Shardul Amarchand Mangaldas has relaxed its earlier controversial policy under which it could claw back up to three months’ remuneration from fee-earners, clarifying that only the difference between standard remuneration and “enhanced” remuneration over three months would be “returnable” (and only if lawyers join a rival law firm).
In the words of an email sent by the firm to lawyers today, “the claw back only applies to the special fee enhancement and not the total annual fee”.
Or, in case that’s not clear, in yet other words: lawyers would just be liable to repay an amount equivalent to three months’ of the base pay hike itself.
This would significantly reduce the amount theoretically re-payable by leaving lawyers to very little, as the amended policy would likely also exclude the potentially much larger variable or bonus payment and would only consist of the difference between the standard monthly base pay and the so-called one-time “special fee enhancement” to base pay.
It is understood that for the period from 1 September 2018 to 1 April 2019, monthly base retainer pay was “enhanced” by amounts from around 10% upwards, while the variable annual bonus amounts were “enhanced” to a much greater extent in most cases.
The original policy was first reported by us on Wednesday.
It had been controversial for - on a standard interpretation - requiring lawyers (including non-equity partners) to repay a full three months of hiked remunerations to the firm, if they resigned the firm anytime before 1 April 2018 (see clause below).
However, earlier today, co-managing partners Akshay Chudasama and Pallavi Shroff have sent the following email to the firm:
We are writing to address certain misunderstandings which have been brought to our attention:
1. Two staged increments - In addition to the annual fee enhancement that we pay out, we have rolled out a one-time special fee enhancement to reward all our teams, recognising their commitment, dedication and high service standards.
2. Claw back — the claw back only applies to the special fee enhancement and not the total annual fee. It is the pro-rata additional amount (i.e. the difference between the annual fee enhancement and the special fee enhancement from 1 September 2018 (on a pro rata basis)) that may be returnable. Exceptions to this shall be considered at the management’s discretion e.g. for reasons of ill-health or going in-house. The fee revision letter may be treated as clarified to this extent.
It is clear that with the special fee enhancement and the variable pay policy of our Firm, this is a significant increase in fee for all. We hope this resolves any misconceptions you may have and we look forward to seeing you work with renewed enthusiasm and vigour.
The original clause incorporated into retainer amendment letters to lawyers on 5 September had read that the:
enhancement in retainership fees is conditional upon completion of a minimum of 7 months as a retainer with the Firm from September 1, 2018, failing which, three months retainer fee will be payable to the Firm within 30 days of resignation or on the agreed last working date
We have reached out to the firm for further comment.
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If you’ve followed the legal industry are honest about things, you should give SAM the benefit of the doubt. No idiot in their right minds would claim back 3 months salary. This clearly was a miscommunication. But it does demonstrate the insecurity of SAMs competitors as nobody at SAM had raised any objections but the rest of the world was up in arms.
Any ho... SAM has clarified.... end of story!
And btw even if they intended to claim 3 months, rolling it back demonstrates sensitivity and listening to people. It takes a big man to accept a mistake and change.
Obviously you ain’t at SAM?!?
Didn’t you get a pay enhancement from 1 April - 31 Aug 2018? And another from 1 sept 2018 - 31 March 2019?
The first was the standard increment which is always announced mid year and paid in arrears. The second was the bumper payment!!
SAM now is the best pay master!
I am a Sammie... and I’m watching my bank balance increase...
Today's letter is not very clear. just a request.
Cover up or not, I now am paid more than my peers at other law firms (barring Trilegal which is a mid size firm in comparison)!
For once I can gloat about being at SAM and earning the salary I do!
AZB, CAM etc the pressure now is on you to increase salaries!!
Next round of drinks on me fellas
the power of the oppressed classes singing in a single chorus on legally india. shardul has rightly retracted his tom alter alter ego and is back to being just a rich and moody lawyer and businessman.
If you know even basic english, u would have been able to understand that what is written in increment letter meant three month salary return... the clarification issued is no where clarification... its a complete stepback. It has been issued in garb of clarification but the substance prevails over form..
The managing partners and other partners who shout at associates for basic grammer error should first review what they have written and what it means both in hr letter and todays clarification
Their mission:
Target SAM
Target Jamai Raja
Mission failed.
Hardly anyone within the firm was complaining about the claw back.
Jamai Raja cares more about the firm being non-family run than the non-family partners! He’s a dude who is an excellent competition lawyer, a food Instagram star and an overall baller!
Please stop this. It's sickening to read
anyone defend SAM's stunt. The whole exercise is an eyewash.
Even otherwise, It’s great that they were sensitive and made the change based on reactions (whether outside or inside).
Also, don’t understand where the exception for rival law firms in your first paragraph is coming from. It seems like you will only lose the additional increment even if you go to a rival law firm.
HK Admirer
What’s the truth Kian - THE NATION WANTS TO KNOW!! Be transparent.. just the way you seem to want the rest of the world to be!
You’re as bad as those who you claim are bad!!
If you were a lawyer at SAM, which you clearly aren’t, and you were to leave, then only the incremental earning after the second fee increase is repayable!!!!
So if you were earning 50 lakhs last FY and it increased - first from 50 lakhs to 60 lakhs for the period 1 Apr to 31 aug (standard increase announced this week and paid as arrears on a pro data basis ie 5 month) and then increased further from 60 lakhs to 70 lakhs with effect from 1 Sept (special increase essentially to make SAM a market leader amongst the top 5 firms) then it’s the 10 lakh increment from 1 Sept that would be repayable on a pro rata basis
Just angry at all these dumb comments by outsider!!!
No I’m not management. I’m not Jamai Raja. I’m an associate who is loyal to the firm that has made me into a good lawyer and am disgruntled at gossip website like this where people who have grudges and axes to grind so whatever crap that is their in their heads.
The target issue was dealt with on Day 0 to the satisfaction of all concerned!!
Most of the stupid, perplexed, hateful comments, are from those jealous of the success and market leading position of SAM.
If you only win in trolling SAM on Legally India, best of luck!
We succeed by providing clients top notch service and we get rewarded better than you!
For once, I agree with another post here - if the document was so ambigous for internal staff, what should external folks/ clients make of any draft from SAM?
Its good to see that you have faith in the family. They are indeed very decent people. I know them for 20 years and more. For your benefit- they are good to smart people. They laugh at fools who blindly follow their instructions. Earn their respect by being smart and tell them when they make a mistake. They will respect you. Ask the likes of Jatin and Gunjan.
SAM's special fee enhancement shows that it values its people and rewards talent. So stay calm and enjoy the weekend.
And its not a special pay hike, its a price correction. SAM was and to a lesser degree still remains below market on salaries. This hike only serves to lessen the gap.
With such novel policies the firm will become tier 0.
Roflol
If the Firm was so insensitive they would not have cared to clarify and reach out to the people to address this issue. Chill guys!
Hit like button.
Barring this unmitigated PR disaster of clawback, most would likely have been happy at the unexpected pay rise, which though not meteoric as claimed, is still much better than routine.
What most will take away is only the sour taste of clawback, and its supposed recanting.
Thanks.
And given that you can get up to 200% variable pay, we are talking of a possible take home of 52 lakhs.
A1 - 18
A2 - 21
A3 - 25
SA1 28/29+
SA2 32+
PA 42-45
PA 2 55-60
SP 85+
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