Magic Circle law firm Freshfields Bruckhaus Deringer has suspended partner profit share for the fourth quarter and frozen pay across the firm to help weather the economic crisis triggered by coronavirus.
The firm has also deferred decisions on staff bonuses until later in the year.
A Freshfields spokesperson 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.”
Last year Freshfields’ average profit per equity partner was £1.84m with the firm generating net profit of £688m.
Professional services firms across the board are examining their finances to try and position themselves to ride out the dramatic slowdown that has followed the coronavirus lockdown.
Yesterday, City A.M. revealed that Big Four audit firm PwC UK has frozen pay and deferred decisions on bonuses and promotions until the autumn.
PwC is also understood to be considering a delay in partner distributions to help preserve cash.
Last week fellow Magic Circle law firm Allen & Overy launched a partner cash call and delayed the distribution of profits alongside a freeze in lawyer and support staff pay.
UK law firms Linklaters and Pinsent Masons have both said they are considering similar measures, while US law firm Reed Smith confirmed last week that it was slowing its distribution of partner profits.
Last week challenger accountancy firm Grant Thornton asked its UK employees to accept a 40 per cent pay cut to avoid redundancies.
Other major accountancy and law firms such as KPMG and Slaughter and May are understood to be taking a watching brief and have not yet made any decisions on possible pay freezes or profit distribution delays.
Freshfields is currently advising the Bank of England in relation to the government’s emergency corporate covid financing facility (CCFF).
The CCFF purchases commercial paper, a debt instrument, from companies in order to boost their liquidity.
It is available to UK companies that “make a material contribution to the UK economy,” the Treasury said.
The Bank of England was Freshfields’ first client when the law firm was founded in London in 1743.
The firm was also the Bank’s key legal adviser during the bailout of the banking sector after the 2008 financial crisis.