We reported last week the rumour that Mallesons might need to prepare for an exodus of lawyers, in particular from its Melbourne office, in light of the emergence of a new Gilbert + Tobin office in the city.  In response to that post we received the following comments from an anonymous (ostensibly a Mallesons) spy:

Firm Spy is always good for a laugh. If only you guys had the balls to apply the blow torch to Gilbert & Tobin the way you do to other firms. You read like a PR outfit for G&T. It’s not even subtle.

Clearly our friend missed the berating we gave Danny Gilbert over his use of the word “sanguine”.

In any event, we’re always keen to moderate any biases in our reportage, so this got us digging around for some dirt on G+T. Thankfully, two anonymous tips have come through over the last week, meaning we didn’t have to dig too far.

First, we received this in response to last week’s post from an anoymous spy:

I suggest the lawyer from Mallesons does his homework…

G+T is known for being a sweat shop, yes the money is good but does it make up for being overworked and having very little resources and support around you… Remember all the benefits of a large firm with L&D, KM etc etc

Not to mention there are some dysfunctional partners at that firm, just check out how many partners have been and gone from G+T in the last 5 years, it is a lot higher than other firms.

We couldn’t find the statistical evidence to support the partner attrition rate and the claims about it being a “sweat shop”, however we did receive the following from another anoymous tipster earlier this week:

What the legal news sector has failed to observe in its reporting on the “coup” by G+T to secure some of Telstra’s work for a fixed fee is that staff at G+T will suffer greatly from the deal. In the first place, there will be the workers who are stuck running errands into the wee hours for Telstra, with no billing upside. In the second place, the partners, who have left major firms with the hope that G+T will offer greater performance-based remuneration will find that the opposite is true. You can work to your heart’s content for Telstra under this arrangement, just don’t expect your pocket to get any fatter!

I think Danny has been very canny in this deal. He is hoping to forge a deep connection with Telstra, to understand its business, only so that in future he can use that expertise to leverage a traditional, billable-unit fee arrangement in future. I guess time will tell.

Can Mallesons lawyers, pondering a move to Gilbert + Tobin, expect an even bigger workload? Will the hours be longer? Is G+T a “sweat shop”?

Should G+T revolutionary billing arrangement with Telstra actually be called a “fixed-fee-billable-unit arrangement”?

Send the Firm Spy your news and views!

Over the last 12 months we have at various times reported on rumours, received by us from anonymous sources, that 2010 would see a stunning exodus of lawyers from major Australian law firms. In particular, we reported that the firms who have stiffed junior lawyers over pay and threats of redundancy would see a considerably higher than normal rate of attrition.

We were not surprised to see those rumours refuted last week by AAR P&D director Susan Ferrier and Freehills HR director Gareth Bennett in an article published by our friends at Lawyers Weekly. There is nothing quite like planting a seed of doubt as to the prevalence of jobs in the market to allay employee motivation to depart. Astute media-watchers will note, of course, that economists were quoted confidently asserting in a Business Spectator article penned a mere 4 days prior to the Lawyers Weekly article that the “peak in unemployment has passed”.

So where will the exodus of lawyers go? Obviously, we cannot answer that question in every instance, but in the case of Mallesons, a firm we consider leader of the pack in terms of exodus potential (very low pay, apparently highest working hours), things just became a little clearer.

This from an anoymous Mallesons spy recently:

Mallesons partners must reconsider their current, stringent view on remuneration, the reported 44% profit margin, and they must do so quickly. I am presently considering a far more generous offer from Gilbert + Tobin to join its new Melbourne office and right now I see no compelling reason to stay at the firm. By market rates, my remuneration is appalling and a Red Balloon voucher, purchased en masse for a discount, does nothing fix the situation. Partners should be advised that things need to change, and quickly, or G+T might just land the entirety of Telstra’s work along with dozens of Mallesons lawyers.

