The hope is that with this somewhat painful move now, future pain can be avoided (though of course no one knows how bad it’s going to get)**
Cyril Amarchand Mangaldas equity partners have agreed not to draw any take-home pay this financial year in anticipation of worse financial times to come, as the firm has also announced salary deferrals for more senior fee-earners and office staff.
All fee-earners and staff earning more than Rs 25 lakh per year will see from 10% of their fixed salary component in May and June 2020 deferred into a variable component.
At the more senior end, such as senior salaried partners, up to 30% of the fixed salary component could be deferred into the variable.
Significantly, such variable component is discretionary for the firm to pay out; on the other hand, the firm has also not announced a permanent reduction in wages.
“We were not afraid to be first, everybody’s thinking about it. It’s inevitable that every organisation will have to think about this” said managing partner Cyril Shroff, explaining: “No job cuts, no pay cuts also, for now, at least until June but we have moved a portion of the fixed to variable.”
Shroff added: “We are approaching from a survival mindset to be strong at the other side of this.
“We are spreading the potential pain in a descending order, where the equity partners take the most hit, and junior lawyers take no or minimal hit.
“If things improve, there will be finally no real impact.”
CAM’s equity partnership of around 35 had volunteered to not take any pay this year, Shroff said. “We had a meeting where they [around 35 equity partners] said they would not draw. They have all unhesitatingly and unequivocally said that they wouldn’t draw.”
Regarding the downturn, Shroff said: “It’s too early to tell whether it’s going to get worse or not.”
Actual adjustment amounts will be communicated to fee-earners individually, we understand.
Indeed, Shroff is correct that there will not be a single firm’s management that has not seriously thought about taking similar or even stronger measures, and nearly all international law firms have been making significant salary cuts, deferrals or requested partners for cash calls in recent weeks.
As we had reported on 27 March, Agarwal Law Associates (ALA) had been one of the first. perhaps presciently, to have announced pay cuts for of 30% for those earning above Rs 40,000 per month, after its Supreme Court filing practice had practically fallen off a cliff due to the shutdown of the courts.
Update 15:35: Khaitan & Co has reduced equity partner and senior executive director pay by 20%.
Comments
This is the ONLY way in which firms of any size can survive. Mark my words - equity partners will 100% be called upon to make a capital contribute as well. We are staring at a dip in revenues by minimum 40-50% this FY. IMHO, lay offs are not distant.
A day before implementing WFH, CAM laid off atleast 10 associates in the Mumbai office. God only knows how many more they are planning to let go.
When (A) falls, then either (B) has to be reduced by slashing associate pay or (C) has to fall by equity partners forgoing their take home. CAM decided to go with the latter. That's literally all there is to it. So, please stop weaving amateurish conspiracy theories.
As for your ten. I don't know where you got that number from but people are asked to leave CAM all the time. Every firm does that. It's called performance appraisal. You sound like the kind of person that has faced it in many firms so you should know.
Didn’t css try and sell the bonus payout in these times as being a benevolent gesture - or are you suggesting that this gesture was just the same hogwash that css sells to the world...
Revenue - Expenses - Tax = Equity Takehome
Say, 100 - 40 - 25 = 35
If Revenue dips by say 40, it could:
(a) [i][b]first[/b][/i] be met by dip in Equity Take-home
(b) [b][i]then[/i][/b] reduction in Expenses
This step this early is to protect the Equity Takehome.
Don't be fooled.
Do not be mistaken, the equity partners by unhesitatingly and unequivocally saying that they wouldn’t draw an advance during the year is not tantamount to not drawing profits at the end of the year and must rather be seen as what it is. A shoddy attempt to not contribute to capital calls if CAM was actually facing a cash flow issue.
If at the end of the year, things are not so bad, associates will get their deferred pay. What do you do with the profits left over? Oh yes, you distribute it to the guys who own the firm. It's what every business does!
And you don't take money out as a equity payout and then put it back as a capital call! You stop the pay out to equity which is what these guys have voluntarily done. It's the same thing as a capital call, you spectacular imbecile! No one has said that if things worsen despite this decision, they will not fund a capital call.
Now stop throwing around words you barely understand and go back into your basement to watch Ramayan re-runs.
