A reasonably de riguer portfolio of legal-media platitudes greeted Chris Freeland last week as he commenced his new role as national managing partner of Baker & McKenzie. Freeland, a recent  Gilbert + Tobin defector, appears to have gotten the new gig on the back of corporate sing-songs like the ‘profit maximisation’ chant he delivered to a managing partners conference a few years ago, where he sang into the mic that profit is about:

just another failed remix

• Ensuring that staff achieve satisfactory levels of productivity;
• Creating appropriate expectations around performance;
• Effective leadership to improve productivity and profitability;
• Communicating information about productivity and financial performance

The legal-media niceties abounded last week. First, The Australian handed Mr Freeland the mic, allowing him to sing the praises of his new firm:

“This is probably the world’s only truly global law firm,” Mr Freeland said. “Given the changes in the dynamics, the entry of magic circle firms in some form or another, the changes in billing and fee arrangements, I actually think this firm is superbly placed.”

Lawyers Weekly followed suit, but this time handed Bakers & McKenzie a megaphone. The firm sang loudly:

“We are very pleased that Chris is bringing his considerable talents to join our Australian team…We welcome the opportunity to continue to develop our provision of strategic and valued legal advice to our clients in Australia and across the globe with Chris’ insight and skills,” said Baker & McKenzie executive committee chairman, John Conroy.

Not to be out-done, ALB also gave Baker & McKenzie the microphone (although it looks to us suspiciously like a pirated copy of an earlier song delivered by the firm):

“the international experience that Chris has matches the global perspective from which we view and consider our strategic opportunities.

With a now mucous-infested microphone in hand, AFR was the last to come to the cabaret party, handing the mic to Mr Freeland late last week (13/8). But Mr Freeland delivered a curious encore performance:

Freeland threw down the challenge to to Allen & Overy, Norton Rose and US firm DLA Piper, which is allied to Phillips Fox in Australia. “Each has its own strategy, but I happen to think that ours is the best … We are not comprised of partners who have come from another place…”

Partners who are not … from another place?  Sounds to us like Freeland forgot the words to his new firm’s song, because according to our research:

Three of the four total partners appointed [by Baker & McKenzie] between July 2009 and July 2010, it turns out, were apparently lateral recruits from Mallesons Stephen Jaques.

Not to mention, of course, that Mr Feeland is the most high-profile recent DEFECTION from Gilbert + Tobin. Not from another place? More like a law firm that would be would be known in the music induustry as a “remix”.

Which brings us to our next point: what sort of role model does a rockstar high-profile defector provide to partners below who might be considering the A&O triple jump? Should Freeland be “throwing down the challenge to A&O”, or quietly strumming his guitar and hoping that A&O doesn’t … sing his partners a sweet little lullaby?

On the subject of lullabies, it would appear that Freeland’s new colleagues are well-versed in err…. corporate ballads. Yes, the following gut-wrenching refrain from Baker & McKenzie has been leaked onto Youtube and is available for the whole world to see:

Baker & McKenzie 2008 Christmas Party.

This appauling video, ostensibly played at the firm’s Christmas party a couple of years ago, is a satirical take on the 1971 pop song I’d like to teach the world to sing in perfect harmony by forgotten one-hit-wonder pop-group The New Seekers.

And now, with the microphone finally in Firm Spy’s hands, we too would like to wish Chris Freeland a warm welcome. Good luck teaching the firm how to sing in ‘global fluency’!

Send the Firm Spy your news and views!

In late August last year, with a post entitled “Shit Sandwich”, we reported the news that Baker & McKenzie had elevated Bruce Hambrett to the chairmanship of its Australian offices.

snake and bake!

We reckoned that Bruce picked up something of a poisoned chalice and we’re afraid that Mr Hambrett has, in the interim, done very little to source the anti-venom that his staff desperately need.

The AFR Partnership Survey contained the following comments from Hambrett’s right-hand-rattler man, national managing partner Mark Chappel:

Baker & McKenzie managing partner Mark Chapple says becoming a partner at a top tier firm has become difficult. “If you’re a really bright, effective senior associate and you see the partner tap has been turned off, there’s now a big moat and it’s almost impossible to jump over,” he says. Lawyers, who are typically ambitious people, “see that and then they look around for where the opportunities are,” he says.

