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Freshfields Bruckhaus Deringer chief executive Ted Burke revealed today that the magic circle firm spent £24m in severance payments to departing partners last year during the firmwide restructuring named ‘Size and Shape’.
During the ongoing hearing of former insolvency partner Peter Bloxham, Burke told the employment tribunal that the firm had allocated the money as costs for the 2006-07 financial year. The £23.914m went to around 25 departing partners of all ages, the tribunal heard, at an average of 40 partner points each. In 2006-07 one partner point was equal to £22,000. In total, Freshfields spent £55m on the restructuring that culled more than 100 partners from the equity, as first reported by The Lawyer (21 May).
Burke was the last witness called by Freshfields as the respondant in the hearing, which is examining Bloxham’s claims of age discrimination arising out of the firm’s controversial pension reforms. He is claiming £4.5m.
Under cross-examination by Tim Pitt-Payne of 11KBW, Burke said that, by September 2006, a consultancy offer to Bloxham was conditional on his dropping any age discrimination claims against Freshfields.
In summing up, Dinah Rose QC of Blackstone Chambers for Freshfields stressed that this was only the case by September: in July, when Freshfields maintains an original consultancy offer had been made to Bloxham, there was no such “quid pro quo” agreement.
Bloxham argues that no consultancy offer was ever made as a legally binding contract and that he was effectively forced to retire.
Rose has now finished her closing arguments on points of fact and this afternoon will examine points of law.
She stressed in closing that Freshfields had meticulously consulted the partnership over the reform process and that pension reforms and restructuring were entirely separate matters. “If it was about restructuring,” she said, “it was incompetently handled as only nine plateau partners left the firm.”
The news comes as The Lawyer revealed (16 July) that the firm is facing another age discrimination claim brought by former corporate partner Lois Moore, now at Shearman & Sterling. It is understood that much of her claim will rest on the outcome of Bloxham’s.