Dibb Lupton Alsop is understood to have dropped a controversial plan for a cash call to boost its tax reserves after a rebellion among its 142 junior partners.
Sources close to the firm said Dibbs hoped that its junior partners, referred to as "fixed share partners", would forgo a proportion of their income to increase the reserves. The fixed share partners are said to have received the proposal in an e-mail message from senior partner Roger Lane-Smith, and then to have rejected it after a series of heated meetings led by the Sheffield office.
One source said: "Dibbs has now withdrawn the proposal for the time being, but you've now got a bunch of junior partners who are very unhappy."
Dibbs, however, sought to play down the rumpus. Lane-Smith "categorically" denied there "is any question of a cash call".
The situation is thought to have been triggered by the Inland Revenue's change in partnership taxation from "preceding year" to "current year", which is resulting in a bigger than normal drain on tax reserves for many firms.
But Lane-Smith rejected rumours that there has also been a squeeze on 1997/98 profits. "The firm is extremely healthy, very profitable, with lots of cash in the bank," he said.
There has been a history of partnership wrangles at Dibbs, and earlier this year the firm attempted to introduce a more collegiate culture by appointing an operations manager, Andrew Chappell, to work alongside managing partner Nigel Knowles.