find the latest legal job
Corporate/Commercial Lawyers (2-5 years PAE)
Category: Corporate and Commercial Law | Location: Adelaide SA 5000
· Specialist commercial law firm · Long-term career progression
View details
Graduate Lawyer / Up to 1.5 yr PAE Lawyer
Category: Personal Injury Law | Location: Brisbane CBD & Inner Suburbs Brisbane QLD
· Mentoring Opportunity in Regional QLD · Personal Injury Law
View details
Corporate and Commercial Partner
Category: Corporate and Commercial Law | Location: Adelaide SA 5000
· Full time · Join a leading Adelaide commercial law firm
View details
In-house Legal Counsel & Commercial Lawyers
Category: Corporate and Commercial Law | Location: All Sydney NSW
· Providing lawyers with flexibility and control over when they work, how they work and who they work for.
View details
In-house Legal Counsel & Commercial Lawyers
Category: Corporate and Commercial Law | Location: All Melbourne VIC
· Providing lawyers with flexibility and control over when they work, how they work and who they work for.
View details
Pay cuts boom as firms avoid redundancies

Pay cuts boom as firms avoid redundancies

Pay cuts have replaced layoffs as the money saver de rigeur for law firms.

PAY cuts have replaced layoffs as the money saver de rigeur for law firms. 

Cuts in compensation are "more widespread now than in past recessions," John Challenger, chief executive of outplacement firm Challenger, Gray & Christmas Inc, which tracks employment trends, told The Wall Street Journal this week. 

But a Sydney-based law firm CEO warns firms should carefully analyse firm culture and structure before radically cutting pay to save money ahead of the half-year salary reviews. 

"If your culture is a high profit, high performance firm then your people may be more aligned with the concept of a direct correlation between their budget achievement and their salary," Bronwyn Pott, CEO of Swaab Attorneys, told The New Lawyer.

"By the same token, your staff could be a bit miffed if partners were taking super profits as recently as last year, and now that things have turned, the staff that contributed to those profits are being asked to share the pain," she said.

Law firms globally have been experimenting with ways to cut costs. From the four day working weeks implemented by UK firms Norton Rose, Mills & Reeve and Charles Russell, to the mass redundancies implemented by a number of Australian law firms, including Blake Dawson, Minter Ellison, Deacons and Corrs Chambers Westgarth, firms are making efforts to overhaul the balance sheets in the global downturn. 

Other firms have announced pay freezes, which many lawyers have expected amidst a global downturn anyway. Mallesons Stephen Jaques, Corrs, Clayton Utz, Allens Arthur Robinson and Freehills have all confirmed lawyers would not be handed pay rises in this next pay revue. 

But when it comes to the choice between redundancies and pay cuts, firms are now choosing the latter in the hope that it will better position the firm for when the economy picks up again. 

But challenges exist in asking staff to take a pay cut, said Pott. She argues that a blanket cut should not be considered. "The challenge around asking staff to take a pay cut across the board is that not all areas of firm are quiet. Some are very busy, [including] insolvency, litigation, infrastructure," she said. 

"Others have fallen off a cliff, [including] securitised lending, and professional staff can't necessarily transfer between the two easily."

Firms need to balance keeping lawyers on with the problem that they may have no work to do. Before cutting salaries and making redundancies, firms should look at offering retraining, said Pott. 

"One of the biggest challenges you have is keeping your professional staff engaged. No one wants to sit around with nothing to do. If there is genuinely no work and you have exhausted all the options of offering early sabbaticals, asking staff to take leave, then your only option (apart from redundancy) is to ask staff if they are interested in retraining," she said. 

She acknowledges, however, that when a principal area of law has disappeared, and the rest of the firm is down on targets, "there may not be the revenue to invest in that level of support". 



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

Pay cuts boom as firms avoid redundancies
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
Dec 11 2017
Warm welcome for new district court judges
Three practitioners who were appointed as district court judges in WA have been congratulated by ...
Lawyers welcome same-sex marriage reform
Dec 11 2017
Lawyers welcome same-sex marriage reform
Australian lawyers have welcomed the recent legalisation of same-sex marriage, after a prolonged nat...
Senate disallows double standards for temporary visa holders
Dec 8 2017
Senate disallows double standards for temporary visa holders
Lawyers have welcomed the Senate’s rejection of regulations imposing strict penalties on temporary...
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 & ...