SJ Berwin managing partner Ralph Cohen has defended the decision to withhold partner profit distribution payments for the third consecutive quarter.
Cohen said the policy was “prudent” and hit out at firms that have opted to increase cashflow through a capital call instead of retaining existing capital.
“We’ve taken a conservative and prudent approach to cashflow issues,” he said. “The majority of firms have made cash calls - we’ve not wanted to do that.
“People would prefer to receive profit distributions on a regular basis, but they recognise that we’re going through a difficult time.”
SJ Berwin has not made any quarterly payments to its equity partnership since February 2009. The top 20 firm has also seen its average profit per equity partner (PEP) figure slashed from £801,000 in 2007-08 to £410,000 in 2008-09 year.
Cohen was confident that the firm would be able to meet its payment obligations in February 2010.
Several other firms, including CMS Cameron McKenna, Eversheds and Pinsent Masons, have also either deferred profit distribution payments or paid only a proportion in recent months. Camerons finance director Krishna Vishnubhotla said that delayed payments were “not an indication of a firm’s health but of them being prudent”.
PricewaterhouseCooper’s annual survey of law firms revealed that around two thirds of all law firms and half of the top 10 had called on partners to increase their capital contributions during the year.