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Blog Name: Matthew's blog

Why US firms should spank the Magic Circle at grad rec.
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6
19 March 2015
Freshfields has announced that it is making up 17 partners in May. Only three of them are in London. Only two of those trained at the firm.

Freshfields has long abandoned the "partners of the future" mantra that most firms trot out in their grad rec literature. It is quite open about its offering: top work, top brand, top training, top cash, very slender prospects. But two trainees making the cut out of around 110? That's slender to the point of invisibility.

The Magic Circle was traditionally the top choice for ambitious, bright graduates. US firms might pay more but they didn't offer the gilt-edged brand, the stability or the long term career prospects. Grads were warned that partnership at the City outpost of a US firm was just a pipe-dream and that trigger-happy yanks cheerfully sacked their staff in droves.

This all changed when the Magic Circle broke its pact with its associates in the recession and made hundreds of them redundant. If the market dips you're now at risk regardless of your employer. The top deals are global in nature, and much of the money funding them is coming out of America. This is why Latham added $228m to its revenues last year and saw its profits grow by 16%. Is the quality of work being done at Skadden any lower than at Clifford Chance? In a global market, are Cravath or Cleary inferior brands to have on your CV than Linklaters or A&O?

    If you're going to be beasted, you might as well be paid.

Yes, hours at US firms are incredibly hard. But tip up at any Magic Circle firm at 2am tomorrow and you'll see plenty of lights on. Freshfields pays its NQs £67,500. Weil pays £95,000. Weil also promises similar if not better partnership prospects. And it offers, as do all the major US firms, a viable alternative to partnership in the shape of counsel - a long term career move that pays more than many partners at UK firms take home. Freshfields has an up or out policy. And for 98% of its trainees, that's "out".

Rather like once-fashionable restaurants that rely on out-of-date guidebooks, some of the smarter City firms trade on the fact that graduates look at the market retrospectively. The reality is that they offer brand, work, security, hours and prospects that are at best on a par with the top US firms. And for much, much less money. Over time the top talent must start to realise this.


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The end of an age for Freshfields?
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3
12 March 2015
Freshfields is considering outsourcing a mass of support staff to new offices in Manchester. The press is claiming 800 jobs are on the line. The firm denies this, but whatever the figure there will clearly be a significant number of redundancies if the project goes ahead.

Freshfields isn't the first firm to look at this sort of venture, but it's a surprise. It was the only Magic Circle firm not to make any job losses in the credit crunch (bar what it described as a small amount of "readjustment" in real estate). In fact the firm reckoned it was the only sizeable institution throughout the City never to have entered into a redundancy round. Since 1743. That's some boast.

The firm's partnership structure was given as the reason for this benign paternalism. Decisions which made little sense when looked at on a balance sheet would be taken anyway because they were the right thing to do. Corporates with institutional shareholders can't do this. Partnerships can. It is Dickensian enough still to have messengers in its Fleet Street offices. That can't stack up economically. Any other institution would make them redundant and make more use of CitySprint. Freshfields keeps them on and simply doesn't replace them when they retire. It's a stylish way to behave. The cost to a business that pays its partners £1.4m a year each is de minimis.

This culture is one of the reasons why, despite working its lawyers like Spanish donkeys, the firm came top of the Magic Circle in our 2014 Firm of the Year survey with 70% overall. This year it was second from bottom with 62%. I know where the smart money will be on its placing in 2016 if Manchester goes ahead and redundancies start to bite.

    A Spanish donkey yesterday

Of course the firm is a business, not a charity, it has to remain competitive. But it is already more than competitive. It is massively profitable. These profits are generated because the firm is a class act - it provides top drawer advice by hiring top drawer people and looking after them. It can charge accordingly.

It's not mere sentimentality to rue the erosion of a culture that has been carefully built up over more than 250 years. I'm not sure it will be appreciated by clients. A General Counsel who earns in a year what a Freshfields' partner makes in a month is unlikely to be delighted at news of swingeing redundancies and a massive relocation project just so his lawyers can buy even bigger watches. Unless he or she is going to experience an increase in delivery or a decrease in fees. Neither of which seems very likely.

Improvements in technology and communications enable lawyers to work on endless deals in quick succession with barely any time to breathe. Services which had to be on site can now be anywhere in the world. This has made a lot of firms very rich. But the relentless pursuit of ever increasing profits risks knocking the legs out from under the profession, and if Freshfields takes the axe to hundreds of staff for the first time in its history it'll be yet another kick.

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Will the SRA abandoning the code make any difference?
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0
05 March 2015
The SRA has, for reasons known only to itself, decided to withdraw from the voluntary code governing the recruitment of trainees. There will now be far less pressure on law firms to sign up to it themselves and grad rec partners are warning of dire consequences.

Technically there'll be nothing to stop a firm from hiring a student before he or she even tips up at university. There are grim predictions as to the impact this will have on diversity. Rich kids from the most academic public schools with a clutch of top grades and a place at Oxbridge are more likely to be the recipients of offers than poor kids from state schools with average A levels and a place at a former polytechnic. And how does hiring immature candidates several years before they'll start work benefit the profession?

The answer is that it doesn't, which is why it's not going to happen. At least not in any meaningful numbers.

I'm not aware of banks or hedge funds having a similar code, but they don't hang around the gates of Westminster or Winchester waving contracts at sixth formers. They all fill their grad rec schemes from students in their final year at university who have proven academic records. The Etonian with top grades at school may have developed too much of a fondness for Columbian marching powder and flunked his exams. The kid with crappy grades who's the first person in his family to go to uni may have blossomed and be on his way to a first. They'll be older and have a better understanding of what they want to do for a living. And the banks will also have a better handle on the likely state of the market in a few months as opposed to in a few years, and will be able to recruit appropriately.