As reported by AFR (11/12/09):

G+T managing partner Danny Gilbert snared a large chunk of Mallesons’ work from Telstra earlier this year after offering to provide unlimited advice for a fixed fee… G+T has appointed 5 new partners in the past 6 months, & its partnership has grown by 7.4%. G+T is also growing in geographic terms. It will open its first office in Melbourne soon. The move is client led - Telstra’s [general counsel] Will Irving is based there… Gilbert says … “Telstra was looking for a broader engagement with the firm across all of activites the firm has expertise in and we were looking for a fee arrangement that had the best prospect of expanding our connections across what is a very large corporation”.

The article goes on to mention more bad news for Mallesons:

G+T also announced last week it had convinced highly regarded private equity specialist [and former Mallesons partner] Peter Cook to join the firm.

Are you considering changing firms? If so, why?

Tell the Firm Spy first!

We received a few replies to our call yesterday for news on the way firms are handling the Christmas shut-down. In essence, we were hoping to find out if any firms were using the opportunity - a traditional down time in the calendar - to force staff to take unused annual leave.

Surprise surprise - notorious tightwads AAR are rumoured to have implemented a very tight scheme in which staff will lose almost half of their annual leave entitlements. This from an anonymous AAR spy last night:

put your annual leave in the bag, b*tch!

Re: your story on involuntary leave- Allens is closing Christmas Eve this year and re-opening on the 11th. All staff forced to take leave unless they have the approval of their section head to work during the office closure. No extra leave is given to compensate for this, so you’ve lost 8 of your 20 annual leave days for the year as the firm shifts the burden of a traditionally quiet period onto its staff (and justifies it by saying “the firm believes it is important for staff to spend this time with their families”). Interestingly, last year we re-opened a week earlier…

No doubt our best mate, AAR spokesperson Chris Fogarty, was behind the “spend time with your families” rigmarole.

Meanwhile, it appears Mallesons have finally gotten into the festive cheer by actually giving staff some extra leave. We received the following from an anonymous Mallesons spy yesterday:

Mallesons is closing on Christmas eve and will not officially reopen until 11 January. All told, staff are forced to spend 5 days of annual leave, but will receive 3.5 days of annual leave for free. If people have urgent work, they will not be required to take those 5 days, but this is subject to partner approval… I think everyone is pretty happy with the arrangement. Let’s call it a very minor solace for the sh*t that everyone has been through this year and for the almost laughable “bonus” we received.

We’re happy to call it a ” very minor solace”, but better than nothing!

What is your firm doing? Let us know - send the Firm Spy your news and views!

When you’ve implemented a redundancy scheme that has given rise to a 25% constriction in the number of senior associates populating the office, it is time to speak out in media, ramp up the PR machine, and sell to staff/the public the rationale of such action.

Accordingly, we saw Mallesons Chief Executive partner Robert Milliner quoted in yesterday’s AFR as follows:

‘Milliner said the size of the firm had been adjusted to reflect falling work volumes and a recovery was not likely in the medium term… “most of our clients here and overseas have gone through cost constraints, or because of the disruption of the debt markets have not been able to raise leverage to do the [M&A] activity they have done before”.

This comes just a few days after Mallesons spokeswoman Kate Rimer was reported to be:

cautious about the recruitment market’s likely rate of recovery, particularly given prevailing conditions in former recruitment hot spots overseas. “I think overall we will see a gradual pick-up in recruitment activity, but nothing significant until at least the middle of next year,” she said. “Historically we have lagged much of the economy going into and coming out of downturns. We are seeing a similar pattern with the GFC, where law firms are lagging many of the economic indicators by six-plus months.

Err… ‘Busta’

The Australian economy added near 100,000 jobs between September and November

Putting Milliner & Rimer’s comments in the context of justifying major staff departures is one thing, but putting them beside the comments, made in today’s AFR by Freehills Chief Gavin Bell, makes them look like something of a piss-take:

”[Freehills] took the view that we were going to retain people, that we were not going to lay off people, that that was a last resort. And we kept recruiting. It will probable take a while for full activity to return but I think the trend is up, rather than down. It is a trend up from a plateau that was nowhere near as deep as we thought it would be.”

