As partnerships continue to take a cautious approach to profit distribution, SJ Berwin has confirmed that it has released profits that it withheld in February.
The firm’s profit per equity partner (PEP) increased by 1% between 2011 and 2012 to £635,000 with revenues up 1% to £180.1m. According to the firm, the February distribution was held back as a matter of caution in light of a large tax bill in January.
The practice is becoming increasingly commonplace – in March, Field Fisher Waterhouse withheld their partner distribution, citing the firm’s investment plans as the reason for the delay. The firm saw its PEP drop by 16% in 2011/12 to £434,000 against a revenue increase of 4% to £97.6m.
However, it is not just firms that have seen a drop or only marginal increase in PEP that are withholding profits. Ashurst held back its quarterly distributions in November last year, later making the payment in February. The firm saw its 2011/12 PEP up by 5% – respectable in a year of very mixed performances among the top 20 firms in the LB 100 – to £747,000. Dentons, meanwhile, has delayed some of its payments over the last 18 months from the 2011/2012 financial year.
Berwin Leighton Paisner – which did see its PEP drop by 5% between 2011 and 2012 – held back bonus payments to senior equity partners in March. Managing partner Neville Eisenberg said: ‘We operate a conservative and prudent approach to partner distributions which is important in the current market and expect to pay these bonuses in instalments by June 2013.’
As the Royal Bank of Scotland’s James Tsolakis told Legal Business in our April issue: ‘The old model of withdrawing all the profits is no longer fit for purpose. Most top firms have no drawn debt and are financing the business with capital.’