Biglaw

Magic Circle Firm Suspends Partner Distributions And Freezes Attorney Pay

Doing everything they can to avoid layoffs.

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(Image via Getty)

Magic Circle firm Freshfields Bruckhaus Deringer is a giant international player with $1,967,034,000 in gross revenue in 2018 and more than 1,400 attorneys on the pay roll. And amid the COVID-19 economic downturn, the firm is doing everything possible to keep all those attorneys — and their legion of staff — gainfully employed.

In order to avoid any layoffs or furloughs the firm has instituted a series of austerity measures aimed at maintaining cash flow. As reported by Law.com, that includes suspending quarterly partner distributions. Plus lawyer pay globally has been frozen and bonus decisions — typically made in April — will be postponed until September. Freshfields is also considering optional reduced hours for employees that want that flexibility.

A spokesperson at the firm provided the following statement on the move:

“We have historically matched the competitive NY/DC associate pay scale and expect to do so again this year. We remain bullish on our growth and expansion plans in the US. In fact, we have added 20 associates in the US in the past six months, including 10 lateral M&A associates in New York, and have continued recruiting and hiring in our key US practices throughout the pandemic.

For our people outside the US, salary and bonus decisions were to be made in late April coincident with our April 30 year-end—the equivalent of COVID-19 hitting the US market in November right as NYC firms are determining year-end bonuses. Many of our competitors in Europe had already announced they are skipping bonuses entirely. Although the firm just ended one of the best years in its more than 275-year history, a decision was made to postpone bonus decisions until September to have better visibility on how the pandemic would impact our business. In light of that postponement, partners offered to defer their year-end profit distribution until September. However, they continue to receive their quarterly distributions to cover tax payments and their regular monthly draws on the usual schedule.”

If your firm or organization is slashing salaries, closing its doors, or reducing the ranks of its lawyers or staff, whether through open layoffs, stealth layoffs, or voluntary buyouts, please don’t hesitate to let us know. Our vast network of tipsters is part of what makes Above the Law thrive. You can email us or text us (646-820-8477).

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headshotKathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

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