Some long overdue gossip from a Blake Dawson spy!

In early December last year we reported the rumour that Blake Dawson was tracking at a remarkable 20% over its budget. At that time we queried when the firm would unfreeze the pay of the 70% of staff (approx) whose wages have been steady for well over a year now, notwithstanding that the firm had made a 89 staff redundant.

Since that time, Freehills, Minter Ellison and Clayton Utz have all moved to unfreeze pay for some or all staff. So where does Blakes sit?

Well, if the information received by an anonymous Blakes spy last night is to be believed, wages will remain on ice for several months yet:

I wish to write on a matter of recent interest here at Blake Dawson. I was surprised to see that the Firm Spy is yet to report on it.

A couple of weeks ago, a meeting was held at Blake Dawson (Melbourne office) in which a partner - who I won’t name - asked those in attendance if there were any general queries about “issues” affecting Blakes staff. The partner was then promptly asked by a courageous colleague of mine “when is the firm intending to move on pay?”

This question has certainly been playing ont he minds of many Blakes staff recently and many of us were thankful that it was raised. However, no one in the room was satisfied with the response. The partner in question responded with “these decisions take time - it doesn’t happen overnight, but I think July 1 would be enough time to consider everything, how the market is moving etc”. In short, the response was a disgrace. What sort of modern corporate law firm “takes time” to make decisions?

The decision to make nearly 100 staff redundant was made quite quickly…

Yes, we recall the very abrupt sackings too.

Is your firm moving pn pay? Tell the Firm Spy first!

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[ED - thanks to our good pals at Lawyers Weekly and The New Lawyer we can now report that a Blakes spokesperson confirmed that salary freezes will remain in place until 1 July 2010]

When does the point come when partners can feel convinced that the economic uptick is not just a “false economic dawn”? Where is the juncture that partners agree that the GFC is over and decide to lift pay freezes? Do partners sit down and actually think about these things, or do they just keep one eye on Firm Spy to check if other firms are acting and, in the absence of such action, decide to do nothing?

partners having a chuckle

These are the questions which are playing strongly on the minds of lawyers/accountants across the nation. “The partners are f*cking us”, one eloquent contributor recently wrote. We agree. And the following anonymous tip, emailed to us yesterday, sent us over the edge:

I read with interest the comments made several days ago (ostensibly by an Allens Arthur partner) about the way AAR has apparently systematically revised down lawyer performance reviews, in many cases in the face of opposition of partners. I hold a senior position at Blake Dawson and while I cannot say there has been a focus on giving bad performance reviews despite good performance, a growing number of my senior colleagues have grown tired with the way the firm is handling the pay freeze. As of at least a few weeks ago, I know for a fact that Blakes is tracking at more than 20% over budget for 2009/2010 - certainly not the kind of performance that justifies the current pay conditions being levied against most lawyers. It is time for Blake Dawson to increase lawyer pay or risk losing a substantial number of lawyers. And yes… even I agree that this is “remuneration f*ck us”.

“F*ck-you” strike, anyone? The post the tipster is referring to about AAR noted the following:

Allens Arthur Robinson’s management are aware that legal salaries across all levels are below market rate (although this has not been acknowledged or communicated to staff). At some levels, the discrepancy is as much as 20% below market rate. Salary compression at junior levels is also critical. “Thawing the salary freeze” offers the opportunity for the firm to consider a revision of its approach to remuneration. This may result in changes to the calibrated lock-step system currently in place. After the introduction of a forced-rank distribution sytem for performance reviews in 2009, the firm “successfully achieved its distribution curve”. (ie the firm reduced the number of staff achieving an “exceptional” or “very strong” rating and increased the number of staff who received a “strong” or “underperforming” grade). Some partners complained that they felt compelled to impose a grade on staff they did not agree with. Lawyers complained about flaws within the calibration system itself, including the fact that lawyers might be disadvantaged if they did not have someone to “champion” them during the calibration process (ie if they do not work directly with a high-ranking partner).