These comments probably come as a bit of a snake-bite to Baker & McKenzie SAs currently slithering (at least in their own minds) toward the partnership. However, the comments are buttressed by the AFR partnership statistics which show that the firm has added a net total of only 1 extra partner in the last year, moving from 89 to 90, an increase of 1.1% (3 partners left the firm, 4 were added). Said the AFR of Bakers paltry growth:

Mark Chappel says the firm has kept a lid on staff growth to ensure it remains in proportion with the broader [Baker & McKenzie] network.  “We’re not ourselves looking to become the size of Mallesons or Clayton Utz. We think we’re much closer to what the right size is for the Australian market than perhaps they are,” he says.

But where have the new Baker & McKenzie partners come from? Three of the four total partners appointed between July 2009 and July 2010, it turns out, were apparently lateral recruits from Mallesons Stephen Jaques.

So if you’re a hard-working Bakers SA, who has matured from an Articled Bakers snakelet into long-nosed corporate adder, the news that the firm has placed a python’s strangelhold over the partnership numbers - and will apparently afford primary consideration to lateral partnership candidates - must be perceived as a viperish act of “snaking and baking”.

But the death-bite, which we think might see a few SAs snaking their way out of the firm, are the following statistics also contained in the AFR Partnership Survey:

Although Bakers is the 10th-biggest firm by revenue, it has the 12th-biggest partnership and the 14th=biggest number of full-time equivalent, non-partner fee-earners.

That’s right - a firm with the very high revenue has a comparatively low number of partners and an even lower number of full time staff. So despite being in argubaly an ideal position to make new partners, the firm has declared that there is now “a moat that is almost impossible to jump over”, and, in the event that it does make up partners, it will almost exclusively look lterally.

In explaining the statistics (and we picture a tongue flicking in and out of his mouth as his says this), Mr Chappel hissed:

“For us, it isn’t about being national or being the biggest in Australia,” Chappel says. “We look at things through a global firm”.

Send the Firm Spy your news and views!

Very regrettably, we have heard little gossip from Baker & McKenzie in recent months. A quick check of our records shows that after a flurry of posts about the firm in mid-2009, nothing has been reported.

partners get into the promise zone

We therefore heartily welcomed the following comments sent by an anonymous Bakers spy last night:

Baker & McKenzie imposed salary freezes across the board in July 2009. Even before that, for the first half of 2009, they froze the pay of junior lawyers who were meant to come off the lock step after 2 years of work, even though their charge out rates went up. All other juniors were also frozen on the lock step they were on at the time of the freeze.

All of this effectively means that there are now second, third and fourth year lawyers who grew up with B&M who are getting paid peanuts. As you can imagine, there are a lot of digruntled juniors at firm. Since then, the firm has announced that the pay freeze will be lifted in July 2010 with pay increases back-dated to April 2010 (i.e. a lump sum payment in July for increases in pay which technically came into effect in April 2010). A very sneaky way of locking in staff until at least July 2010. But that’s not all, they have told disgruntled staff that they can expect pay rises of 5-20% (in the case of juniors, 2-15%). That’s no where near market esp, for juniors who have come off the lock step.

It is an almost incredible proposition that in the case of junior lawyers, a pay-rise of up to 15% would still not place them on market salary rates. However, Bakers partners are paid in US dollars, so the appreciation of the AUD against the greenback (the value of the AUD against the USD has grown by about 21% this financial year) has likely made these tightwad partnership antics more necessary.

What is more troubling however - and this is not the first time we have seen this - is the rumoured representation made by the Bakers partners that pay will be lifted and the apparent rhetoric that “we will do the right thing by you” come end of financial year. These opaque promises - an absolutely essential partnership tactic - create false impressions in employees that their justifiable hopes for a particular percentage rise will be met by the partnership. Our preliminary view is that partners will leave expectant lawyers disappointed, both at Bakers and elsewhere, all the while paying those staff at undervalue for the months leading up to July. We agree that this is “a very sneaky way of locking in staff until at least July 2010”.

