Freshfields kick off partner de-equitisation

Freshfields Bruckhaus Deringer

‘s management has kick-started a radical partner de-equitisation programme in a bid to boost profit.

Discussions have started with partners who will be affected by the restructuring as the firm’s ongoing financial review progresses to the next phase.

The moves come just a few months after 30 partners decided to retire from the partnership to take advantage of favourable pension terms. Some have since announced their departure while other remain as consultants.

One senior partner said: “We have to be in a place where our profit is commensurate with our reputation and deal flow.”

It is understood that the magic circle firm is planning to de-equitise up to 50 partners. Partners across all of the firm’s offices including London and Germany may be affected.

The partner said: “I’d be extremely surprised if it were more than 50. But it could be less than 30.”

Another added: “If we do not de-equitise a significant number the exercise will be pointless – 25 is not significant.” Freshfields expects the exercise to be concluded by the end of the financial year.

“I think it’s a good idea. If people aren’t contributing and I’m subsidising them, why would I want to work extra for someone I’ve never met?” concluded another hawk.

As first reported on www. (28 June), Freshfields partners voted in favour of ditching the firm’s all-equity partnership model and gave the management power to create fixed-share partners.

In a separate exercise revealed last week on (20 October), Freshfields has embarked on a sweeping review, affecting more than 100 staff in its support services teams, expected to result in a number of redundancies.

Freshfields’ average profit per equity partner (PEP) of £830,000 for 2005-06 lags behind that of arch rival Linklaters, which posted a PEP £1.062m for the same period.

Freshfields declined to comment.