So how do you feel about your pay freeze? Are you confident that the partners of your firm - people who probably regard themselves as having the highest moral fibre - are actually considering your interest in being remunerated fairly when deciding whether to lift your pay freeze? Or are they just holding out, lining their already fat pockets, waiting for one of the other big firms to move before they do something?

Pour your heart out to the Firm Spy. We are your voice. Send the Firm Spy your news and views!

It is very clear to us that the Firm Spy Remuneration Report has thus far been a ratings bonanza. Our internet traffic has taken off on (what our favourite special comments person would term) a “semi-ballistic trajectory”. And so, today we move onto Blake Dawson.

when enough is enough

By way of background, Blake Dawson has undergone a GFC period as tumultuous as any of the Big 6, though its partners still pocketed up to a reported $1,200,000. Distringuishable from other firms, however, Blakes has repeatedly deployed its PR machine with an almost comical modus operandi - break bad news to staff and then try to score points in the media with half-truths and distortion.

An excellent example is the Blake Dawson pay-rise-pay-freeze. At the time, the firm denied that it was introducing a blanket pay freeze, instead telling media it would still:

‘recognise exceptional performances but in a more focused way than in previous years.’

What is this “focus” rubbish? The firm later clarified, after the Firm Spy suggested that its pay position was less about “remuneration focus” and more about “remuneration f*ck-us”, that 30% of staff had received pay rises. We subsequently revealed, thanks to the excellent work of a Blakes firm spy, that the figure reported by the firm of 30% included raises given to newly admitted lawyers and elevations to SA. All of a sudden, 30% became 18%! Let’s hope that half of the 18% given pay rises weren’t support staff, otherwise less than one in ten lawyers would have received a pay rise. F*ck us? Err… maybe it is time for a “f*ck-you” strike! It wouldn’t be the first time that a revolt has been mooted. Little wonder why Blakes lawyer turn to chicanery like hijacking.

…And onto the figures reported by our anonymous Blake Dawson spies.

Firm Spy cannot guarantee the veracity of the figures quoted. They come from anonymous sources.

Sydney

Summer Clerk

Not admitted. Daily billable hours target - 5 hours. Salary - $900 per week. Comments:

Summer clerk for the upcoming break. Salary $900 incl super. Free gym membership for the 12 week period.

1-2 Years PQE

Admitted between July 2007 and June 2008. Daily billable hours target - 6.5 hours. Gross package 2008/2009 - $86,000. Gross package 2009/2010 - $86,000. Perks - free gym, subsidised further education.

2-3 Years PQE

Admitted between July 2006 and June 2007. Daily billable hours target - 6.5 hours. Gross package 2008/2009 - $88,000. Gross package 2009/2010 - $88,000. Perks - free gym, purchase additional leave, subsidised further education.

3-4 Years PQE

Admitted between July 2005 and June 2006. Daily billable hours target - 6.5 hours. Gross package 2008/2009 - $110,000. Gross package 2009/2010 - $110,000. Perks - free gym.

6-7 Years PQE

Admitted between July 2002 and June 2003. Daily billable hours target - 6.5 hours. Gross package 2008/2009 - $128,000. Gross package 2009/2010 - $128,000. Perks - blackberry, free gym, subsidised further education.

7-8 Years PQE

Admitted between July 2001 an June 2002. Daily billable hours target - 6.5 hours. Gross package 2008/2009 - $185,000. Gross package 2009/2010 - $200,000. Perks - blackberry, free gym, subsidised further education.

Melbourne

0-1 Years PQE

Admitted between July 2008 and June 2009. Daily billable hours target - 6.5 hours. Gross package 2008/2009 - $67,000. Gross package 2009/2010 - $70,000. Perks - purchase additional leave. Comments:

Morale is terrible. Many people I know will leave when hiring picks up again - so the firm is going to have a shortage of lawyers when many take off for greener pastures. Very small pay rise for those who were newly admitted (credit where it is due - any pay rise is better than none) from $67k to $70k. That is where the stats used to come from  - ie they gave x% of employees pay rises. The truth is, there were no pay rises for lawyers with 1, 2 and 3 years PQE. Revenue was only 1-2% down from the previous financial year [ED - it was actually lower by a mere 0.5%], staff have been shed, discretionary costs are down, lawyers are working long hours and harder than ever. By the sound of it, partners aren’t feeling any impact from the GFC. A couple of people I know did get a “bonus” in the form of a $200 gift voucher from Myer. WOW!!!

