Cyril Amarchand Mangaldas has announced internally that it would pay out by Diwali the 10% to 30% of fee-earners’ salaries that had been deferred since May 2020.
“Whilst the economic situation is challenging, the need for quality legal advice has increased manifold,” commented Cyril Amarchand Mangaldas managing partner Cyril Shroff.
“The first five months have surpassed our expectations and hence we decided to give some relief to our lawyers,” he added. “They have worked very hard.“
Up to 30% of fee-earners’ salaries (for those who earned more than Rs 25 lakh) had been held back but will now be paid out by Diwali of this year, around 14 November, the firm has announced. The development had first been reported Bar & Bench today.
Diwali bonus merged into 2021 payment, case-by-case increments, partners TBC
However, life is not completely back to business as usual at CAM: bonus payments - of which 30% is traditionally paid at CAM around Diwali time - would be deferred and merged into the upcoming March 2021 bonus payment, the firm had said.
Furthermore, while associates in non-Covid times usually automatically advance into higher pay bands of post-qualification experience (PQE) in years, this year the PQE bumps will be decided on a case by case basis, depending on individual interviews and performance appraisals with fee-earners.
We understand that no decision has yet been made regarding whether Cyril Amarchand Mangaldas equity partners - who had agreed to not draw profits this year - will be back to status quo, though we understand that it is being mulled over.
Benefits of foresight
In late April, Cyril Amarchand Mangaldas (CAM) had been first large Indian firm (after litigation firm Agarwal Law Associates) to hold back;; part of fee-earners’ salaries.
With the benefit of foresight, at the time we were facing the early days of a potentially catastrophic global pandemic and recession, and CAM aggressively battened down the hatches (facing some flack) hoping that taking early measures could hedge against more serious pain later on.
Around that time, David Morley, the former Allen & Overy global senior partner who had steered the firm through the 2007-08 financial crisis and recession, had written a widely-shared article in the UK's Legal Business magazine. His advice was sensible, if perhaps less emotional and more direct about such things than the Indian legal profession has been used to:
Few will have taken their current leadership role with any of this in mind. It’s natural to wish it wasn’t you having to take such painful steps. But there’s no-one else. That is a leader’s burden. Deal with it with decisiveness, openness and fairness in equal measures.
It is worth mentioning at this point that Morley also happens to be on Cyril Amarchand Mangaldas’s strategic advisory board, since 2017.
And hindsight: No size fits all
Even so, with the benefit of hindsight, even those early bearish projections were probably too bullish for the reality that we are now likely facing a domestic and global depression the likes of which has not been seen in a generation.
As such, while Cyril Amarchand Mangaldas’ decision to will be welcomed by fee-earners and will put some pressure on other firms’ management in the market to also loosen their restrictions and purse-strings, every firm has more or less taken its own decisions on how to deal with the pandemic.
Measures have included nearly everything from salaries or bonus freezes or reductions, to cuts for equity partners only, to deferrals of fresher starting dates, to no measures at all:
- L&L Partners - at least on the corporate side - has not made any cuts and paid out bonuses more or less on schedule as we had reported earlier today, though on the litigation side there have been 15-35% cuts in salaries,
- Khaitan & Co equity partners have taken a 20% haircut,
- Trilegal has reduced bonus payments slightly,
- Shardul Amarchand Mangaldas has deferred bonuses but kept fixed pay the same,,
- Talwar Thakore Associates (TTA) has frozen fee-earner salaries at last year's levels, and
- DSK cut partner pay by 10-30%.
Clearly very few firms believe they will emerge from this crisis unscathed and the worst is more than likely yet to come.
But the differing reactions also reflect two other things.
First, unlike foreign and international law firms, where firms in the same bracket such as the Magic Circle have similar finances and strategies, in India, no two firms are alike and each equity partnership or set of promoters have vastly differing reserves of cash, appetites for risk and client and work profiles.
Second: while many have strong suspicions, most clients don’t yet know exactly how bad things are going to get for their businesses; the same will go for law firm managing partners.
Photo by Nikkul
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(2) Pay attention in townhall? You might want to start the next townhall by starting off with no bonus / no increment, rather than doing the ground work for the first 40-45 minutes, and then dropping the bomb in the last 15-20 minutes. To be precise, the bomb was dropped exactly at 4:44 (+- 1 minute). Hows that for attention?
(3) Also, you shouldn't have mentioned "you guys" - because now I feel like asking around whether or not this 'no increment' was universal. Just kidding on this one. Its JSA, its in our DNA to not pull off stuff like this. Keep your drafting tight next time around.
(4) Got nothing against you [...] (or EPs). Totally cool with the narration in the townhall as well. Just dont patronize us.
(5) Go silent now, as long as you have benefit of doubt of being a troll. This is not your floor/ building/ office/ team call. This is an anonymous forum. Usual EP tantrums wont work here - you will get it all back with interest.
I'm a few years behind a CAM SA1
But it is a long term investment (no politics and I decide my own bonus!)
Both pending Dayzeros and those already recruited?
If for some strange reason, you are on the rolls and if you paid attention to what was explained (as opposed to dreaming about your entitlements while playing PUBG) - Salaries below a certain level are NOT affected. Entry level Associates were out of the purview of the pay cut. So there.
If you really want to survive at a firm then you got to focus and fire on all cylinders!!
But I think the essence of that was question related more to the recruitment/joining dates of the 2021 batch instead of their compensation.
So given that such a move by the firm clearly indicates that things had gotten better for them - can the 2021 batch expect decent/relatively normal day zero recruitments?
And the people who have already been recruited - can they expect to join in the normal timeframe?
(The donuts, of course, are just for you)
Generally, they have also announced (normal) increments and promotions (on time), and have paid off the arrears for increments for FY21.
Effectively they have paid out the entire amounts owed to fee earners for FY20 without any discount, and other than routine retainer payments, don't have any outstanding payments for FY21. Rather amazing.
Tons of brownie points for them. At this point in the year, fee earners have been paid the same that they would have in non-Covid years!
Seems like a good place to be rather than family runs who are not doing so well since I have read more travel jokes than about the firm itself recently !
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