Is Links boxed in as market moves Freshfields' way?

So Thursday (2 April) proved to be the day the phoney debate on City associate salaries finally ended. After all, you could have still made a case that a course of action wasn't entirely set when Freshfields Bruckhaus Deringer led the market by announcing that it was to halt the associate track back on 9 February, holding assistant salaries at 2008 rates. But by the time Allen & Overy announced it was freezing salaries later that month, any genuine debate was over. That still left most of the City 'reviewing' their salaries. This week that 'process' finished with Clifford Chance following suit on Monday (30 March). When even Slaughter and May - perhaps the one firm that could conceivably have made a business case for bucking the trend - announced a freeze yesterday, the fat lady had not only sung but made it home and put her feet up.

But while the market is set, there remains the matter of Linklaters' response, and this should be interesting. This is the one firm that looks the least enthusiastic about the whole pay freeze concept. (Please, ranting posters, don't start hyperventilating about pay cuts - I'm fully aware that halting the track effectively reverses the 2007 hikes in underlying pay bands, but it still does still not constitute a pay cut back on Planet Reality).

The reason for Linklaters' lack of enthusiasm for a pay freeze is partly that it has committed itself to dealing with excessive overheads through substantial job losses. The rationale of Linklaters' stance was clear. This was a restructuring aimed at repositioning the firm not only for the post-Lehman age but also in taking the firm a notch further up the value chain after a period in which some felt there had been too much quantity and not enough focus on quality.

Yet with the market having moved Freshfields' way, Linklaters will either have to try to sell to the troops a major redundancy programme and a pay freeze, or buck the market and take on millions of pounds in additional costs. It's understandable that some rivals believe the firm has rather boxed itself in on this one.

Current indications are that swallowing significant extra costs was not high on the agenda as partners headed off to Monaco this week for Linklaters' annual partner conference, but a flat freeze is not that popular with opinion-formers either. The only other option that would leave is a move towards a more merit-based remuneration system for associates that would leave scope to reward the stars. A pure guess: the end result will be a freeze with a bit of sugar for the high performers. Still, rivals shouldn't get too smug. As Mergermarket's recent Q1 figures show, Linklaters' spot of global difficulty has done nothing so far to blunt its competitive edge.