4-5 Years PQE

Admitted between July 2004 and June 2005. Daily billable hours target - 6.5hours. Gross package 2008/2009 - $90,000. Gross package 2009/2010 - $92,500. Perks - blackberry.

5-6 Years PQE

Admitted between July 2003 and June 2004. Daily billable hours target - 7 hours. Gross package 2008/2009 - $92,000. Gross package 2009/2010 - $94,000. Perks - blackberry, free fruit. Comments:

The unfriendly work environment, uncollegiate atmosphere, uninteresting work, lack of support/mentoring, no emphasis on development, not enough client contact, under-resourced, not enough emphasis on expertise building, hopeless HR team [sic]*

Canberra

Graduate

Not admitted. Daily billable hours target - 6 hours. Gross package 2008/2009 - $68,000. Gross package 2009/2010 - $68,000. Perks - free gym, subsidised further education.

[ED - another ACT grad gave us the following entry]

Graduate

Not admitted. Daily billable hours target - 5.5 hours. Gross package 2008/2009 - $61,000. Gross package 2009/2010 - $61,000. Perks - free gym.

Brisbane

Graduate

Not admitted. Daily billable hours target - 6.5 hours. Gross package 2008/2009 - $65,000. Gross package 2009/2010 - $75,000. Perks - free gym, subsidised further education.

*yes, the comments just cut off at this point.

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Blake Dawson pay freeze - you have reported on this already, and Blakes came back with figures of 30% received rises - this INCLUDES those lawyers elevated from graduate to lawyer and lawyer to SA. However, it has now come to my attention that in the September quarter Blakes turned the 2nd largest profit in the firm’s history - this was included in the Board report for the quarter. The firm has not changed its approach to remuneration however!!

In 2009, Blake Dawson took on a total of 85 graduates. Meanwhile, the firm was recently reported to have a total of 1382 employees. It was elsewhere reported that the firm averages $190,000.00 profit from each lawyer, giving rise to a total profit of $136,000,000.00. By dividing the total profit by the profit of each lawyer, it reveals that the firm has apporximately 715 lawyers. So … when Blake Dawson spokesperson Helen McKenzie said ‘we were pretty upfront about what our approach would be and we told everybody that there would not be a salary freeze’, why didn’t she also clarify that considerably fewer than 20% of lawyers (plus grads) were those who actually received the pay rise? 30% sounds much healthier than 18%, don’t you think?

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The Tristan Jepson Memorial Lecture & Conference is an event aimed at improving attitudes toward, and bettering the response to, the prevalent issue of depression in the legal profession. After a long battle with depression, 26 year old Tristan Jepson took his life in October 2004. His parents created this event to galvanise the legal profession into action.

if you feel you might need help, call 13 11 14

At the conclusion of this year’s event, questions were raised about how far the profession has come since the initiative took off in 2006. The ABC reported that one young lawyer in attendance at the lecture stated:

Recently, my brother is suffering from leukaemia and I had to take two weeks’ annual leave in the new financial year to go and look after him… And I got into trouble because I was under budget.

With these comments, and at a time when a climate of fear and anxiety has descended over corporate firms across the nation as a consequence of the parlous state of job security, it is fitting that we contrast comments made by law firm partners at ‘pre’ and ‘post’ boom Tristan Jepson Memorial Lectures to see if the firms are just paying lip service to Tristan’s legacy.

In October 2007, Law Society Journal reported that the following comments were made by partners from major Australian law firms at the 2007 Tristan Jepson Memorial Lecture:

Clayton Utz Managing Partner Craig Pudig:

A competitive edge between four firms such as ours, or any of the major firms in any city or, in fact, this country is just, in this area, wrong. And the four of us have, in fact, been speaking about it, and we want to do something about that, to … work together as firms… We have to get away from ‘shake yourself out of it’.

