Key facts
- Freshfields has ousted several equity partners across European offices, including London.
- The firm aims to fund its aggressive expansion in the US market.
- A performance-based compensation system was implemented last year to align with US partner earnings.
- Freshfields' US revenue increased by 21% to £473.3m in the year to April 2025.
- The firm admitted 88% more US lawyers into its partnership this year compared to the previous year.
Magic circle law firm Freshfields has recently ousted several equity partners across its European offices, including London, as part of a strategic push for growth and significant expansion in the United States. This move is intended to boost the firm's profitability and fund its aggressive US market entry.
Sources indicate that the firm introduced a strict performance-based compensation system last year, which involved stripping equity points from long-serving European partners. This change is designed to better reward top-performing individuals and compete with elite New York law firms, where top talent can command annual compensation of up to $20 million.
"The reality is that firms competing at the very top of the US market need greater flexibility to reward their highest-performing partners. Traditional lockstep systems can struggle to accommodate that," said Nick Woolf, partner at Woolf&Co. He added that this reflects the "continued influence of US compensation practices on the leading UK and international firms."
Christopher Clark, director at Definitum Search, commented that the move "seems logical" and that affected partners will likely still be "paid very well" while delivering a "healthier profit margin for the firm."
Freshfields reported a 6% increase in global revenue to £2.3 billion for the year ending April 2025, though pre-tax profit saw a 2% dip to £656.8 million. However, its US revenue surged by 21% year-over-year to £473.3 million in 2025, now representing approximately 21% of the firm's total global revenue. The firm operates five US offices: New York, Washington D.C., Silicon Valley, Boston, and San Francisco.
In terms of partnership growth, Freshfields admitted 88% more US lawyers into its partnership this year compared to 2025. While London saw a slight increase with nine new partners in 2025 and a total of 11 this year, the US saw only 3 partners admitted in 2025, compared to 13 this year. The firm's total profit share for its core management group in 2025 was £25.8 million, down from £26.2 million in 2024. The average profit per equity partner (PEP) at elite New York law firms typically ranges from $5 million to over $12 million.