Following yesterday’s post profiling the Mallesons voluntary redundancy program, we received these comments from an anonymous Mallesons spy:

…for a few hours this morning the entire productivity of the firm [Mallesons] came to a screeching halt as all employees - well, at least those still with us - scoured the intranet searching for the names who ‘left the firm on 23 September’. This information was online for a few hours, before being shut-down… I personally counted over 150 employees in this time but I understand that not all those who have taken the VRP have left yet, so presumably the figure across the firm is closer to 200…

If this is true, Mallesons’ workforce will have shrunk from a total of 1,842 to 1,642 - a loss of 11%.  To put the gravity of this loss in perspective, Mallesons reported a reduction of 5% of its headcount between July 2008 and July 2009 - ie before the voluntary redundancies were finalised. In the same period, Mallesons revenue rose by 1.5% - not a bad performance given its a considerably smaller workforce.

However, according to our calculations (and based on the comments above, the veracity of which we are uncertain), Mallesons’ workforce will now have shrunk from a total of 1,936 to 1,642 in 15 months; a loss of 16%. If this figure is correct, Mallesons now has less employees than its two nearest competitors in terms of revenue (196 less than Minter Ellison and 112 less than Freehills - or 11% and 5% less respectively). Yet Mallesons reported revenue that was $58,000,000.00 higher than these competitors in 2008/09.

If Mallesons reports higher revenue in 2009/2010, and its charge-out rates remain steady, it will mean (according to our rudimentary calculations) that lawyers at the firm will have worked on average 10%-13% harder than in 2007/08 (boom times).

Did 75 billable units just become 85?

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You’ll recall the announcement on July 30 that Mallesons was calling on employees to volunteer for redundancies. That announcement was accompanied by a categorical statement from Chief Executive Warlock Partner Robert Milliner that “despite contradictory reports”, the market for legal services would “remain subdued” into the future.

Those “contradictory reports” appear to have been the comments from an impertinent little hobbit going by the name of Glenn Stevens that the economy was getting better. Stevens also happens to be Governor of the RBA.

We subsequently received comments from an anonymous source that such was the incredible popularity of the voluntary redundancy scheme that the firm in fact had to reject many applications.

A sign that even the relevant employees could see an economic uptick and an easing job market, perhaps?

The AFR reported last Friday that the redundancy scheme affected “about 110 staff, or 5% of the workforce”. That estimate seems dubious, however, when considering the following anonymous comments we received from a Mallesons spy yesterday:

Dear Mr Firm Spy,

I’m one of the Mallies employees who took the VRP [voluntary redundancy package] and I thought that because I have enjoyed reading you so much over the last few months I would give you an insight into the state of affairs here in the Melbourne office.

….there has been much speculation about the number of employees who have taken the VRP but until today, everything has been kept completely confidential. Tomorrow everyone will be able to check the intranet to see who has left… Approximately 65 employees (over 10%) in the Melbourne office  took the VRP… many of my colleagues who … chose to stay on are now worried that there wont be enough people left to handle all the work coming in…

With all this rumoured work coming in, is this a case of cutting too deep, too late?

David Fagan, the chief executive partner at Clayton Utz, would certainly say yes. Fagan told the AFR last Friday:

Over the last few months we have seen a significant increase in activity across the firm and we are optimistic about the outlook heading into 2010.

At the same time, our favorite necromancer Mallesons spokesman Robert Milliner said:

Now is perhaps the least productive time as you wait for the market to improve and clients are more cost conscious.

Hmmm - Milliner the “bear” and Fagan the “bull” - surprising that the partners have such a divergence of opinion when senior equity partners at both Clayton Utz and Mallesons are reported to have taken home the same wage of between $1,400,000.00 and $1,600,000.00. Both firms also reported fantastic increases in overall revenue.