If your firm is making hollow or opaque promises about how your pay will move in July 2010, we want to know about it.

Send the Firm Spy your news and views!

Thanks to the AFR for the following profile:

Partner Remuneration System

Performance based on objective formula for equity partners. About 55% are equity partners (principals) and 45% “base and bonus” partners (national partners).

keeping their heads above water

Partner Pay 2008-09

Principals earned from $600,000.00 to $900,000.00 though payment in US dollars may have pushed this above $1,000,000.00 at the upper end. Local partners received $300,000.00 to $650,000.00.

Profit

Estimated profit margin = 34%

Estimated profit = $53,000,000.00

Estimated Profit Per Lawyer = $200,000.00

Estimated Profit Per Equity Partner = $1,080,000.00

Revenue

Revenue 2008/09 = $155,000,000.00

Revenue Change 2008/09 = -8.8%

Revenue Per Lawyer = $590,000.00

Revenue Per Partner = $1,730,000.00

Revenue Per Equity Partner = $3,170,000.00

The Verdict

Managing partner Mark Chappie says the year was one of “consolidation and investment” in a volatile market and he is cautious for this year. “Market volatility continues to throw up valuable opportunities to make strategic investments in key practice areas which we are vigorously pursuing, keeping faith with our long-term strategies,” he says. Baker also has the benefit of a global referral network; it advised the firm’s Tokyo client, Asahi Breweries, on its purchase of Schweppes for $1.18 billion from Cadbury.

Comment

Baker went from having the largest revenue growth of the top 10 in the 2008 financial year to the biggest fall, of 8.8%, a year on, although revenue was still at the second-highest level ever. The firm has a leading private equity practice that suffered as transactional demand plunged in the wake of the crisis, while the profit margin slid as the partnership was hit salary and rent rises.

Send the Firm Spy your news and views!

Baker & McKenzie yesterday appointed Bruce Hambrett to its national chair.

As reported in June 2004:

only floss the teeth you want to keep!

Baker & McKenzie has recruited Bruce Hambrett as a partner to its litigation and insolvency practice in Sydney. He will start 28 June. Hambrett comes to Bakers from Minter Ellison.

In five years, Bruce has ascended to the senior-most position at Baker & McKenzie. However, Bruce takes the reigns at a turbulent time for Bakers, with the firm:

1. rumoured to be feverishly chasing a free office fit-out in Sydney;
2. counting the cost of damage to goodwill that an ex-partner is embroiled in ‘fugitive’ allegations;
3. apparently having drastically cut its graduate intake and allegedly having made several redundancies; and
4. managing the office fallout following a rumoured pay freeze.

But Bruce is a terribly optimistic fellow. In September last year, it was reported:

At Baker & McKenzie, Mr Hambrett heads a practice that has been riding a wave of company failures … Mr Hambrett predicts even stronger growth… “We’re positioning Bakers in the cross-border insolvency space, particularly in Asia,” he said. “We will be well placed.”

Perhaps not that well placed Bruce… a bit like ‘food’ between your teeth!

Send the Firm Spy your news and views!

Baker & McKenzie is reported as being in the hunt for more office space in Sydney. As noted by the Sydney Morning Herald:

loving the free fit-out

Hopes that Sydney’s office vacancy rate will not reach double-digits are growing with more companies planning to expand and take advantage of the current favourable rental conditions… Incentives, such as free office fit-outs, accounted for about 25 per cent of new rental deals, rental growth remained about 6 per cent, with an overall occupancy of 97 per cent. The law firm Baker & McKenzie … [appointed] CB Richard Ellis to look for new space of up to 9000 sq m in Sydney. It is understood the firm, which occupies levels 24-30 of the AMP Centre at 50 Bridge Street, is looking for a lease term of five to 10 years, but with an arrival date of mid-2011 at the latest.

Sounds like Bakers wants a free office fit-out, but would such a financial coup result in any gain trickling through to ordinary Baker & McKenzie employees? Apparently not; Bakers is rumoured to have subjected all staff to a pay-freeze after allegedly having halved its graduate intake and sacked several workers.

Send the Firm Spy your news and views!