Freehills Managing Partner Peter Butler:

This is not a matter of competitive edge between professionals, whether barristers or solicitors or warring firms … this is a matter that the profession needs to work on jointly… I’ve seen the [devastating effects of depression] in my family. I’ve seen it with my friends and I’ve seen it with my own firm. I want to do something about it. All of us do. We need to bring this issue of depression to the forefront of our thinking. Not as something that is embarassing and we don’t talk about it; it should not be like that … [we need to] develop a culture where for someone to say to someone else - a friend or colleague - ‘I’m depresssed’ is seen in the same way as any other illness, worthy of no more embarrassment or awkwardness than ‘I’ve got a fever’ or some other problem.

Blake Dawson Managing Partner John Atkin:

[Law firms have] lost our sense of professional purpose. We have let ourselves just be regarded as businesses. [We should be] emphasising that we stand for the professional values of the law and that in doing that, we recognise we have a social obligation, which is first and foremost; it’s before our obligation to the client and certainly before our self-interest in terms of whatever remuneration we might derive out of our occupation. [Partners’ meetings that only consider] what’s the impact on profits [are wrong]. You’ve got to acknowledge this is just an intrisic part of what you are doing.’ [BDW is participating in psychological research designed help people in high-stress jobs and] to build their capacity and cope.

The following comments are reported to have been made at the 2009 Tristan Jepson Memorial Lecture:

Freehills Managing Partner Peter Butler:

Every lawyer in these firms would go through a program very early in the time they started and deal with three things. One is give them some information about anxiety and depression. Secondly, to give practical ways to manage stress and anxiety. And thirdly, to give them techniques for building personal resilience, including cognitive and physical strategies… Is it just the case that it’s an idea whose time has come? It deserves to be… We were going to openly share what we were doing in this space to make it better

Mallesons Stephen Jaques Partner Stuart Fully says his company has set up a health and well-being program:

It’s through health checks, it’s through gym memberships, it’s through yoga and pilates. So at any time in the firm if you get to 5:00pm, there’s people walking around in pilates gear.

Allens Arthur Robinson Chief Executive partner Michael Rose said:

Older practitioners, they understand that depression is a real thing [but] they often don’t accept that it’s a communal thing, as opposed to a private thing. They don’t necessarily accept that it’s an issue that belongs in the wider community of our firm, as opposed to in the private lives of the people who are affected.

So how far have we come? Are law firms doing enough to protect 15% of the lawyers surveyed by Beyond Blue and Beaton Consulting who are reported to suffer moderate to severe depression? Do law firms have a role to play in responding to the 40% of law students who are reported to suffer ‘distress severe enough to warrant medical assessment’?

It seems that some in-roads have been made at least at Freehills and Mallesons, with practical and positive efforts made to confront the issue of mental illness within the profession. But has the Tristan Jepson event fostered the institutional change that was the original reason for its inception?

Perhaps the earlier comments of Blake Dawson partner John Atkin and the subsequent conduct of his firm offer the best evidence of how firms are delivering on what he termed a ‘social obligation’ which is to be placed ‘before our obligation to the client and certainly before our self-interest in terms of whatever remuneration we might derive out of our occupation’.

Top equity partners at Blake Dawson are reported to have taken home $1,200,000.00 in 2008/09. These results come after the firm sacked 89 employees in March after advising all staff that sackings were imminent several weeks earlier. One imagines that the harbinger of sackings, not to mention the torment of the announcements themselves, would have presented a challenge to the mental fortitude of even the most hardened Blake Dawson employee. Those resilient workers that made it through to the other side and who are reminded of previous comments made by a Blakes partner that the firm would be placing social obligations ahead of remuneration, yet are shown the incredible seven-figure salaries of some partners, must now be questioning the moral conscience of the firm.

Are firms doing enough to combat this very real issue? Or are the grand statements we have heard just lip service produced for syndication across major news media?