And while the Mallesons workforce has been reduced considerably, Freehills has increased non-lawyer staff by 8.5% this year. Mallesons, a firm that posted revenue that exceeded Freehills by $58million in 2008/2009, despite having less partners and apparently less staff, is forshadowing no recovery in the medium term, while Freehills thinks the trend is up.

Is Milliner ‘buying time’ to keep the pay freeze in place? Is a Freehills pay thaw on the way?

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Last Friday we reporte that the Mallesons partnership had decided to give staff a Christmas bonus, of sorts. In response to the Mallesons December Pay Run of the Milliner, we received the following comments:

get gandalf now

Actually many of the good staff, i.e. the solicitors that are above budget are extremely mad that a 3% one off payment is being made to all staff. It is true now there is a 7k gap between graduates billing 30% of a 6 hour budget and third year lawyers billing 145% of a 6.5 hour budget and working late nights and weekends while others toddle along at 5 to enjoy their lives.
We were told the pay freeze would be reviewed based on how the firm is tracking to budget. Now we are told the firm is not tracking to budget so the pay freeze stays but everyone is getting a 3% rise. How can MSJ justify paying those below budget the same as those smashing their budgets in a GFC? It is a slap in the face to those putting in the hours to build the firm.
MSJ may be a great place to work, in terms of the people and the work we do, but that doesn’t keep junior lawyers earning less than people at other firms happy. Add to that people billing heaps so those well below budget getting the same bonsuses - seems like a recipie for losing good junior lawyers and keeping the useless pricks.

We also received the following comments on Friday:

I am cynical enough to believe that the bean counters did the analysis and decided that this was the absolute minimum that they could get away with to prevent a mass mutiny next year.

It’s the bonus you have when you don’t have a bonus - more importantly, it doesn’t address any of the structural and cultural issues which they have created (by way of salary freezes) by paying lawyers who’ve been in the game almost 2 years now about 20c per week more than they’ll be giving to the bright but clueless young things coming through the door in Feb. Don’t expect that these people won’t notice this, Mallesons.

As such, they are probably wasting the money - people will still be pissed off because it just comes across as tight.

That said, this is a great sign for the industry as a whole and I predict will be the first of many such moves over coming weeks. Remains to be seen whether other firms are slightly less scrooge-like leading up to the Xmas period. I suspect some firms in particular will still be handing out lumps of coal in the stockings, though…

How is your firm tracking? Is it bonus season? Let the Firm Spy know first!

We reported last week that Mallesons’ pay freeze is apparently showing no signs of thawing. This remains true, despite encouraging news received earlier today that the firm is giving staff a Christmas bonus, of sorts.

Thanks to the anonymous Mallesons spy for the following information:

Warlock Milliner has just delivered some long overdue good news - we’re getting some money out of the partnership and just in time for Christmas! Not that it is very much, mind you. “3% of your wage” in the form of a bonus in the “December pay run”. Is this the “pay run of the milliner”?

It is interesting that the partners have chosen to carefully calibrate the bonus as a one-off payment, rather than a more permanent increase in our wages, annualised in each monthly pay.  This means that when the time comes for our annual (and much anticipated) salary review in June/July 2010, the raises, if any, will come from a lower base. Clever, Gandalf!

Yes, very clever indeed! Still, some money is better than no money, even if it is only 3%. Hat tip to Mallesons for showing some merriment as this increasingly festive time of year.

Apparently even necromancers celebrate Christmas!

Send the Firm Spy your news and views.

