With a heap of fanfare, Clayton Utz announced on Monday that 6 new partners had been appointed to the firm. The firm said that the appointments reflected the emergency situation where several lawyers were rumoured to be readying themselves to give the partnership an ultimatum “calibre and depth of talent at the firm”. You’ll recall we reported a rumour that 6 partnership promotions were set to be announced one week prior to the official announcement.

In that post, we mentioned that the Clayton Utz equity pool might shrink on the back of the promotions and in light of the fact that the firm will soon be opening an office in Hong Kong and had also resolved to lift the pay freeze.

But something didn’t add up. Yes it was a dire situation, but how could Australia’s greatest corporate tighwad show such a preparedness to splash the cash?

Alas, our instincts have proven correct. What does an emotionless, money-hungry corporate enterprise do when equity value is threatened? You guessed right - they sack a few people!

In the words of the numerous Clayton Utz firm spies who have written to us in the past day (thanks to all for your efforts):

First this:

Clayton Utz did not renew the contracts of 8 out of their 20 2009 graduates today.

Then this:

Clayton Utz Melbourne hired 20 graduates in 2009. 2 graduates resigned last week to take up other jobs. Yesterday the firm advised 6 of the 2009 graduates that they would not be kept on. The 6 let go will be paid out the remaiing 4 weeks of their contract and not allowed back to the office. In less than 12 months the original group of 20 is now just 12. Pay is still frozen at 56k with a review in the coming weeks.

…[moments later, this was sent] Correction re Clayton Utz graduates: There are only 11 with ongoing employment, the 12th has been put on a 6th month contract.

Then this:

Yesterday (2 March) Clutz Melbourne told six of their 2009 grads that their careers at the firm were over. In a series of orchestrated meetings, the unlucky ones were told of their fate and then… wait for it… given a cab charge and advised to take the rest of the day off!

And finally, this:

Dear Firmspy, In case you haven’t already heard, the Clayton Utz graduate lawyers found out yesterday whether they were offered a permanent placement. Of 16 graduates, 6 were “not offered” a permanent placement due to “business reasons”. All 6 were women. The graduates have been given the option of being paid out until the end of the month. A silver lining i suppose. It is a repeat of 200, where 7 out of 19 graduates were let go. The way HR approached the situation has been appalling, with graduates made to feel as though they should exit quietly through the back door as opposed to being thanked for their hard work and long hours over the past 12 months. Clutz are only starting 15 graduates in the March 2010 intake - here’s hoping that at least half of them can actually keep their job…

You read it right: a cab charge; a few grand; and a polished boot to the backside. Where we hail from, that’s called abUtz!

How can Clutz make a business case for sacking the Melbournian grads, given the paltry wages paid to them and the fact that the defecting partners were all Sydney based?

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Last week (17/7) The Australian published an article profiling the outplacement firm The Walford Partnership. In an article which appears targeted to evoke sympathy in the reader for retrenched law firm partners, managing director of Walford, David Slessar said:

our heart goes out to fallen corporate figures

leaving a firm after years as a valued partner can be daunting and emotionally difficult.

Boo hoo! There is no mention in the article of the emotional difficulty and general hardship endured by sacked junior employees who, unsurprisingly, have none of the tremendous wealth enjoyed by their equivalently sacked partners. The article does note, however, that Walford:

advises firms on how to deal with partners who … are being retrenched. … Outplacement and mentoring services have been used by Allens Arthur Robinson, Blake Dawson, Corrs Chambers Westgarth and Clayton Utz.

Does this mean what we think it means?  First support staff, then junior lawyers and now the major Australian law firms are sacking … partners? Are partners finally patulous to the GFC-induced cutbacks and sackings we have seen pervading corporate firms for months and months?

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It emerged earlier in the week that hard-up Latvians, unable to procure a traditional bank loan, can now pledge their soul as security for a revolutionary loan scheme pioneered by the Kontora Loan Company:

Clients have to sign a contract, with the words “Agreement” in bold letters at the top. The client agrees to the collateral, “that is, my immortal soul”.

pay us, or Barry gets the soul

In other news, we have received several reports now about as-yet unreported redundancies at top-tier national law firm Clayton Utz. This from an anonymous Clutz spy:

Clayton Utz  boasts so much that it tries to support & develop staff so I don’t understand why it would just cut stuff loose. Rumours are rife about more cuts at CU & all the grads are quite worried as there isn’t much work around & back in Feb/March they cut at least 5 grads that I know of, denied 1 grad a LOA so they left (they probably don’t include that figure), and keep changing the commencement date for the next intake of grads. Can FirmSpy pls see what info they can come up with?

Well, in terms of what we ‘can come up with’, we have since had two separate anonymous sources offer surprisingly similar claims to that in the above email. These sources allege that more than one graduate was made redundant at the conclusion of their graduate year and several more were given fixed-term contracts, rather than permanent employment.

If true, these measures would amount to a stunning reversal of form from the firm that heartily said of the GFC as recently as December 2008:

‘It is a very unique environment but even out of periods of difficulty, opportunities arise and you have to be out there, nimble, looking for these opportunities.’