This begs the question, why would Mallesons chief executive soothsayer partner Milliner give such a comparatively pessimistic opinion on the state of the Australian legal market? John Weber CEP of Minter Ellison is ‘cautiously optimistic’ about the next financial year (AFR 18/09), while Freehills CEP Gavin Bell ‘said there were increasing signs of confidence in the market’ (AFR 18/09). But what of Mallesons’ Milliner? Is he trying to sell his voluntary redundancy scheme to the media?

Finding the answer to this cryptic puzzle is made easier by other comments quoted in the same AFR (18/09) article where Milliner says:

Law firms always lag the market into recession.

Always? Has Mr Milliner established a behavioural pattern out of the two or three recessions that the world has experienced in the last 100 years? Was the corporate duplex of Gandalf there on Black Tuesday in 1929 when The Great Depression kicked off? Was he was there in 1981 and 1990 too? Or, like his immortal middle-earthman brother Gandalf the Grey, has Gandalf the Corporate actually been deathless for thousands of years? If so, one imagines that Milliner would cultivate a formidable appreciation of economic patterns, and perhaps we shouldn’t doubt his bold assertions about recessional behavioural patterns.

But the similarities with Gandalf certainly do not stop at this incredible longevity.

On Gandalf’s wikipedia-page for example, a quote direct from J.R.R Tolkien describes our favourite wizard as:

the last to appear in middle-earth who … seemed the least, less tall than the others, and in looks more aged, grey-haired and grey-clad, and leaning on a staff”

Yes, even the great wizard leans on staff! And If the comments from the anonymous Mallesons spy above are true, the few of remaining staff will doubtless be leaned on increasingly by Gandalf the Corporate in the weeks and months ahead.

Shall we call those left behind The Fellowship of the Very Hard-Working?

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We reported in July the news that Australia’s leading economist wizard law firm partner, Mallesons’ Robert Milliner, had looked into his crystal ball, consulted with the spirit world, and decided that the time was right for a voluntary redundancy scheme.

We later reported the rumour that Mallesons staff were unhappy with the size of the voluntary package. Like Elton John, we thought that Mallesons staff would therefore say goodbye to the yellow brick road out of the office.

Well, not so!

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

… the voluntary redundancy package announced by Mallesons Stephen Jaques was taken up by many staff. When i say ‘many’, I mean more than the firm cared to lose… Although we haven’t been told who took it or how many took it in total, we have been told that many staff who applied for the package but were rejected.

You’ll recall that Robert Milliner announced that Mallesons had hoped to shed 5% of staff with the scheme. Presumably this means that if the above rumour from our anonymous spy is true, more than 5% applied to be made redundant. According to the BRW Top 500 Private Companies list, Mallesons has 1,842 employees and if 5% applied and were accepted, this means the firm will lose 92 employees.

If our calculations are correct and Mallesons loses 92 employees it will mean that the firm now has less employees than its nearest national competitor in terms of revenue - Minter Ellison - and a paltry 4 employees more then Freehills. Yet compared with Minters and Freehills, Mallesons can boast revenue that is higher by $59,000,000.00. Mallesons also has the fewest partners among these firms: Minters has 297; Freehills has 212; and Mallesons has 191.

Less partners + less employees + higher revenue = (you guessed it!) higher partner profit!

Will Robert treat himself to a new cape? Send the Firm Spy your news and views!

Last week the Firm Spy contacted the genial AAR spokesman Chris Fogarty in the hope of getting a comment on rumours we have heard that the Allens partnership is presently deliberating over a massive firm-wide involuntary redundancy scheme.

Yes, a new wave of layoffs in addition to the massive voluntary redundancy programme in which 114 Allens Arthur Robinson employees apparently left the firm!

It didn’t come as a huge surprise that Fogarty first demanded we reveal our identities, before launching into a homily that the Firm Spy is cowardly for hiding behind the shield of anonymity, and then finally refused to even consider our request for comment. We invited Chris to send us his thoughts via email and promised to publish them, but we haven’t heard anything yet.

On the weekend, we received the following comments from an anonymous spy:

I wonder if AAR would care to confirm the rumours that firm management told staff last week that they are currently carrying 100 too many lawyers…does this mean that despite “double digit” growth another round of redundancies is likely?????

