find the latest legal job
Corporate Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Highly-respected, innovative and entrepreneurial Not-for-Profit · Competency based Board
View details
Chief Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Dynamic, high growth organisation · ASX listed market leader
View details
In-house Projects Lawyer | Renewables / Solar | 2-5 Years PQE
Category: Generalists - In House | Location: All Australia
· Help design the future · NASDAQ Listed
View details
Insurance Lawyer (3-5 PAE)
Category: Insurance and Superannuation Law | Location: Brisbane CBD & Inner Suburbs Brisbane QLD
· Dynamic organisation ·
View details
Legal Counsel
Category: Corporate and Commercial Law | Location: North Sydney NSW 2060
· 18 month fixed term contract · 3-5 years PQE with TMT exposure
View details
Who's sorry now? The GFC that wasn't

Who's sorry now? The GFC that wasn't

In the turmoil of the GFC, firms have rid themselves of precisely the people they're going to need in an upswing. Michael Bradley talks post-recessionary planning and how it all went wrong

As it becomes apparent that the GFC didn’t reallyhappen, or at least it didn’t really happen to law firms in Australia, there isa proliferation of articles dedicated to the topic of post-recessionary planning.

In particular, how to motivate staff, who’ve justspent 18 months on a salary freeze, in circumstances where they’ve probablynoticed by now that their employers didn’t actually suffer a fall inprofitability at all, to not express their disappointment by no longer turningup for work.

This is a tough one. Certainly there was a lot ofoverreacting going on last year, not that anyone should be criticised forthinking that things were going to be a lot worse than they turned out. We allgot that wrong. It’s how we planned for and reacted to it that matters.

How do law firms manage a downturn? Same as they domost things, in a very predictable way. Here’s the conventional approach:

1.     Give the finalyear law students, who have already received and accepted a graduate offer fornext year, a lesson in basic contract law by cancelling them. If you’re nice,sling them some money so they can go backpacking in Europe instead.

2.     Change theChristmas party from a masked ball at the Westin to a $40 a head limit for eachteam to go to the pub. And remove the free soap from the showers (true story).

3.     First round ofretrenchments – junior lawyers lacking patronage from influential partners.

4.     Second round ofretrenchments – some mid-level lawyers who weren’t going anywhere anyway.

5.     Third round – “voluntary”– some of the more expensive senior associates and everyone who works parttime.

6.     Fourth round -surplus admin staff. HR goes last.

After that, in a real recession, the partners wouldhave no choice but to turn on each other. That’s a genuine spectator sport.

What’s interesting is the order of priorities. Graduatesand juniors are always the first victims because it’s well known that they areunprofitable. And very replaceable, given the endless supply of new graduates.

However, it tends to be forgotten that today’sgraduate is the year after next’s two year-out lawyer, which we know is amythical beast for whom firms are willing to pay recruiters outrageous feeswhen things are good.

Therefore, what the firms have just done is to get ridof precisely the resource they’re most going to want, and find it hardest toacquire, when the market rebounds. While at the same time alienating everyonewho didn’t get sacked by asking them to wear (from their perspective) the wholecost of the GFC.

But what was the alternative? Loyalty? Actual, notjust notional, sharing of risk?  The partners (gasp) taking a pay cutthemselves? Or even accepting, as owners of a business, that part of thecapital risk of ownership in the real world is the possibility in bad times ofhaving to reinvest most or all of the profit back into the business itself?

You’re right, that’s crazy talk.  Better to cashout now, but then at least spare us the disingenuous hand-wringing about how toconvince the remaining employees that you valued them more than your parkingspace.

 

Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

Who's sorry now? The GFC that wasn't
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
LCA president Fiona McLeod SC
Aug 17 2017
Where social fault lines meet the justice gap in Aus
After just returning from a tour of the Northern Territory, LCA president Fiona McLeod SC speaks wit...
Marriage equality flag
Aug 17 2017
ALHR backs High Court challenge to marriage equality postal vote
Australian Lawyers for Human Rights (ALHR) has voiced its support for a constitutional challenge to ...
Give advice
Aug 17 2017
A-G issues advice on judiciary’s public presence
Commonwealth Attorney-General George Brandis QC has offered his advice on the public presence of jud...
APPOINTMENTS
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
opinion
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
Help
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...