Why can’t the css family (which during the good years keeps most of the Malai) - subsidise the firm during such an unprecedented time?
During the first firm wide zoom call didnt css say that “promoters will step in if the need arises”?
Where are the promoters now?
And before you go harping on and saying that the measure announced is temporary and if at the end of the year, things are not so bad, associates will get their deferred pay. Remember the fact that in its best year CAM hasn’t paid a single associate or rather salaries lawyer 100% bonus - which means what you spectacular imbecile? It means that the equity partnership in its best year (majority of the equity partnership is the css family) chooses to take more “profit” home rather than completely reward the ones that are deserving, then it is only prudent in a bad year to expect the equity partnership to worry about their “profit” moreso when they think that the associates will live with a pay-cut.
And lastly bro, when you say “What do you do with the profits left over? Oh yes, you distribute it to the guys who own the firm. It's what every business does!” You are bang on - But now don’t bs by saying that deferral is not going to translate into cut so that profits leftover aren’t hit due to a bad year and are still sufficient to be sent off with baba to NY.
If as an equity partner you mint crores on the back of your employees for years, it is not unreasonable of employees to hope for you as a equity partner to bear cost which the partnership firm can’t during one year of a pandemic where business will see unprecedented challenges.
More so it is not unreasonable to have hoped for communication from the great css ~ two months into a lock-down to not have been that of pay cuts rather a capital call if cash flow was such a concern!
Ab samjhe?
I am a PA whose salary will be deferred. Its scary, it’s worrying but we have protected the kids A0-A3.
I do have my concerns about CSS committing that they have reserves for 6 months, so what is the worry/concern thats made them take this step. He was aware of the PR backlash, he still did it.
Its too early to just make assumptions whats the true nature of this decision. Its not unrelated to recent events. They will end up losing a lot of talent if its indeed as selfish as it seems.
And there is so much misinformation in this thread about laying of 10 people. Like who what ? Insulting CAM people by calling amarchandus? Tell me how many time was your CV rejected that you are this butthurt?
SSS [...] and [...] the AMSS and [...] from AMSS. So tumhare basmati main bass hai [...]
That way an actual cut like the one Khaitan announced is much more real than this sham.
By this logic, Associates deferring are also 'contributing'
Equity isnt poached... PA’s arent poached.. Sa’s arent.. poached...
We have enough liquidity... he said so...
CAM/SAM equity partner tag is misleading. A few are true equity but the rest are just high salary and big bonuses. None of them "own" a piece of the firm. The Bharuchas were the only true equity guys. Its very suspicious to say 'no salary', obviously these guys with big EMIs and big spending habits are not going to dip into their savings. Obviously they ARE getting something fixed an that may have reduced 20-30% but to say it's reduced 100% sounds nonsense. Even KCO has announced equity partners taking a 20-30% cut which makes sense.
Secondly, CAM has 35 equity partners. They don't take home anything unless the firm makes a profit. When the firm makes a profit they take home a share in that profit. That is what educated people call ownership.
Apart from saying that it is suspicious and using capital letters to insist that they must be getting something, you really haven't offered any reason to disbelieve a perfectly reasonable statement by a firm's managing partner.
CAM equity partners have no capital buy-in and thus by that itself are not owners of the firm (or a fraction). Not having contribute to the assets they cannot be equated with real equity. At best they are well paid salaries and equally big bonuses. It's like saying a CEO of a company who gets a fat paycheck and a bonus based on profits is a shareholder (newsflash: he's not).
I can't help it if you don't know what a buy-in is. But plz go talk to any of these "equity" partners and ask them what their buy-in was. Till then spare yourself the embarrassment of commenting like an ignoramus. Or Not.
All i have got to say to this guy/gal: KCO.
When the firm was making money, people were paid 85%, now that the firm is not making good money, it will pay 60-70%. How is this fair? Why can’t CSS and family take less money this year?
It’s not that when the firm makes money, partners and the associates are paid 100%.
CAM makes money or not, the only people to be affected would be salaried partners and associates. For the next few months, plenty of emails will flow from the managing partner on getting business and billing.