Good question! Last financial year AAR boasted 3.8% growth in revenue, which apparently translated to double digit growth in partner profits. For the mathematically challenged, this means that if a fictitious partner earned $1,500,000.00 in 2008, they would receive $1,650,000.00 as a minimum in 2009 (10% growth).

Count the zeros! That’s a mother lode of cash … in the middle of the worst financial crisis in history!

Hardly the sort of financial woes that would justify a second wave of redundancies, we would have thought. And yet, like the anonymous source quoted above, we have heard similar rumours from other AAR spies in recent days. We invite Chris and the partnership to confirm these rumours.

If true, is it time Allens staff considered striking? Send the Firm Spy your news and views!

[ED: since publication we have been helpfully informed that Mr Fogarty is not a partner of AAR, but a spokesman for the firm.]

AFR legal affairs editor Alex Boxsell and deputy legal affairs editor Rachel Nickless, both excellent journalists, reported the following on 31/7:

Clayton Utz and Freehills are now in an exclusive club of two - being the only large national law firms

Clayton Utz "Chivas Regal"

yet to introduce formal redundancy programs following the announcement this week of Mallesons’ voluntary redundancy program.

We will report on the accuracy of this comment in relation to Freehills later in the week, but so far as Clayton Utz is concerned, well, the Firm Spy thinks that the firm is shredding splitting hairs.

Moreover, we first reported in February the claim that Clayton Utz had made 9 lawyers redundant from its Sydney practice. Then, in July, we reported the allegation that Clutz had ‘cut at least 5 grads and denied 1 grad a LOA’. No redundancy program?

Later in the AFR article, the following is noted:

Clayton Utz Chief Executive David Fagan said the firm was neither planning nor has had a firm-wide redundancy program, although last month he said 13 lawyers and a handful of support staff had been let go through the course of the economic downturn.

In terms of redundancies that we’re aware of, assuming the rumours we have heard are correct, Clayton Utz has sacked at least 27 lawyers, sacked a “handful” of support staff (let’s say 10), and denied 1 grad a leave of absence. That’s 38 workers! When Minter Ellison shed 34 staff there was a media announcement. When Corrs laid off over 20 (approx) staff there was an announcement. When Blake Dawson sacked 89 staff there was an announcement.

At what point do tranches of redundancies become a coordinated scheme, rather than an uncoordinated Clutz ad hoc sacking spree? How many sackings warrant an announcement? We invite your comments below.

To add insult to injury, the following is noted in the AFR article:

Mr Fagan said the secret to Clayton Utz’s success had been the spread of work among litigation…government and major projects, which had compensated for the reduction in corporate work. Revenue at Clayton Utz was up $23million in the 2009 financial year and ‘…certainly the signs for the new financial year are quite promising,’ Mr Fagan said.

This sounds like the sort of claytons ‘downturn’ that warrants employee redundancies, not to mention a firm-wide pay freeze and involuntary leaves of absence. Non-alcoholic beverage, anyone?

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In response to our report last week that Mallesons Sorcerer Partner Robert Milliner is apparently thrusting

objectionably low voluntary redundancy packages under the noses of anxious staff, we received the following comments from an anonymous source:

Better than DLA Phillips Fox. They pay less than 2 weeks per year of service plus notice.

Does this mean that DLA Phillips Fox also has a voluntary redundancy scheme in place? If it does, this is the first we have heard of it! More likely is that these terms (if true) are part of either wave one or wave two of the involuntary redundancies announced by DLA Phillips Fox over the last few months.

More to the point, what are the redundancy packages that are being offered at your firm? Please take the time to send us details, anonymously if you so choose.

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Mallesons Stephen Jaques is reported to have yesterday announced a voluntary redundancy scheme open to all employees. The firm apparently hopes to shed an incredible 5% of staff with the scheme.

