Chief Executive Partner Robert Milliner made the announcement to staff at the firm Wednesday morning, citing the weaker financial outlook.

The salary freeze will be subject to a review at 31 December, dependent on whether the firm is "tracking on or ahead of budget" for the year 09/10.

Mallesons' head of communications Kris Barry explained: "It applies across the board from the start of the new financial year 09/10; the plan is to keep the salary freeze in place for 12 months. However, if the business is tracking well at the end of this calendar year they may consider lifting it."

There will be no salary increases based on CPIs or band movements (for example moving from second to third-year lawyer).

Bonus payments will remain in place, as will promotional salary increases for those moving into the senior associate or partnership ranks. Non-legal staff will be eligible for discretionary bonuses on a case-by-case basis.

Partner income will be lower this year as well, with the firm anticipating a lower profit pool at the end of the current financial year.

The firm also moved to quash online rumours about its performance-management strategy.

"The other thing I've seen on these blogs [is] that Mallesons is using performance management as a backdoor way of cutting headcount - we are not," Barry said.

"The best indication I can give for you on that is that we are looking at the same distribution of performance ratings across the firm as previous years."

Barry also confirmed a firm-wide freeze on recruitment, but said the firm had not made any retrenchments of legal staff in the current financial year.

"There were about five back office or shared services staff made redundant in the last 12 months [and] that wasn't related to the GFC, that was just internal structural changes, but no legal staff have been made redundant this financial year," she said.

- Laura MacIntyre