You do not want to be an alleged fraudster in Dubai. The tribulations of convicted frauster George Atkinson and his

get the hell out of Dubai

‘I am in a cell with four others. There are two double bunk beds just centimetres apart, pushed right up against the cell door. There are only 122 beds in my block to accommodate 246 men. We’ve just heard about an HIV epidemic in here and 70 inmates have been isolated… I was convicted even though the prosecution admitted they had no evidence against me. I am being arbitrarily detained and the British government don’t give a damn.’

Presumably armed with this knowledge, it is little wonder that ex-Baker & McKenzie partner, and newly appointed Mills Oakley partner Anthony Brearley allegedly left Dubai when allegations apparently arose against him while working for Nakheel Corporation. As reported by the Sydney Morning Herald:

Australian lawyer, Anthony Brearley, [is] believed to have left Dubai before a police investigation, thus avoiding jail. Well-placed sources last night confirmed that Mr Reed and Mr Brearley have been declared “fugitives” in Dubai and will be tried in their absence.

In relation to Mills Oakley’s recruiting practices, CEO John Nerurker recently said:

What we do is add that little bit extra; like only hiring lawyers who share our passion for an unwavering client focus and making absolutely sure that all our lawyers are as well, if not better, trained than their top-tier counterparts… This is one way we will continue to differentiate ourselves.

Does your firm have a point of differentiation?

Send the Firm Spy your news and views!

In a Firm Spy exclusive, we yesterday revealed claims that Baker & McKenzie staff had been told recently that a pay

Bakers precedents wrote a book about their alleged ordeal

We can today reveal additional comments received from another Bakers spy:

there has been a reduction in the number of library staff here at Bakers - where there once was a Sydney manager and a Melbourne manager, there is now a single “national” manager. Futhermore, precedents staff have had their hours cut and the number of grads starting next year has halved. Funny that we have moved into this posh new office, yet the way things are going, there will be no one to fill all the offices!

The Firm Spy understands that the Melbourne office of Baker & McKenzie has recently relocated to 550 Bourke St (sharing with Deloitte), indicating that these comments come from a Victorian. What is more certain however, is that, if true, any reduction in precedents staff would not be a precedent.

Has Bakers blown the budget with its new offices?

Send the Firm Spy your news and views!

It’s that time of year again: partners are in a tizz about billing targets, secretaries are getting antsy over unbilled time and lawyers are generally working too hard.  Given the EOFY party season, it’s also the time of year when pay arrangements for the coming financial year tend to come to light.

In what will come as sad news for the Bakers staffers among us, the Firm Spy can today exclusively reveal that, despite ranting as recently as April that there would be no salary reduction, the Australian offices of international law firm Baker & McKenzie are presently subject to a pay freeze.

the Firm Spy is proud to be on the frontline

We received the following information from a Bakers spy earlier in the week:

we were told about a month ago that there would be a pay freeze this year. Performance reviews are largely finished now and I understand that there have been a handful of exceptions, but not many.

A pay freeze would bring Baker & McKenzie into line with its other major competitors, if true. Other major national firms to have announced a pay freeze include: Mallesons, Allens, Freehills, Minter Ellison, Corrs Chambers Westgarth and Clayton Utz.

Is your firm freezing pay? Let the Firm Spy know first!

Whereas top-ties firms Freehills, Allens Arthur Robinson and Minter Ellison have each now enforced a firm-wide pay

A lawyer baking bread

Baker & McKenzie Australia has confirmed that unlike its North American offices, there will be no staff or wage reductions. Of course, this does not indicate that staff will receive wage increases, but it has presumably engendered a measure of confidence in staff who might otherwise have been fearful for their futures in light of international developments.

In an official statement last week announcing further redundancies, it was noted

‘Our management in North America and Global Services today has informed 38 attorneys and 86 paralegals and professional staff that their positions are being eliminated due to the economic downturn. These changes involve various practices, offices and Global Services departments in North America.’

This is the third round of redundancies for the firm, following January’s initial cut of eight associates in New York, and March’s slashing of about 85 jobs in London.

Is your firm cutting more staff? Let the Firm Spy know first!