Freshfields Suspends Partner Payout in Virus Response
The firm is also suspending pay reviews and bonuses, as well as looking into offering reduced hours.
April 06, 2020 at 08:55 AM
3 minute read
Freshfields Bruckhaus Deringer has suspended its latest quarterly partner distribution as it becomes the latest firm to protect itself from the financial impact of the coronavirus pandemic.
The firm will not pay any distribution to partners for the three months to April and is freezing pay for its lawyers as well as delaying a decision on what bonus levels will be, it confirmed on Monday. The firm's bonus levels are usually decided in April but will now be reviewed in September.
In addition, the firm is looking into flexible working arrangements and offering reduced hours for people who are interested. The measures are global but will differ depending on the region.
One person at the firm said it was taking the steps to help it remain financially flexible and so that it did not need to make redundancies or furlough staff.
Partners' fourth-quarter distributions are usually the largest quarterly payout at U.K. law firms. Freshfields partners would have expected them in the summer but will now have to wait to see what, if anything, they will receive.
Unlike rival firm Allen & Overy, Freshfields is not looking at any capital raising related to the virus and it will continue with its promotions, although the pay freeze means salaries will not rise. It has not implemented a blanket hiring freeze but hiring levels are lower.
A spokesperson from the firm said: "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."
Freshfields is the latest firm to announce such measures. At the end of March A&O asked partners to contribute capital to the business and is gradually reducing its partner profit distributions. Cadwalader Wickersham & Taft, Reed Smith and Norton Rose Fulbright have all said they will be taking steps including lowering or deferring partner pay outs.
Meanwhile, PwC's legal arm has been affected by the Big Four auditor's decision to freeze promotions, pay rises and bonuses across its U.K. business.
Read More:
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