We received the following insight from an anonymous Mallesons spy last night:

When the Mallesons pay freeze was introduced it was implemented on the basis that it would be reviewed in December against how the firm was tracking against budget. In recent centre by centre reports on a detailed employee survey (the Vibe) Mallesons undertakes every two years, presenters were at pains to point out that the firm was NOT tracking towards budget, with the hidden implication being that the pay freeze will continue. This is of course news to those lawyers in some sections who are exceeding their budget consistently and are being paid well below people in other firms who get to go home at 6 each night.

6pm?! Who leaves the office at that unreasonably early hour? Certainly not Mallesons lawyers. How else are partners able to boast revenue that is a whopping $58,000,000.00 higher than its nearest competitors, despite having apparently less employees?

In our most recent poll (see to the right), we asked precisely this question - inviting your views on how Mallesons manages this incredible revenue feat. You responded as follows:

Mallesons outperforms its competitors (by $58m!) despite having apparently less employees because:

a) Mallesons lawyers work harder, longer hours than at competitor law firms (95 votes);

b) Charge-out rates are higher than at competitor law firms (52 votes);

c) Chief Exceutive Partner Robert Milliner is a part-time warlock (116 votes)

So if lawyers are working hard, beating budget, leaving well after 6pm, and the Chief Executive Partner is actually gandalf the grey, shouldn’t more money just appear? Will lawyers, who have their pay frozen, watch as Mallesons partners earn more than their reported 2008/2009 wage of between $1,400,000.00 and $1,600,000.00?

Send the Firm Spy your news and views!

Hypothetical scenario:

dont you be goin overseas!

Imagine you’re the number 1 person at your firm in relation to staffing levels. Imagine further that at the very end of the GFC, your firm decided to implement a massive redundancy scheme leaving those employees still at the firm concerned that the cuts were too deep, too late, and that there are not enough members of staff to handle the apparently steady work stream. Imagine also that some of those employees remaining are disgruntled with their remuneration, making comments to Firm Spy like:

MSJ’s remuneration strategy is to pay below market (ie 80-90%). Lovely strategy given that the partners are the most well paid in Australia! If only they put that in their recruitment promotional material!

Imagine finally that there is a major international economic up-tick and employees finally feel the power shifting back into their hands and away from frugal, sack-ready partners.

If this were you, would you Busta Rhyme to encourage staff to stay?

Yesterday, Lawyers Weekly reported that Mallesons executive director of people & development, Kate Rimer, busted the following rhyme made the following comments:

Kate Rimer… was cautious about the recruitment market’s likely rate of recovery, particularly given prevailing conditions in former recruitment hot spots overseas. “I think overall we will see a gradual pick-up in recruitment activity, but nothing significant until at least the middle of next year,” she said. “Historically we have lagged much of the economy going into and coming out of downturns. We are seeing a similar pattern with the GFC, where law firms are lagging many of the economic indicators by six-plus months.

“As the economy picks up there is likely to be some lift in recruitment activity, but markets such as London - which have historically been the destination for many lawyers - are not likely to provide many opportunities for at least the next 12 months, given the severity of the GFC in the UK.”

Oh no, not another person Mallesons who can see the future! In the same article, an actual expert on recruitment flows made the following, starkly contrasting comments:

Taylor Root consultant Matt Harris presented a much more opportunistic outlook, suggesting that the market was already feeling the first winds of a “recruitment storm”. “About six weeks ago things started to dramatically develop and increase and improve. A number of firms - in fact quite a large number of firms - that had made it very clear that they had put recruitment on ice returned to the market, and in some cases have returned to the market aggressively,” he said. “I think we’ve already started entering a recruitment storm. I think everyone was expecting it to take place over the next six to 12 months, but I think it’s happening already.”

Harris said practice areas which had seen the most dramatic improvement include corporate, private equity and banking and finance - particularly among the larger mid-tier firms - which he said indicated a very strong confidence in economic recovery. “As soon as one section of firms start [recruiting in those areas] then that’s a very clear indication that the market has improved dramatically and it’s going to be like a snowball.”

