Dozens Lose Points, A Handful Clear $17m
Freshfields’ US growth ambitions has forced out equity partners across London, Paris and Germany, the Financial Times reported on 13 July, weeks after a pay overhaul left dozens of its roughly 500 partners holding fewer equity points.
Freshfields reset its internal exchange rate from $1.60 to the pound down to about $1.30, then handed extra points to its top US earners so their dollar pay held. Points are a share of a fixed pool and Freshfields’ European partners are the pool.
The Financial Times reported this week that Freshfields has culled equity partners in recent weeks, with its London headquarters and its Paris and German offices all seeing exits and equity downgrades.
City AM ran it as a shake-up to fund the American push, which it is. What neither write-up reached is the ledger entry that explains it, and that ledger entry has been sitting in public since March.
Why is Freshfields cutting Equity Partners Now?
The firm rebuilt its remuneration structure at the end of 2025, following earlier changes that we have reported on, being its first substantive overhaul since 2017. The old system ran to 40 points for most partners with a ceiling around 100 for a handful, and it paid handsomely for length of service.
A point was worth roughly £70,000 last year. Dozens of partners came out of the review holding fewer of them. The exits followed, as exits do. Rival firms have been taking calls from Freshfields lawyers ever since, according to the FT, from those who were pushed and from those who read the room.
Global managing partner Alan Mason told Bloomberg Law the firm chose to “introduce non-equity partners and introduce more flexibility in partner compensation”. It appears that flexibility does a great deal of quiet work in partnership announcements.
Who is Actually Paying for the US Expansion?
In March, Bloomberg Law reported that Freshfields walked back a post-Brexit internal conversion rate of $1.60 per pound to the prevailing market rate of about $1.30. For a US partner, that is roughly a nineteen per cent cut in the dollar value of every point held. So the firm reallocated points to its highest-paid Americans, protecting their take-home.
The top US earners are now on track for $17m or more, in a market where the genuine rainmakers command north of $20m.
Points are a claim on a pool, not a salary. Raise the claim in New York without raising the pool and the difference surfaces somewhere.
The FT said it without varnish: partners in Europe have had to support hiring in the US market.
Does de-equitisation Close the Gap?
A&O Shearman ran this play first, cutting around ten per cent of its equity partnership at the end of 2024 as it consolidated onto a single all-equity model.
The firm posted £2.9bn in revenue, ahead of both Linklaters and Clifford Chance. Its PEP landed at about £2m, behind both, with Linklaters at £2.2m and Clifford Chance a shade over £2.1m. Fewer mouths, and also a smaller mouthful.
Freshfields stopped publishing results voluntarily in 2023, when PEP stood at £2.09m. Law.com estimated $2.9m for 2024. Kirkland & Ellis returned $9.25m per equity partner in the same year. No firm has ever subtracted its way from the first number to the second. You buy your way there, and points are the currency.
The Freshfields Points
Slaughter and May is now the only elite UK firm still running a true lockstep, and even Debevoise & Plimpton added a bonus pool in May. The lockstep argument is largely over and what replaces it is a system in which a partner in Frankfurt with twenty years of service and a solid book is no longer holding an entitlement. They are holding a position, reviewed annually, against a New York hire who has not started yet.
Christopher Clark of Definitum Search told City AM the move looked logical and that the affected partners would still be paid very well. Both things are true. They are also, if you are the one being reviewed, entirely beside the point.
