Originally published on LinkedIn on 16 July 2026.
Freshfields has spent the last few weeks culling equity partners and downgrading others in London, Paris, and Germany after overhauling its pay structure at the end of 2025. The Financial Times reported the changes on 13th July 2026. On the surface it’s a story about a magic circle firm getting more disciplined about pay. Underneath, it’s a story about what happens when a firm goes years measuring the wrong thing.
Years served was the measure. It was never the target.
Under the previous structure, partners held up to 40 points, some as high as 100, with each point reportedly worth around £70,000 last year, according to people familiar with the system, as reported by the FT.
Tenure was the proxy, but a points structure weighted that way isn’t designed to catch the operational patterns that actually determine value: how a partner reads a scope change, handles a mistake, or is experienced by their team day to day. Whether Freshfields caught this some other way, the reporting doesn’t say.
Every one of those points carried an unasked question: did this partner’s work actually protect or grow the firm’s value?
What the sequence suggests
Freshfields has been pushing to grow in the US, where top partners can command more than $20 million a year. Partners in Europe have had to support that hiring push.
The reporting doesn’t say exactly what forced the pay overhaul, or whether a formal review of partner performance played a part alongside that push. It’s possible the two are connected because a system built to reward tenure would have made it hard to pay high performers more without also raising pay for everyone ranked above them by points.
What we do know is the sequence: the US competition came first; the restructuring came after. A firm that already had a clear read on which partners were driving value wouldn’t need a new pay structure to find out. Needing one is itself a signal that the old system had never been built to work out who was actually protecting or growing the firm’s value.
What we know about what came next
Once the new performance-based structure came in, the response was exits and downgrades.
There’s a difference between a partner being told their pay is changing and a partner being shown, specifically, where they’d misjudged their own contribution, with a chance to close that gap before the decision was made. Nothing in the reporting says whether the second thing happened, only that the decision followed quickly once the new structure came in.
A partner who was genuinely coasting on tenure and a partner whose contribution simply doesn’t show up well under the new criteria look identical from the outside: both end up as an exit or a downgrade. Without a step in between to check the new read against reality, the firm has no way of separating one from the other, and no way of checking whether the new system is actually reading value more accurately than the old one, or just producing a different set of casualties.
That matters more than it looks. If the firm can’t tell the difference, the new criteria haven’t fixed what was wrong with the old system, they’ve just replaced one proxy with another. If the new one measures fit to a fresh set of criteria without ever confirming those criteria track value that actually matters, to clients, teams, and the firm’s own numbers, the firm has changed who gets hurt without changing what it actually knows. That isn’t a correction.
It’s the same blind spot wearing a new set of numbers.
The closest thing to visible evidence either way is the market reaction. Rival firms say they’ve fielded approaches from Freshfields lawyers in recent months, some who were seemingly pushed out and others who were simply unsettled by the changes, exactly the mix you’d expect if both kinds of partner were caught in the same fast-moving correction.
Freshfields declined to comment on the partner changes.
What Freshfields needs to be sure of now is that the new criteria actually measure the value that matters, not just a different, more convenient proxy for it. What that value actually consists of will differ by firm, but it isn’t tenure, and nothing in the reporting says whether the new system has found it either.
The pattern isn’t unique to magic circle firms
Most firms don’t have Freshfields’ points system, but plenty run compensation and progression on an equivalent proxy: billable hours, years since qualification, or who’s most visible to whoever decides on partner pay and promotion. All of them share the same blind spot: they measure something adjacent to the situations that actually predict value, and they only find out the proxy was wrong when profitability forces the question.
The firms that catch this early aren’t doing anything more sophisticated than asking, before the pressure hits: what are we actually measuring when we decide who gets more, and does it track how someone reads a scope change, catches a problem early, or follows through on what they said they’d do?
Freshfields found out the expensive way. Most firms won’t get a Financial Times headline when they find out too, just a partner who leaves quietly, or a client who moves on, with nobody quite able to say why.
If your firm’s progression or pay decisions rest on a proxy such as tenure, hours, or seniority, how confident are you that the proxy is measuring the thing that actually matters?