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Contribution change calls for extra £100K from many partners
Addleshaw Goddard in capital structure rejig" />Addleshaw Goddard has reorganised its partner capital contribution system post merger, in a move that has seen many equity partners putting an extra £70,000-£100,000 into their capital accounts.
Legacy Addleshaw Booth & Co partners had between £80,000 and £288,000 in their partnership capital accounts, whereas Theodore Goddard partners all held £150,000 each in theirs. The firm has now moved to a three-tier contribution system, dependent on seniority, with partners making capital contributions of £150,000, £200,000 or £250,000.
The move means that the senior equity partners from Theodore Goddard have invested as much as an extra £100,000 and junior equity partners from Addleshaw Booth have put an extra £80,000 into the new firm.
The situation is rosier for partners who were at the top of equity at Addleshaw Booth, who will have received £38,000 back.
The partners who have made extra contributions have funded it from their current accounts, which is where they keep their share of the firm's profits. If there had been no merger, this is money that they would otherwise have taken home.
It is understood that the increased capital contributions have not been made because of any significant debt. Addleshaw Goddard is believed to have an overdraft facility of around £6m.
Theodore Goddard partners have also said goodbye to 'the Floor' - the system of a minimum and equal amount of money that they were permitted to draw each financial year, regardless of performance. This amounted to around £150,000 last year.
"Both sets of partners at both legacy firms bought into the idea of losing the Floor," said Addleshaw Goddard managing partner Mark Jones.
The merged firm now operates a lockstep system with each equity partner receiving a different amount of the firm's profits.