Hammonds is reducing partner drawings by an average of 12 per cent in anticipation of a “significant” drop in UK profitability.
The firm is also carrying out a programme of redundancies among fee-earners and support staff.
Hammonds’ management made the announcement to partners earlier this week as part of a wide-ranging review designed to cut costs.
Peter Crossley, Hammonds’ managing partner, said: “We have recently met with our partners to announce that due to an exceptional charge which is going to hit the current financial year, our level of profitability is going to be lower this year than anticipated.”
Crossley added that turnover was expected to be flat. Last year, according to The Lawyer UK 100, Hammonds’ income was £136m, with average profit per equity partner of £272,000. Neither Crossley nor senior partner Richard Burns would confirm the size of the expected profit drop, saying only that it was significant, but it is understood that it could exceed 20 per cent.
With regard to the redundancies, the firm refused to confirm whether or not partners would be included, although other fee-earners will be laid off.
Hammonds’ management also said that in order to cut costs within the firm, support services will be centralised and that the firm is examining other ways of saving money. The “exceptional charge” refers to the costs of reorganising the business and will be incurred entirely within the financial year 2004-2005.