Ashurst ends pay freeze

Management aims to complete profit payouts within a year of the financial year-end

There were low grumblings to be heard among some Ashurst partners about its decision not to pay profit distributions for the last quarter following a 6 per cent drop in first-half revenues, as reported by The Lawyer in November.

But the firm is said to be back in high spirits after it chose to break the freeze and pay partners this quarter – a decision understood to have been taken by management in the past week.

The news will be a relief to present and former partners, many of whom had only received around 20-30 per cent of their 2010/11 profit shares. It is understood the firm aims to complete profit payouts within a year of the financial year-end ideally, and within two years if circumstances are tougher. Neither of these are fixed deadlines, and the firm is well known for its prudence.

Ashurst frequently claims to have no debt and said at the time of the referral that its policy was not to borrow to pay distributions. High-profile law firm collapses have proven how sensible this is.

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Back in November it expected to pay distributions this quarter and has held true to this. Needless to say it is far from the first time the firm has held back profits for a quarter. Indeed, this is by no means a method of financial management unique to the Appold Street outfit.

SJ Berwin deferred profits for more than a year during the financial crisis, while CMS Cameron McKenna, Eversheds and Pinsent Masons also held back profits.

Ashurst has declined to comment on the latest decision, so it is not yet clear whether it made up entirely for the autumn haircut and is now quits with partners, or if there are still outstanding profits to be paid.

And now that partners are being asked to pay capital into the firm upfront rather than have part of their profits held back, a move carried out to bring the firm in line with Australian tie-up partner Blake Dawson, things are different at Ashurst from the way they used to be.

Whatever the details of the distributions, one source of worry at the firm has been shelved for the time being.