Freshfields Culls Partners After Pay Overhaul — Performance-Based Compensation Spreads Across Magic Circle

Freshfields — approximately 500 partners, last reported PEP of £2.09 million (2023) / estimated $2.9 million (2024, Law.com) — forced out equity partners in recent weeks following a late-2025 overhaul of its remuneration structure that shifted from a tenure-weighted lockstep model (most partners at 40 points, a minority reaching 100; each point worth approximately £70,000) to a more performance-based system. The cuts and downgrades affected offices in Germany, Paris, and London, and Freshfields simultaneously introduced a non-equity tier to its partnership for the first time. The economic driver is the firm's aggressive US push — where top partners can command more than $20 million per year, requiring European partners to subsidize American talent acquisition — a structural strain that the new performance-based model is designed to address by giving the firm flexibility to pay more to those generating or attracting the most revenue. The broader market signal is the near-universal movement away from lockstep: Debevoise introduced a bonus pool in May, and Slaughter and May is now the only remaining elite UK firm still using full lockstep. For law firm CFOs and executive committees, the Freshfields restructuring is a reference case for the economic forcing function: the lateral market for top partners in the US is setting compensation floors that traditional European equity models cannot sustain, and firms that do not redesign compensation structures are facing either talent loss or partner exodus.