By no stretch of imagination, one can assume that CAM doesn’t have money to survive for 3-4 months without pay cuts. I think those tall claims of being a 103 yr old firm are of no use when pay-cuts are being made from salaries of PAs and SAs.
Its a fancy term to say that we have deferred a portion of the fixed salary which will be given along with the variable at the end of the year but no details have apparently being shared with the partners or associates yet. And, everyone working in firms already know how transparent the process of allocating variable pay / bonus is, so the these adjustments are pay cuts only. On top of that diwali bonus is also not coming.
[img]https://media1.giphy.com/media/10xpYldBGgLYNG/200.gif[/img]
[img]https://media0.giphy.com/media/iqkUhBIdNOetJWXtNx/200.gif[/img]
Associates should question these decisions critically. It is silly to act all accepting.
The ugly side will reveal soon. There are also rumours that they have already started identifying ppl they wanna lay off.. of course they are not gonna announce it at one gone. They will slaughter them individually.
But one wonders what their business model is? one month passes and you fall like a house of cards!! If this how you have run your business, you indeed did a terrible job.
You seem completely unaware of basic provisioning. As I said, if a firm has only provisioned for 3 months, they are doomed. The only options such firms have are (a) lay-offs, (b) pay cuts, and/or (c) capital contribution from equity partners. If you were privy to the details of costs and expenses, and, revenues, you would know this.
Btw clients please take note - CAM is having its HR roll out on June 19. This is to ensure that associates start charging at SA rate and SA at PA rate.
It's a business, alright let it be that; don't delude yourself into thinking you're fair and just and what not - sitting under the Rotunda at The Pierre.
"volunteer" is about all right for older employees of a family-controlled (avoiding "owned") rich business.
If taking a pay-cut during a pandemic saves me from taking a bribe on all other days, would prefer the pay cut.
-the business pays the promoter for the buildings its offices are in, and at a price which is atleast 15-20% premium of the prevailing market rate;
-the business buys/leases old vehicles, tech, furniture etc from the promoters;
-the business pays premium travel expenses to a travel company in which the promoter is a jv partner;
And many more instances where the promoters knowingly bleeds the firms finances.
No wonder they tweaked the reimbursement policy to effectively make them the only viable option for booking flights or hotels. The agency is such a scam, they openly mark up prices of flights to more than 25% than the highest available price online and employ shady tactics like not showing you cheapest options etc.
The Cyril Shroff family should have some shame - how can they blatantly scam the firm like this, not even taking into account the ridiculous rent the firm pays the family (he had the gall to say the family is also taking a hit by deferring rent payments from the firm today during the announcement), the cushy equity partnership for many family members who certainly don't contribute at all or as much as other family members in rival firms (say the second rung in SAM), etc. etc.
The other big problem with CAM is the number of people in the support stuff. I don’t have the exact number but it’s easily more than 200. Can someone from CAM explain why there have so many BD teams, KM team, seminar organisers, AI team etc etc. I would have written down the names but then Kian will not publish the post.
I hope CSS opens his eye and RCS, being gen next, guide the firm to be more a profitable model by disposing off the NPAs, streamlining support teams n doing away with all these blogs etc.
In your world I am guessing associates have no targets and no obligation to make 4 x of their salaries to even be deemed useful, and are allowed to take most of what they make for the firm home right??
It may be sound bijness sense, but then we should not pretend it's the ethical choice, and definitely not fair for necessarily in line with the supposed big happy family line that is put out
Be that as it may may god bless us all.
Surprisingly, chamchas were silent today at the time of announcement, no one came forward to say something when they were given an opportunity to speak.
While it may be fashionable to crib and complain, my personal experience over several years has been that when the firm has done well, at least particular SAs and above whose individual performance has been exemplary have received 100% bonus and sometimes even more when the MP's discretionary bonus is added. Obviously equity partners made a lot more but that's how the model is in every business. The rank and file don't get to compare themselves with the top management!
