Editor's comment: Less is more
It was no shock it happened, but it wasn't a foregone conclusion that it would be a firm of the standing of Freshfields Bruckhaus Deringer that would first institute a full pay freeze, or that it would have the stomach to act so early. Yet, as Legal Week has recently argued, the logic is undeniable. A big four City law firm spends in the region of £500m annually on staff. A full pay freeze for a firm of this size should save more than £20m annually at a stroke. That's around £2m a month in cashflow released from 1 May without having to lay off a soul, even before you consider that redundancies take months to provide any benefit, thanks to upfront costs. Such thinking has been reinforced by recent developments Stateside, where firms in December ditched boom-time bonuses and slashed standard payouts. This means most major Wall Street firms have already sliced more than 15% off their associate remuneration. And there are other benefits. Cravath Swaine & Moore's calculation in pitching its market-leading bonus cut explicitly at clients has not gone unnoticed. The expectation is that clients - after years of half-hearted moaning on the conference circuit - will this year demand major concessions from advisers. Being seen to move early on costs has an obvious value for Freshfields.
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