If you want to support the Tristan Jepson initiative, you can donate to the Tristan Jepson Memorial Fund.

Send the Firm Spy your news and views!

Thanks to the AFR for the following profile:

Partnership Remuneration System

Performance-based across eight levels, up from six, with a bonus.

Partnership Pay 2008/09

The lowest level partners drew $380,000.00 and the highest $1,200,000.00, with the handful of fixed-share partners taking between $300,000.00 and $700,000.00. No bonuses were paid last year after a restructure of the remuneration system but they are expected to return this year.

Pay

Estimated Profit Margin = 37%

Estimated Profit = $136,000,000.00

revenue lower

Estimated Profit Per Lawyer = $190,000.00

Estimated Profit Per Equity Partner = $790,000.00

Revenue

Revenue 2008/09 = $368,000,000.00

Revenue Change = -0.5%

Revenue Per Lawyer = $520,000.00

Revenue Per Partner = $2,070,000.00

Revenue Per Equity Partner = $2,130,000.00

The Verdict

New managing partner John Carrington says “it was a very challenging year”, though the firm showed resilience and will manage costs rigorously. Blake was hit by lower transactional work but the insolvency group was busy, including working for McGrathNichol on the Allco voluntary administration, as were the employment and government groups.

Comment

Blake has been battling a market perception that its partnership lacks depth and its Melbourne office is stronger than Sydney. Still, the firm counts BHP Billiton and ANZ as key clients. Blake’s margins are expected to improve this year as the benefits of redundancies flow through but the firm will need to restore its market image before revenue catches its big five rivals.

Send the Firm Spy your news and views!

In response to our story profiling the Blake Dawson pay-rise-pay-freeze, which we thought was less about ‘focus’ and more about ‘f**k-us’, we received the following email:

The source who said no Blake Dawson staff received pay rises or bonuses is wrong. I received a pay rise so too did quite a number of my peers (although not to the usual scale). A number of other lawyer received bonuses in lieu of payrises. I dont know what all the fuss is about. BD treats its staff well and it was a sensible means to prevent further redundancies. I personally would prefer to sacrifice a pay rise to keep members of our team… and hey, it’s better than the big 4. They’ve been asked to take pay CUTS to save members of their team.

taking aim at Blakes partners

To the source, thank you. We appreciate your comments and enjoy feedback generally. We fear, however, that partner rhetoric about ‘focus’ may have prejudiced your views on remuneration and working conditions. We will therefore take you through the ‘fuss’, as we see it.

Firstly, 30% of your colleagues in fact received pay rises. That is, this 30% either received a pay rise in the traditional sense or a bonus in lieu thereof. But 70% missed out. We have already corrected the mistake we made earlier about the Blake Dawson pay freeze. You forgot to mention in your email that some 89 other people not only failed to receive a pay rise, but they lost their job at Blake Dawson.

At the same time these workers and ex-workers are suffering, the Blake Dawson partnership remained steady as the seventh largest law firm in Australasia and its revenue dropped by a paltry 2.6%. But whereas Blake Dawson is the seventh largest in terms of total number of lawyers, it is the fourth highest by revenue. DLA Phillips Fox, for example, has nearly 100 more lawyers than Blakes, but its revenue is over 30% lower.

What does this mean? Well, depending on overheads, fewer lawyers and higher revenue likely means more profit. Blake Dawson declined to spell out the precise profit to be shared amongst the partners this financial year (surpise, surpise!), but one thing seems clear; Blakes partners would have lost little, if any of the profits they enjoyed prior to the GFC. The massive reduction in employees and wage expenses would likely have ensured this. So when you say ‘I personally would prefer to sacrifice a pay rise to keep members of our team’, understand that your partners did not show you the same courtesy earlier this year. A 100% equity partner who earned, for example, $1,500,000 in the boom-times of 2007/2008, might have seen this profit might dip to, say, $1,300,000 (we have no idea of the correctness of these figures). With a partner still receiving such an awe-inspiring salary, could it ever be justifiable to freeze pay, much less sack workers, on the basis of this loss? The partner still earned in excess of $1,000,000!

