Freshfields delays partner distributions and associate bonuses in response to Covid-19 disruption
Magic circle firm also freezes pay, but underlines its commitment to long-term business investment
Freshfields Bruckhaus Deringer is delaying its Q4 partner distributions and staff bonus payments and freezing pay as it positions itself to ride out the Covid-19 market turmoil.
The measures are similar to those put in place last week magic circle rival Allen & Overy (A&O), although A&O is also increasing partner capital levels.
Freshfields is also understood to be exploring flexible working measures with staff on a case by case basis in recognition of the additional challenges some people are facing while working from home, for example in the absence of childcare.
“We are focused on supporting our people and continuing to serve our clients as we all adapt to the social and economic uncertainties. We are managing our business responsibly and will continue to invest in our business for the long term,” said a spokesperson at the firm, which came second in the Mergermarket global M&A table by value for Q1.
Freshfields’ year-end is at the end of April with pay reviews scheduled for May: last year the firm sparked a salary war when it raised newly qualified salaries by 18% from £85,000 to £100,000.
Bonus payments are discretionary and now will be determined later in the year, depending on the circumstances at the time.
The move comes as leading international firms in the UK and US respond with a variety of measures to the impact of coronavirus ranging from pay freezes and delayed partner distributions and bonuses at one end of the spectrum to job cuts at the other.
First out of the blocks were the UK’s listed law firms which updated their investors on the impact of the pandemic in mid-to-late March.
Knights revealed that it has reduced board members’ salaries by 30% and those of all employees earning more than £30,000 annually by 10% while DWF issued a profit warning and said it was negotiating additional credit on top of its £80m revolving credit facility to secure ‘increased headroom for working capital purposes’.
Among US firms, Womble Bond Dickinson's US arm has implemented some associate layoffs, employee furloughs and cuts to lawyer compensation and Cadwalader is among a growing list of law firms that have imposed temporary salary cuts, as recorded by Above the Law.
However, Above the Law has also identified a number of top US firms — including Skadden, Debevoise and Milbank — which have held off from making cuts and instead handed out tech allowances to staff to help them kit out their home offices.
Meanwhile, last week Norton Rose Fulbright’s EMEA arm revived the flexible working scheme it deployed during the financial crisis to ward of redundancies while top 100 UK firm Weightmans is introducing a voluntary furlough programme, using the UK government’s Coronavirus Job Retention Scheme.
Further reading on the Covid-19 pandemic