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Shardul Amarchand imposes 3-month salary clawback on lawyers who leave this financial year

A possible retention strategy...
A possible retention strategy...

Shardul Amarchand Mangaldas (SAM) has instituted a novel HR policy: fee-earners who leave the firm within the next seven months will have to repay the firm three months’ of their retainer fees.

The changes were rolled out today (5 September) across the firm’s offices, communicated together with the individual pay hikes for the period from 1 September 2018 to 31 March 2019.

However, according to the agreements circulated to the fee-earners, including salaried partners, 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”.

Let’s rephrase that in case it’s not clear: SAM fee-earners get a pay-hike, but if they leave before 1 April 2019, they have to pay SAM back three months’ of their pay.

We have reached out to SAM for comment on the reasoning behind this move.

Presumably, it is aimed at retaining lawyers by hitting their wallets if they move.

And sure, on the one hand, unofficially, quite a few big firms have been known to cause difficulties for leavers trying to collect promised bonuses or their last few months’ pay (so much so, that many departing partners give up on seeing such monies after a while; many others often simply pretend they are not joining a competing firm until their dues settled).

However, putting such policies down in writing could end up not even being legally enforceable. It’s also not likely to do wonders for morale or actually stop a lawyer who is determined to leave (even if it might raise the cost of doing so).

Update 6 September, 16:25: Citing unnamed “sources”, Bar & Bench has reported that SAM’s “huge [...] increments range between 20% and 75%", adding: “Sources within the firm say that SAM has introduced these changes with the intention of becoming a market leader in remuneration. They already have market-leading variable pay incentives, where Associates and Partners can earn up to 200% of their variable component. This has been in place for the last 3 years.”

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