People don’t crib and complain because it’s “fashionable”. Don’t trivialise their complaints - you sound like Marie Antoinette (let them eat their bonus!). If you’re amongst those handing out this decision rather than those who have to mutely accept it, hear this:
- trust doesn’t mean blind support for every decision and comes with full disclosure - have you seen the comments regarding lease and other arrangements between the firm and its owners? Does the firm trust the people who are now subsidising it’s operations enough to disclose these arrangements? Will the firm now renegotiate leases with its owner lessors like it would have done with a third party? Answer in three sentences or less (20 marks)
- the MP’s discretionary bonus is discretionary. A fact annually re-emphasised. Most people don’t get this often or more than once or twice, if that - this though the firm has had many good years before this. Has the discretionary bonus been handed out to everyone? Has it ever been handed out to those who those who made less than 3x. Answer in one word (10 marks)
- moving a fixed salary based on which people have planned their finances to a bonus pool seems to be “fashionable” (to use your phrase) when the going gets bad. Has the reverse been done even when the going was good? Answer in one word (20 marks).
- If associates carry business risk now, then announce that you will link x% of their bonus to the firm’s overall revenue. Will that be done? Answer in one word (50 marks)
People may have to live with this because it’s the only thing that could be done or because they have no choice. Please don’t be sanctimonious about the decision or scoff at the dissenters. Please.
Back in 2008 during the global recession, when all the firms had made capital calls and asked their EPs to contribute, Luthra had announced bumper bonuses and only the senior partners had taken any pay cuts. Associates (like me) were assured by the executive committee that we will treated like family and that we should continue to put our heads down and just focus on work.
The firm had lived up to their promise of declaring bonuses and announcing promotions and increments on time (a custom which they have continued with even until now without any blip).
Possibly the magnanimity of Luthra has its origins in the Punjabi blood that runs within the management! God bless. Om shanti.
Or if their luthra partner joins indus!
[img]https://media3.giphy.com/media/B0vFTrb0ZGDf2/200.gif[/img]
Do they even have any associates to cut pay? Everyone quits that terrible place within a month or 2. The recruiters keep calling people desperately to join Vertices. In fact I got a call from 4 recruiters, 1 even saying we can give AP designation. They are desperately looking out at all levels, well that's the case 365 days. They should search from cameras in office
I frankly don’t understand why can’t people take a mere 10% cut. Not like everyone who has commented above will be taking a hit. Some are and some aren’t. It’s not a pay cut, it’s deferral. Most of you for last 5-10years (min) have earned an avg of 10+ lacs a year (for fact checkers not counting SAs who were promoted in 2019) then you should be in good stead with your savings. Don’t whine about not getting an addition 25k a month. Learn to be prudent and money wise in these times. You would be able to manage with what you get.
2. What are the others doing AZB, SAM, Trilegal, L&L -- are they all waiting to see how much flack CAM gets?
Period.
sss has too much chamchagiri
See their peers, KCO and SAM - they turned out to be more considerate. Seems they are doing good financially. Something to think about.
We are paid the least in the industry. HR finds every occasion to not give a raise. Non performers are paid more on the same slab in certain cases and partners say well we’ll try to undo it!
They need to start doing justice to their associates... or they will lose people.
SAM - only equity is taking a hit
CAM - everyone earning above 25 LPA is taking a hit.
I will let you decide which firm is fighting for survival.
Also, Mr. Ambani, taking no salary from the hydrocarbon division is like VCS not taking any salary from Aero Agencies - Nuff said !
My salary has not increased for 11 years.
Performed the marriages of my son and daughter just last year.
Now I understand my daughter in law and daughter both are pregnant.
Marriage of second son is on cards.
I lost my father long back .
I have a bankrupt brother and my mother - a widow who is not medically keeping well is also to be taken care of.
Guys - despite all these problems, if I am always positive and smiling why can't you?
It’s all state of Mind ...... Be positive even if u have nothing ..
Sincerely yours,
Mukesh Ambani.
March GST collection sinks to Rs 28,309 cr vs Rs 1.13 lakh crore last year.
In what could be just a tip of the iceberg when it comes to the impact of COVID-19 pandemic, the Goods and Services Tax (GST) collections of March recorded in April reached a record low of Rs 28,309 crore as on April 29, sources told CNBC-TV18.
This compares with Rs 1.13 lakh crore recorded in the same month last year. GST is a consumption based tax and is considered to be the first indicator of economic slowdown by economists.
Change your advisors, NOT Pay.