There will always be some law firms who'll try for an unfair advantage. Some US firms already offer places to star second year students in order to snap them up before the Magic Circle has a chance. There'll be a bit more of this. But it makes no sense for any of the large employers to go down this route.

    "Oh cheer up, you're still waiting to hear from Skadden."

If Linklaters announces that it will start hiring first or second year students, all of its competitors will follow suit in a matter of days. Remember back in 1998 when Clifford Chance upped its NQ salaries to £50k and every City firm had no choice but to match it? Linklaters' competitive advantage would be lost immediately. However it would, along with all the other firms, find itself in a worse position. Committing to employing large numbers of students who still have to go through another two or three years of university and then up to two years of law school is lunacy. Particularly if those students start expecting their university tuition fees to be paid. Firms would simply end up with riskier candidates, bigger bills and a bigger bet on the future state of the market. So they won't do it.

Which is not to say that nothing will change. At the moment the code says that candidates can hold an offer for four weeks. I've heard of some firms offering contracts that expire after 24 hours, and incidents of  this will surely increase. Exceptional second year students who impress on vac schemes may well be offered jobs early. But this already happens, albeit often unofficially.

Ultimately the free hand of the market will do its thing and this will work itself out, just as it has in every other sector. But there'll be uncertainty, discord and a fair bit of pain while it gets there, and the SRA should be hanging its head in shame for abandoning the code without even consulting with the profession.


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Exclusive: SRA abandons voluntary code
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0
04 March 2015
RollOnFriday can confirm that the SRA has withdrawn from the voluntary grad rec code. 

Currently law firms agree only to offer training contracts to law students in their second year and non law students in their third. Now that the SRA has abandoned this expect a free for all with the Magic Circle bickering over Tarquin from Westminster as soon as he has his straight A stars and a place at Christchurch confirmed. This can't be good for anyone. Except, of course, for Tarquin.

This is one of the biggest changes to hit the profession in decades. Law firms are currently being consulted on the wider impact so more to follow. Read all the details on Friday.  .... read more >
Fifty shades of grey - how not to do it
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-1
26 February 2015
Spotted on the tube the other day:

     

Given that he was on the Central Line rather than tied to a four poster, his likely form of masochism was presumably savouring the scent of his neighbour's disgusting fried chicken snack rather than Jo Malone body oil. Or being smacked in the face by an overweight German's backpack rather than on the arse by a leather paddle.

Takes all sorts.

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Things getting tough? The SBA can help you
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4
10 February 2015
The profession's charity is the Solicitors' Benevolent Association. If you haven't heard of it please check it out. It's your charity - there to help solicitors and their families who find themselves in harship.

The Chairman wrote a letter to the Gazette this week reminding the profession that the charity is more relevant than ever given the number of lawyers facing redundancy or shorter hours. As he points out, its mission is to ensure that no solicitor should be unsupported in times of need or crisis. If things are going south for you then call and see if they can help. 020 8675 6440.
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Best name badge ever
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3
22 January 2015
Spotted at Pret a Manger on Fleet Street this morning:

     

And he made a cracking flat white too.
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Official - Rwanda more business-friendly than Italy
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0
09 January 2015
The Economist points out that the World Bank now rates Rwanda as a better place to do business than Italy.

Sure, Rwanda has had a massive reversal of fortunes over the last few years. But it's still trying to get over its horrific genocide and civil war, and two thirds of its population live beneath the poverty line. How can this be a more business-friendly country than Italy, a G8 nation, the inventor of modern banking and the artistic and musical capital of the world?

    What could possibly have caused this to happen?

All self-respecting Italians should hang their heads in shame.


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Exclusive: Maclay Murray & Spens secretary tells top client to f*ck off
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1
08 December 2014
A secretary at Maclay Murray & Spens' Glasgow office is likely to find herself without a job after sending a foul mouthed letter to a top client.

The secretary worked for a partner in the firm's Private Client department, and has apparently been at the firm for nearly 30 years. So she should probably have known better than to end her missive with "I hope you're OK (but we don't really give a f*ck)".

Needless to say it wasn't asterisked, the client complained and the secretary is now facing dismissal.

    Some MMS secretaries yesterday

The reason for the outburst is unknown. Maybe the office held an early Christmas lunch and the Tennent's got the better of her. Or maybe she was just having a really bad day. Whatever the explanation, the firm is embarrassed, the client is furious and the secretary is facing Christmas without a job. Always think before pressing "send"...

A spokesman for the firm said "the matter is subject to an ongoing disciplinary process and it would, therefore, be inappropriate to comment any further".


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Citibank lawyers - buy a raffle ticket, win a Tuscan villa
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2
20 November 2014
In-house lawyers at Citibank in London are funding their Christmas party by raffling their holiday homes.

The legal and compliance team at Citi holds a raffle every year. Half the money raised goes towards its bash and the other half goes to charity. All jolly good, it's a very worthy cause, and team members have found it in their hearts to donate four luxury villas.

At least one of the homes belongs to a senior honcho in the group - a villa in Chamonix is apparently named after the managing director who owns it. Now that's tasteful. But some of them are owned by more junior lawyers (or, presumably, their families), and one property in Tuscany is understood to belong to the office manager. In-house at a bank is clearly the way to go...

    The weekend bolthole of Citi's outdoor clerk

It's extremely classy of the lawyers at Citi to offer up their homes. A snap poll at RoF Towers came up with offers of an old phone charger and some rugby-themed sweets originally sent in by Clifford Chance. Even back in the day when I was at a law firm we'd generally get a few bottles of wine, re-gifted bubble bath and paperbacks. Maybe a partner would donate a day's golf or some theatre tickets. But a week in his villa in Chianti? A week in four villas? Not a chance.


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