Are you sure ‘BD treats its staff well’? Send the Firm Spy your news and views!

Blake Dawson boldly claims on its website:

We recognise the importance of attracting, developing and retaining the best people in order to provide you with an excellent service. We have been acknowledged as an employer of choice for many years and are proud of our reputation for being a great place to work.

Yet an anonymous insider had the following to say of the firm:

no singing in the rain here!

Noone at Baked Daws*** got pay rises this year. The line about a few receiving them is untrue. Not even one measly dollar and as for bonuses- well they are a myth round here. More folk are rolling out the door but this time round the firm has been smarter in how they do this and instead of a mass exodus they are letting go bit by bit. They still expect the same service though and effort from the remainder of us. A wakeup call to Blakes management - 5 minus 10 does not equal five…

Although we don’t quite understand the arithmetic, and notwithstanding claims we’ve already heard that Blakes is rumoured to have implemented a pay-freeze, it is clear that this tipster is directing a new allegation of secret-sackings at the firm. If Blakes were to rid itself of more staff, it might make sense that it would do so this time in a more covert fashion. Moreover, you’ll recall that earlier in the year Blakes forthrightly announced that sackings were imminent. Not only did the subsequent sackings result in blighting media coverage, but an apparently disgruntled employee temporarily hijacked the firm’s wikipedia page.

Will a few drips turn into another flood? Will there be a revolt? Send the Firm Spy your news and views!

A huge news story is emerging at Blake Dawson this morning in what might easily be construed as a calculated effort by

Quack Quack

It has been reported that rather than introduce a blanked pay freeze like most of its competitors, Blakes will ‘recognise exceptional performances but in a more focused way than in previous years.’

These comments follow from our exclusive report earlier in the week of rumours that the Blake Dawson partnership was deliberating over whether to implement a pay freeze. Today we can reveal new rumours which contradict the line being pushed by the firm that there is ‘no pay freeze’,

We received several anonymous tips from Blakes spies last night, including the following:

… [Blakes] performance reviews will be tied in with pay reviews on a case by case basis. The practical effect of this is that Blakes can in one breath tell the world that the firm isnt freezing salaries and in the next breath tell every single one of its employees that there will be no raise this year… Does giving one lawyer out of one thousand a raise mean there is no pay freeze?

Good question! We invite comments. The Firm Spy thinks that if it walks like a duck and it sounds like a duck then it is a … Blake Dawson Pay Freeze!

Blake Dawson first went on a much publicized sack-attack. Then, when the day finally arrived to sack staff, Blakes HR advised the newly sacked workers to ‘tell your colleagues you’re going hom sick’. The Blake Dawson wikipedia page was then temporarily hijacked.

Will this prove to be yet another dark chapter in the recent history of Blake Dawson? Send us your news and views!

A storm is brewing at leading Australian law firm Blake Dawson over fears that partners will announce a pay freeze

Blakes lawyers revolt over pay freeze

We received the following information from two separate sources over the weekend:

I have been informed that the Blake’s partnership is actively deliberating over a pay freeze right now, with a view to making an announcement next week… I wanted to express to the Firm Spy, so that this information could be fed through to the partners via your site, that a pay freeze will seriously offend all Blakes lawyers. Business is booming here. I do not know of a single lawyer with any capacity right now… A pay freeze would be a gross act of partnership profiteering.

And this, from another source:

If Blake Dawson partners announce a pay freeze next week, I think it will cause a revolt… The redundancies went too far and we’re now very light in many areas, meaning that billings must surely be high.

In February, Blake Dawson took the revolutionary steps of announcing that it was intending to make many sackings.
The firm then duly sacked 89 workers, but advised the affected workers to tell their colleagues they were ‘going home sick’. The Blake Dawson Wikipedia page was then hijacked in relation to the debacle.

Will a pay freeze affecting over-worked lawyers cause yet another GFC first at Blakes; an employee revolt?

Send the Firm Spy your news and views!