When two Freshfields partners met for dinner in London last year, it didn’t take long for their discussion to turn to the firm’s US investment and its impact on the wider business.
One partner began rattling off back-of-the-envelope calculations about how much the firm’s ambitious stateside expansion was costing him personally. ‘This is costing me pounds on every point,’ he complained to his dinner companion. ‘Why should I invest in it?’
‘People are aware how much this is costing,’ the other partner, who has since left the firm, tells Legal Business. ‘Particularly those in the latter stages of their career who are unlikely to see the returns.’
Even though the partnership is broadly supportive of Freshfields’ need to expand in the world’s largest and most profitable legal market, and acknowledge the progress it has made, some remain less impressed about the unavoidable disparity in profit share on either side of the Atlantic and what they perceive as an imbalance in investment priorities.
This tension has intensified as Freshfields has stepped up efforts to improve firmwide profitability by more actively managing its partnership, with some suggesting that Europe and Asia have been paying the price for the firm’s US ambitions, while performance and investment in the US have come under less scrutiny.
‘This is costing me pounds on every point,’ one partner complained to a dinner companion. ‘Why should I invest in it?’
Yet the investment has delivered tangible progress. Since hiring Ethan Klingsberg from Cleary Gottlieb in 2019, Freshfields has steadily built out its US platform, adding senior talent across a range of practices, including Cravath dealmaker Damian Zoubek, who is now US managing partner.
The firm has more than doubled US headcount since 2019 and now counts around 500 lawyers, including more than 100 partners.
Since autumn last year, Freshfields has been engaged in what one former partner calls a ‘radical’ reshaping of its partnership. The overhaul is intended to increase firmwide profitability, while also allowing greater control over equity allocations and partner pay.
Five sources said one driver for this focus is that profit per point had remained relatively flat at around £70-75,000 for several years.
‘If you look at the profitability per point, that has not increased and that is certainly the main reason behind why there is a pretty significant reorganisation taking place,’ one former partner tells LB.
It is understood that the firm’s 2025-26 results will show an 8% increase in PEP to £2.53m, meaning average PEP will have climbed by around 22% over five years.
Taking steps to better manage the equity should allow Freshfields to continue investing in US growth, while also enabling high-performing partners in Europe and London to earn more.
‘A significant number of people have been managed out, while others have lost a lot of equity overnight’
However, one former partner describes the ongoing reshaping as ‘brutal’, with some partners seeing their equity points reduced and others effectively managed out.
The process has also triggered exits the firm would rather have avoided, from those unhappy with what they perceive as a change in culture and/or a waning commitment to individual markets, or practices, in Europe and Asia.
‘A significant number of people have been managed out, while others have lost a lot of equity overnight,’ one person familiar with the changes said of recent European departures. ‘At the same time, people have been leaving for reasons other than compensation.’
Since January, Freshfields has parted ways with private capital partners in Germany and Italy, as well as funds partners in London. There have also been high-profile exits in Asia-Pacific, including Grace Huang and Edward Freeman’s moves to Latham & Watkins in Hong Kong, and Nigel Gleeson’s departure for Gibson Dunn in Singapore.
The perception among some had been that the US was escaping the same level of scrutiny, despite several former partners suggesting that in various US practices ‘profitability is low but they also have a lot of equity points.’
‘[European partners] were always having to finance the US. Everyone knows this has been quite difficult,’ says another.
The firm has added 50 laterals in the US over the last four years, which has not come cheap, although it has delivered tangible results, with US revenue climbing by 172% over the four years to 2025.
‘At some point everyone has to prove they’re worth what they’re getting paid’
It has also won roles on big M&A deals, enabling it to climb into LSEG’S top 10 for M&A deal value in the first 9 months of 2026. Last year its mandates included advising Stanley Black & Decker on the $3.2bn sale of its global electronic security solutions and healthcare businesses to Securitas AB.
Several sources have also highlighted the firm’s US antitrust practice as being one of the region’s best-performing.
But, with at least 13 partners leaving Freshfields in the US since the turn of this year, it appears that the firm may have heeded some of the criticism and put performance across the Atlantic under closer scrutiny. Although, as in Europe and Asia, some of those leaving have been strong performers.
‘There was a time when there was a double standard, where the firm was harsher on European partners than it was on Americans,’ says one former partner. ‘Hopefully it is past this and the firm is managing the US equity, which they never dared to do in the past.’
One current partner says the reshaping is less about the US versus elsewhere than cracking down on performance everywhere. ‘This is what well-run businesses do,’ they tell LB. ‘They look at performance and contribution to ensure reward aligns with value creation across the firm. It’s about maintaining high standards and accountability, not about one region funding another.’
Another concludes: ‘There may well be movement in the partnership in the US going forward, because at some point everyone has to prove they’re worth what they’re getting paid.’
Freshfields declined to comment.
Related: ‘We needed more flexibility’ – Georgia Dawson on reshaping Freshfields for the future