So who do you believe? An actual expert in recruitment with no reason to fabricate? Or Busta, a Mallesons exec frantically presiding over an overworked, underpaid workforce that is starting to look to emigrate?

No reason to fabricate

Employees lookin’ to emigrate

Send the Firm Spy your news and views!

Please find below our revised report into Mallesons lawyer salaries. Thankfully, the firm has introduced a sweeping redundancy scheme in between the receipt of many of these responses and today’s publication, making it difficult to determine who has submitted the relevant responses and whether they remain at the firm.

Of course, we’re dealing with a chief executive warlock, so anything is possible! Please let us know if you’re worried that we have inadvertently exposed you as an anonymous tipster (of sorts) by sending us your remuneration package details.

We still need more people to complete the survey, so by all means continue your great work by filling in the remuneration survey.

We will post each of the Big 6 law firms in order of revenue.

Mallesons is on the record as saying that its partnership has a whopping profit margin of 44%. It is easy to see why when looking at the paltry salaries given to staff.

Firm Spy cannot guarantee the accuracy of these figures. They come from anonymous sources.

Brisbane

0-1 Years PQE

Admitted between July 2008 and June 2009. Daily billable target - 6 hours. Gross package 2008/2009 - $60,000. Gross package 2009/2010 - $65,000. Perks - free fruit; free gym; subsidised further education.

6-7 Years PQE

Admitted between July 2002 and June 2003. Daily billable target - 7.5 hours. Gross package 2008/2009 - $139,000. Gross package 2009/2010 - $139,000. Perks - blackberry; free fruit; free gym; subsidised further education.

7-8 Years PQE

Admitted before - July 2002. Daily billable target - 7.5 hours. Gross package 2008/2009 - $138,000. Gross package 2009/2010 - $138,000. Perks - blackberry; free gym; subsidised further education.

Melbourne

Graduate

Admitted 2009. Daily billable target - 4.5 hours. Gross package 2008/2009 - $64,000. Gross package 2009/2010 - $66,000. Perks - free fruit; free gym; subsidised further education. Comments:

I’m employed - counts for something.

[and]

Hi guys I’m a recently admitted (20 Oct) Solicitor in Mallesons’ Melbourne office. Your figures are correct but the billable targets are not. It was 4hrs/day when we were grads and is now 6hrs/day (since admission). Cheers

0-1 Years PQE

Admitted between July 2008 and June 2009. Daily billable target - 6 hours. Gross package 2008/2009 - $68,000. Gross package 2009/2010 - $68,000. Perks - free fruit; free gym; subsidised further education.

1-2 Years PQE

Admitted before - July 2008. Daily billable target - 6.5 hours. Gross package 2008/2009 - $74,000. Gross package 2009/2010 - $74,000. Perks - free fruit; free gym; subsidised further education.

2-3 Years PQE

Admitted between July 2006 and June 2007. Daily billable target - 7 hours. Gross package 2008/2009 - $82,000. Gross package 2009/2010 - $82,000. Perks - free fruit; free gym; subsidised further education. Comments:

MSJ’s remuneration strategy is to pay below market (ie 80-90%). Lovely strategy given that the partners are the most well paid in Australia! If only they put that in their recruitment promotional material! Re the subsidised further education - there are quite strict rules about how long you must remain after you receive you final results (12 - 24 months) otherwise you must pay it all back.

4-5 Years PQE

Admitted between July 2004 and June 2005. Daily billable target - 7.5 hours. Gross package 2008/2009 - $102,000. Gross package 2009/2010 - $102,000. Perks - blackberry; free fruit; free gym; subsidised further education.

6-7 Years PQE

Admitted between July 2002 and June 2003. Daily billable target - 6.5 hours. Gross package 2008/2009 - $115,000. Gross package 2009/2010 - $123,000. Bonus - $11,500. Perks - free fruit; free gym; subsidised further education.