You’ll recall that in the intervening period, Clayton Utz has instituted a pay freeze and also asked some workers to take an involuntary leave of absence. No word yet on whether the allegedly redundant graduates have had to sell their soul.  Or did they already do that when they walked in the door?

Have you got a soul to squeeze? 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?

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After our report on the KPMG tenancy reduction, we received the following information from a DLA Phillips Fox spy on the weekend:

you new chair is really cumfy!

DLAPF Adelaide is on the hunt again. Five more support staff axed within a week! There may be more to come soon with a floor consolidation that will simply not fit all the people that are now there. Literally, there won’t be enough chairs, offices or cubicles! The environment is: Who’s next?!

The first wave of DLA Phillips Fox redundancies occurred in December 2008. The second wave of  firm redundancies followed in May this year. Will floor consolidations and reductions in tenancy space across DLA Phillips Fox offices give rise to a more broad-ranging third wave of redundancies? When the music stops, will you have a chair?

The Firm Spy is anxious to hear more reports of reductions in tenancy space. Is your firm reducing the size of the office? let the Firm Spy know first, super anonymously if you so choose.

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We received the following anonymous, no-nonsense email yesterday:

jobs are as safe as houses

Keddies Lawyers has laid off 40 staff.

At a time when there is a broad perception that personal injury/insurance firms are quarantined from the GFC strife affecting other law firms, this rumour, if true, would make more certain the troubling idea that no job is safe. Either that, or Keddies partners are making opportunistic use of the financial climate to make redundancies.

We invite a clarifaction and comments from Keddies staff.

Send the Firm Spy your news and vews!

In the current edition of BRW, Clayton Utz chief executive partner David Fagan makes the following comments:

has anyone seen my file-a-fax?

We’ve gone through a period where recruiting staff has been a difficult exercise, so we made a conscious choice to keep resources because it’s important to the firm’s future.

In the AFR last week (12/6), Fagan confirmed that in this financial year at least 13 lawyers and a “handful” of support staff had either been made redundant or:

counselled out for performance.

So in one article (11/6) Clayton Utz is ‘keeping resources’ and, in another (12/6), Clayton Utz is acknowledging widespread redundancies and confirming Clutz has ‘managed out’ several workers.

You’ll recall back in May, we exclusively revealed that despite comments in the AFR from partner Stuart Clark that Clutz had ‘not made a final decision about legal salaries’, staff had in fact been informed earlier that they would be subject to a firm-wide pay freeze.

You’ll also recall comments we heard back in December when, in advocating the strength of the Clayton Utz practice, David Fagan noted:

It is a very unique environment but even out of periods of difficulty, opportunities arise and you have to be there, nimble, looking for these opportunities.

Soon after these comments, the firm sacked several workers, cunningly implemented a pay freeze, and is rumoured to have asked several staff to take invountary leaves of absence.

In a huge week for Big 4 accounting screwups gossip, the Firm Spy can today reveal new rumours of discreet sackings, but this time at Ernst & Young.

This from an Ernst & Young spy today:

We made a big public cut earlier in the year but since then there have been many other departures w

A poorly timed laugh at an underhanded departure

hich have not been reported. The people I have spoken to who know people in other areas that have left have said these departures were mostly involuntary, despite the firm telling us differently. I can say that in my own group, we have also had a few who have gone in suspicious circumstances… A lot of my co-workers are now worried that if these gradual job losses continue, we might all go too.

Hmmm… this sounds familiar! Is the corporate world degenerating into a new day-time soap opera?

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Die Hard: coming soon to a mid-tier firm near you?

We revealed in May rumours of redundancies at Tresscox, a story later picked up, and confirmed by, other news media. The firm did not comment at the time on the full extent of the redundancies.

We received the following information from a Tresscox spy earlier in the week, revealing what the firm spokesperson neglected to mention:

… it is difficult to exaggerate how bad things are here right now. The redundancies that you reported in Melbourne, also occurred here Sydney and also Brisbane. That is, each of our offices was affected… Partner revenue is rumoured to have gotten to a point where salaried partners are presently earning more than equity partners…

If this rumour is true, it would affront recent claims that mid-tier firms are ‘less affected’ by the GFC.  Is this true?  (We don’t know.)  Is your firm feeling the GFC heat?

Send the Firm Spy your news and views!

I love sports, maybe I could be a sports commentator?

Disquiet is rumoured to have descended over Gadens’ PR and senior management in recent days over the way the firm, through its departing Chief Operations Officer, has responded to claims that secret-sackings had occurred.

At first instance, the firm line was that there had been some ‘comings and goings’, but this later matured to a more encouraging line that the firm was ‘hiring, not firing’.

The more recent comments were made by Chief Operating Officer Jon Denovan who, in the same article, was also at pains to identify that:

• he is leaving Gadens; and
• he wants a job in radio.

A Gadens spy had the following points to make about Denovan’s article:

…his comments will make the inevitable pay freeze look like a ridiculous ploy to increase partner yields, when I think the reality is that our work flows and revenue has decreased along with all the other major law firms.

Do you think it is appropriate for high-profile lawyers to use the media to spell out their imminent availability to future employers?

Send the Firm Spy your news and views!