Dewey & LeBoeuf has suspended monthly partner distributions, with partners last receiving a payment in August.
Dewey & LeBoeuf has suspended monthly partner distributions due to the economic situation, with partners last receiving a payment in August.
Partners receive a fixed payment of profits every month as well as a monthly share of annual profits. The fixed payments are still being made, but the executive committee has held back monthly distributions to allow the firm to build up a strong cash base.
Firmwide chairman Steve Davis said it was not mandatory for partners to receive a distribution every month, pointing out that the payments are generally made 10 times a year. He added that in 2008 partners have received five distributions, starting in April.
“We wanted to build up a significant cash cushion given the current market,” said Davis. “We need to be financially prudent and building up more cash is a wise decision. We have a diversified practice and that’s a great advantage, but these are unsettling times and it’s important to have good financial management. If an institutional client files for bankruptcy, things can change very quickly.”
Although distributions have not been made for two months, Davis said he was confident the firm will be able to make a payment this month.
The news comes after Eversheds decided to hold back up to two quarters’ worth of drawings to tighten its lockup (TheLawyer.com, 30 October).