Ashurst defers partner payouts after first-half turnover slump

The move follows news that firm’s half-year revenues were down 6 per cent for the first six months of 2012/13 compared with the same period last year (23 November 2012).

It also comes amid a change in the firm’s capital structure that sees partners asked to pay capital into the business upfront at the start of the financial year for the first time.

The firm - which has long prided itself on being debt-free - described the decision to hold back profits as a prudent move carried out to avoid borrowing to pay partners.

An Ashurst spokesperson said: “Our policy is that we never borrow to pay distributions. So this quarter we have not made a distribution but expect to do so in the next quarter.”

As standard, partners receive monthly drawings and quarterly distributions, although the firm has held back distributions in the past. The current quarter’s payout was scheduled for around this month.

It is unclear whether the next quarterly distribution will be the standard amount or a larger payout to compensate for the deferral.

It marks the second change to Ashurst equity partners’ financial position in recent months after the firm switched to the system of taking capital from partners at the start of the year or on joining the equity. The move was intended to make the firm’s capital structure more in line with its Australian arm before they merge financially by 2014 (10 September 2012).

Average profit per equity partner at the firm rose 3 per cent last year from £723,000 in 2010/11 to £744,000 in 2011/12 (4 July 2012).

City rival SJ Berwin went for more than a year from early 2009 without paying its quarterly profit distributions to partners.

Other firms that deferred distributions or only paid a proportion of them during the financial downturn include CMS Cameron McKenna, Eversheds and Pinsent Masons.