Nishith Desai Associates (NDA) had circulated an internal email announcing a salary freeze for mid-level associates and above, due to the firm having experienced “stagnancy in the revenue growth for 2019”.
This effectively means that those beyond around three years of post-qualification experience (PQE), would not be receiving the customary pay-hike in accordance with their increase in PQE.
Furthermore, under a new bonus structure, bonuses would only be payable up to 12 months after the close of a financial year.
NDA operates a 1 January - 31 December financial year, and the majority of bonuses due from the 2018 calendar / financial year would have normally been expected to be paid to NDA lawyers by October 2019, under the previous policy, in-part subject to recovery of billings.
However, under the new policy announced in the email, these bonus payments would now arrive even later and be paid in “four equal monthly instalments” from 1 October 2019, meaning that the full 2018 bonus would effectively only be received by lawyers on 1 January 2020.
Bonuses would only be paid on each date if lawyers were “not serving notice period” on that date, according to the email.
The email was used as a call to action for lawyers, stating: “In 2019 we are left with 7 months to improve the revenue. We need to work extremely hard, smart and in a disciplined way. We have to arrest the downward trend. Bringing more business to the firm has become imperative.”
The email also noted that 20% of salary would be linked to “critical processes” in order to “weed out our inefficiencies and discounts” - presumably this is referring to chasing up bills in a timely manner and not writing off fees unnecessarily.
Last year, Shardul Amarchand Mangaldas attracted criticism from fee-earners after rolling out a policy to claw back three months of salary in if leaving the firm for a rival. The firm rolled back the policy several days after we had reported it.
Firm would prefer assuring bumper bonuses
Managing partner Nishith Desai commented when contacted: “Even though we have frozen salaries, people are also assured of the same bumper bonus next year. Instead of giving 10-20% salary increase we would prefer to assure bonuses of over 60% and going upto 113% and even more.”
While we have not been able to authoritatively confirm the size of bonuses at NDA, we understand that especially at the senior level, the firm does pay bonuses above typical market rates.
Desai added: “As Venture Capitalists do, we like people who are risk takers. We invest almost 40% time and at times about 50% of the profit in in research, academic and innovation. We give up huge amount of billable time in daily continuing education. This year we are taking our entire firm to Estonia to study technology driven country. We just don’t pay people, we invest in them too.
“We have moved to dynamic compensation model which is open, transparent, fair and equitable. At the start of the year everyone has clear idea how would they be judged at the end of the year. Our sophisticated software informs everyone every month the data on how they are performing and guided by leaders and mentors so that they do better and better every month.
“Sometimes revenues slow down because in the first part of the year we may have spent disproportionately more time on research , training or even social work on pro bono basis. We are not purely money minded law firm. We may make up in the coming 7 months but in the meanwhile every one has to be patient. We swim together.
“We still believe, we are in the profession of law and not in the business of law. That’s our philosophy and that’s our culture.”
The internal email
The email circulated internally to NDA fee-earners read:
The bonus payment for 2018 will be paid in four equal monthly instalments starting from October 1, 2019. This amount shall be payable subject to your continued employment with the firm and you not serving notice period on the date the amount is paid.
We have received stagnancy in the revenue growth for 2019. therefore to have a good bonus pool at the end of the year and to reward firm members based on performance we are not increasing the salary of firm members for the current year, we believe this will result in higher bonus for better performance in the coming year.
In 2019 we are left with 7 months to improve the revenue. We need to work extremely hard, smart and in a disciplined way. We have to arrest the downward trend. Bringing more business to the firm has become imperative. It is our moto (sic) to deliver highest quality work in shortest possible time and that’s the best way to capture premium billing.
Certain processes are critical to the existence of the firm. They must be followed to weed out our inefficiencies and discounts. Even after repeated requests, members have not been following these critical processes resulting in serious loss of revenue and increased risk on the firm. Hence, going forward 20% of the current salary shall be linked to some of these compliances on a monthly basis. Others will be factored into half yearly or annual performance.
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A firm like NDA probably 150-180 (this is again very conservative for this year).
NDA sounds as though it needs a more efficient billing and recovery team.
A mark of a good lawyer (deal lawyer) is not how deep his/her understanding of law is, but to make deals happen, while understanding the risks/ reward the parties in a deal are expecting. [...] failing to understand the bigger picture of making things happen, can clearly see how that 50% time in research is counterintutive. From my experience, [...] or probably haven't seen much of NDA. I'm sure I'll get letters for this.
Thanks!
IF THIS IS THE CASE, THEY ARE NOT STAGNATING BUT RATHER THEY ARE SUPERSTARS. Better estimate of revenue would be 75-100cr maximum
And then he has the guts to say,"We are not purely money minded law firm"
Firm grows from 110cr to 170crore in 2018, barely out of 70 people, Nishith makes north of 100crore, then he looks at 2019 and says why again in 2019 I’m not growing 40%, so decided it’s stagnation. and here’s what people get
- no salary hike, but still 5 - 10% hold back on salary so he gets to keep the money longer
- 35% + lost to tax (sorry no tax incentives available)
- never has he paid full bonus - so if firm collects less than all that was billed ;-)
- and he pays the bonus of 2018 in 2020!!
Truly, they don’t work for money in NDA...
Lastly, this is not just a pattern, but a pattern of disrespect and inappropriate behaviour.
What an irony that it is called NDA!
Compared to NDA and the number of articles, commentary, workshops, webinars they have, other firms, esp the so-called 'top tier' firms' efforts are mere tokenism, and the less said the better.
And for reasons which are not clear -- but intense money-making is a plausible explanation -- we hardly have top senior counsel writing on legal topics in publications freely accessible to all. Unlike how their counterparts, senior barristers (QCs), contribute to legal learning in England.
Keep up the good work, NDA. More power to you!
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