More interesting however, is the apparent ascension of Mallesons Chief Executive Partner Robert Milliner to the throne of Australia’s leading economist. In commenting on the announced scheme, Milliner stated matter-of-factly:

The work today is not evenly spread over all practice areas and centres and the economic outlook, despite contradictory reports, is set to remain subdued with flatter conditions in the legal market.

Those ‘contradictory reports’ are presumably the comments yesterday of Reserve Bank of Australia Governor Glenn Stevens, whose speech was regarded as being so positive, that commentators considered it the cause of a major lift in domestic markets.

But forget the RBA, Robert Milliner can see the future! A modern-day Gandalf-the-Grey, if you will.

Note to Robert: do not open a wizardry practice in Africa.

Will the Firm Spy receive rumours of involuntariness of in the Mallesons ‘voluntary’ redundancy scheme? Send the Firm Spy your news and views!

The orignial MILF, Mrs Robinson was the lead character in The Graduate:

a film that enshrined her for all time as the Sexy Older Woman… the seducer of a generation.

While we wouldn’t care to sully her cinematic legacy, or the associated chart-topping song, it seems that a real life Robinson is apparently seducing audiences even today, though in different ways. So here’s to you, Allens Arthur Robinson!

We have previously reported, on three separate occasions, rumours contradicting the firm-line that the recent Allens Arthur Robinson redundancies were 100% voluntary.

We received the following anonymous comments further contradicting the firm-line from an AAR spy earlier in the week:

The firm has a project running called ‘project overflow’ which involves the thinning out of the ranks, outsourcing roles that are not need [sic] and accessing external pools. This spie [sic] hears that the partners are only concerned with who will get their lunch and coffee now!

Again, the Firm Spy cannot confirm these allegations, but there is at least one precedent for a Robinson who has ‘mixed seductive a potion’. Are you seduced?

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We received two emails last week from Allens spies who insisted that some of the 114 people populating The List (voluntary redundancies) emailed by Michael Rose around the firm on Thursday were in fact given a bit of a nudge. Allens partner Chris Fogarty, the same guy who inadvertently revealed the bizarre nature of Allens’ graduate advertising, offered the following response to our report:

No one was tapped on the shoulder and asked to go, Mr Fogarty said, and the program, launched in April, was “100 per cent voluntary”. “I think it’s pretty insulting to the people who have taken redundancy,” Mr Fogarty said of suggestions — published anonymously on a website — that some staff had been pushed to leave the firm.

On the same day of the above report, we received the following comments from an AAR spy:

those rumours are totally correct..at performance review a number of people have been told they are “better off” applying for voluntary redundancy. I have also heard that the firm has put law grads on a one year “contract” as well as given most people a worse performance review this year (thus no bonus)

Who do you believe?  Three anonymous AAR spies, or a member of a partnership which has instigated a pay freeze, cancelled the Christmas party and, as reported in AFR (3/7), enjoyed … ahem … DOUBLE DIGIT GROWTH in profits?  Send the Firm Spy your news and views!

We exclusively reported on Monday ‘the rife speculation’ that some of the staff named by Allens Arthur Robinson as having voluntarily accepted a redundancy were forced into that decision by the firm.

In response to that post, we received the following comments:

absolutely true, couple of senior associates were put on gardening leave and then mysteriously their offices were clear of their personal effects and next thing you know, they are on ‘the list’.

We obviously cannot confirm whether these rumours are accurate; however, if true, it would be a fantastic way of reducing head-count, maintaining partner profits, and quarantining the firm from the deleterious media coverage associated with involuntary redundancies. Of course, added to that, such a programme would have the upside that any involuntarily redundant employees could inform co-workers and future employers that the decision was their own.

We understand that by potentially exposing such a scheme (note: we do not know whether there is a scheme), there is a risk that the involuntarily redundant workers might lose this ‘upside’. But is it fair that the ‘rife speculation’ be directed at those who truly volunteered?

If you volunteered in a voluntary redundancy scheme that was in truth constituted by several involuntarily redundant workers, would you feel like you should be reimbursed your nightclub entry fee? Send the Firm Spy your news and views!