as of 30 June 2010, all Mallesons employees currently entitled to Annual Leave loading will be losing their annual leave loading. Doesn’t take a genius to realise that it is a cunning ploy to disguise any pay rises for 1 July 2010. They will no doubt deduct the leave loading benefit and then spread it across the year and claim it as a payrise.

For the benefit of those unfamiliar with the term “leave loading”, we have extracted this definition from the Wageline Qld:

Annual Leave Loading
An award or agreement may provide for an extra payment by way of a loading (e.g. 17.5%) that is to be added to an employees ordinary current rate of pay during annual leave.

This entitlement was introduced to enable employees to share the benefit of the reduced cost to their employer (eg no use of workplace amenities) of them being absent from the workplace.

Leave unloaded! Does this mean that if you spread that 17.5% across the financial year, then the much publicized Mallesons Christmas Bonus of 3% just shrunk to something like 1.5%? Is it fair for partners to summarily axe hard fought employee entitlements after leaving pay stagnant for such a protracted period?

Send the Firm Spy your news and views!

Last week we published a story in which we quoted AAR spokesperson Susan Ferrier as saying that there would not be an “exodus” of lawyer in 2010 because there are few job opportunities available.

In response to that post, we received the following embittered comments from an anonymous AAR spy:

Susan Ferrier has no idea. Lawyer morale at Allens is at a critical low, people will flood to Freehills who are keenly making the most of this opportunity already. Freehills has positioned itself as the least tight of the top tiers of late. You can’t expect to institute the pay freeze first, be the last to unfreeze, make everyone take annual leave over the christmas break with only half a day on Christmas Eve as bonus leave (Mallesons aren’t even this tight), reveal potential dramatic remuneration restructure in Business Spectator article and continue to brag and strut about exceptional performance and client satisfaction, without fallout. A June/July pay review will be too little too late…but then again what do we expect from HR?

How is morale at your firm? Are you the first to know about major news at your firm, or do journalists/newspapers get the scoop first?

Send the Firm Spy your news and views!