8-9 Years PQE

Admitted between July 2000 and June 2001. Daily billable target - 7.5 hours. Gross package 2008/2009 - $163,000. Gross package 2009/2010 - $163,000. Perks - blackberry; free fruit; free gym; subsidised further education; purchase additional leave. Comments:

I don’t think a blackberry is a perk! The fresh fruit is only available in some departments. Generally it’s a great place to work but so much depends on the particular partners you are working with. One thing that could be improved is transparency in career paths and future prospects.

10+ Years PQE

Admitted before - 1999. Daily billable target - 7.5 hours. Gross package 2008/2009 - $130,000. Gross package 2009/2010 - $130,000. Perks - free fruit; free gym; subsidised further education.

Sydney

Paralegal

 Daily billable target - 4 hours. Gross package 2008/2009 - $65,000. Gross package 2009/2010 - $65,000. Perks - free gym.

0-1 Years PQE

Admitted between July 2008 and June 2009. Daily billable target - 6 hours. Gross package 2008/2009 - $76,000. Gross package 2009/2010 - $76,000. Perks - free fruit; free gym; subsidised further education.

1-2 Years PQE

Admitted between July 2007 and June 2008. Daily billable target - 6.5 hours. Gross package 2008/2009 - $84,000. Gross package 2009/2010 - $84,000. Perks - free fruit; free gym; subsidised further education; parking on weekends; subsidised pilates and yoga; various discounts on products.

2-3 Years PQE

Admitted between July 2006 and June 2007. Daily billable target - 6.5 hours. Gross package 2008/2009 - $85,000. Gross package 2009/2010 - $85,000. Perks - blackberry; free fruit; free gym; subsidised further education.

5-6 Years PQE

Admitted between July 2003 and June 2004. Daily billable target - 7.5 hours. Gross package 2008/2009 - $137,000. Gross package 2009/2010 - $137,000. Bonus - $13,500. Perks - free fruit; free gym; subsidised further education; purchase extra leave.

8-9 Years PQE

Admitted between July 2000 and June 2001. Daily billable target - 7.5 hours. Gross package 2008/2009 - $153,000. Gross package 2009/2010 - $153,000. Perks - blackberry; free fruit; free gym; subsidised further education. Comments:

Crappy salary makes me feel sad and the partners’ massive profits do not help.

Perth

1-2 Years PQE

Admitted between - July 2007 and June 2008. Daily billable target - 6.5 hours. Gross package 2008/2009 - $77,000. Gross package 2009/2010 - $77,000. Bonus - $5000. Perks - free fruit; free gym; subsidised further education. Comments:

Despite the freezing of my already below market salary, my billable targets increased and so did my charge-out rate. Further, there is no rewards for top performers as can be seen by the token bonus received.

If you’re still doubting the imminent prospect of a Mallesons/Clifford Chance global merger, take one look at the Run of the Milliner.

Our favourite Chief Executive Partner, who a remarkable 58 of you think is a part-time warlock (see poll, to the right), featured in an article earlier today in The Australian about changes to lawyer remuneration in which the following was said:

Mr Milliner said the speed at which Australian firms abandoned “lock-step” salaries for all employed lawyers with the same years of service would be strongly influenced by international practice.

He said the use of lock-step salary setting had been declining at major British law firms before the global financial crisis and there was no reason why this trend should not continue once the global recovery became entrenched.

“Over time I think you will see movement (in Australia) away from lock-step towards greater degrees of performance-based salary-setting,” Mr Milliner said.

Hmmm… a remuneration change to please an international suitor, perhaps?

Since our article a couple of weeks ago in which we published a rumour suggesting a merger is set to take flight within weeks, the Firm Spy has been literally inundated with emails and tips from readers corroborating various parts of the anonymous quote we published. We have chosen not to publish these additional quotes because they add little value to what is already known. Of course we appreciate you sending them through.

The eurocentric, British slant informing Milliner’s comments above, however, must surely be the clearest sign yet that Mallesons Clifford Chance will set the legal world alight at some point in 2009.

Watch This Space.

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