Freshfields faces partner tension as more than 60 see profit share reduced
Multiple partners see profit share drop by around £300,000 in latest lockstep restructuring
June 01, 2018 at 08:18 AM
3 minute read
Freshfields Bruckhaus Deringer is facing tension within its partnership after more than 60 partners saw their profit share reduced when the firm ushered in its new lockstep system this month.
The firm agreed a substantive overhaul of its lockstep in November last year, which meant all of the firm's roughly 400 partners saw their position on the ladder assessed ahead of the new system coming into effect from 1 May.
Former partners suggest that more than 60 partners, many of whom were previously at the top of the lockstep, were asked to "voluntarily reposition" themselves through moves that effectively reduced their profit share.
The new lockstep, designed to help retain star performers and allow the firm to expand in the US, runs from 12 to 60 points, with gates at 22, 30 and 40, compared with the previous ladder, which ran from 17.5 points to 50 points.
Former partners suggest some have been asked to move from the top of the old lockstep down to 30 points, which means that even allowing for a significant increase in the value per point to about £58,000, their profit share has dropped from about £2m to £1.7m.
One ex-partner commented: "In the first instance, partners had the opportunity to voluntarily reposition. This brought a lot of noise into the firm as people were asked to reposition. The atmosphere in the firm is not brilliant right now. The cuts affect people everywhere and they are not based in one region or specific to a practice area."
Another ex-partner said: "They have asked people originally on 50 points to move to the new 30-gate level. This is the first round from the 'Gates' committee. My understanding is that relatively few are above 30 and that 30 is seen as the new normal in order to achieve greater profitability."
In January, Legal Week reported that between six and eight partners were set to be appointed to the 'Gates' committee, which oversees decisions made by practice heads and regional heads about partners' progress through the firm's new lockstep.
Those asked to move down are spread across all practice areas and geographies.
One Germany-based partner at a rival firm said: "I heard that no one volunteered to throw units into the basket and were pushed. They wanted to see voluntary steps but this didn't happen."
Another former partner commented: "People are leaving because of the restructuring. It is no surprise that people did not voluntarily agree to points reductions, so they are using some not-so-subtle force."
It is not the first time that Freshfields has docked partners' profit share. In 2016, the firm took advantage of a lower lockstep ladder available under the previous system. Multiple partners began moving down to the second tier across offices including London, New York and Germany.
Separately, Freshfields today (1 June) announced the hire of a quartet of London patent litigation lawyers from US firm Arnold & Porter. The team, which is led by partner Christopher Stothers, also includes counsel Laura Whiting and two associates.
Freshfields declined to comment.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllAustralia’s MinterEllison Loses More Partners From Canberra Practice
2 minute readMore Than 2 Dozen Lawyers Break Off From DLA Piper Affiliate in Brazil to Form New Firm
Trending Stories
- 1Elon Musk Names Microsoft, Calif. AG to Amended OpenAI Suit
- 2Trump’s Plan to Purge Democracy
- 3Baltimore City Govt., After Winning Opioid Jury Trial, Preparing to Demand an Additional $11B for Abatement Costs
- 4X Joins Legal Attack on California's New Deepfakes Law
- 5Monsanto Wins Latest Philadelphia Roundup Trial
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250