Ashurst partners approve move to annual profit payout
Ashurst partners will receive a single annual profit distribution on top of monthly drawings from May next year, ending the existing quarterly payment schedule
December 22, 2016 at 06:02 AM
3 minute read
The original version of this story was published on Law.com
Ashurst partners have voted in favour of overhauling the firm's profit distribution system in a move that means partners will only receive a single profit payment each year, instead of the current quarterly system.
The change, which required the approval of 50% of the partnership, will take effect from 1 May 2017, when partners will receive any outstanding distributions relating to the 2014-15 and 2015-16 financial years.
From then on, profit distributions will be made annually in April for the preceding financial year.
Monthly drawings are unaffected and will continue to be paid out as normal.
Ashurst managing partner Paul Jenkins said: "I am pleased that partners have given overwhelming support for the changes required to harmonise our global partner payments. After a strong first half of the financial year for the firm, it was the right time to make these changes, which we discussed at the time of the merger.
"We will be bringing partners up to date so all profits up to 1 May 2016 will have been fully paid out and all profits in future years will be paid out within 12 months of the end of each financial year."
As a result of the change there will be a small increase in net capital of £1m.
Jenkins said at that time that monthly drawings would increase slightly as a result of the new system, which was designed to bring greater alignment between profit distributions in the UK and Australia.
The overhaul was announced after Ashurst delayed the quarterly distribution due to partners in August after a difficult 2015-16, paying it out in November.
Revenue and profit per equity partner both plunged by double digits in 2015-16, with the firm subsequently seeing a flood of partner exits – some of which were related to the poor financial performance.
Departures in recent months have included a number of office heads. In September, it emerged that Brussels managing partner Carl Meyntjens, Singapore managing partner Shaun Lascelles and Abu Dhabi managing partner Alastair Holland were all leaving the firm.
However, the firm managed to persuade two high profile partners who had previously handed in their notice to stay – finance partner Nigel Ward, who had been due to join Paul Hastings; and financial regulation partner James Perry, who had been recruited by Gibson Dunn & Crutcher.
Ashurst also recently voted in changes to its partner remuneration structure, adding an extra 10 points to the top of the equity ladder and introducing a bonus pool in an attempt to better reward high performing partners.
Jenkins spoke to Legal Week earlier this year about his plans to turn the firm around after a difficult 12 months, emphasising the importance of improving profitability and a plan to measure the performance of individual offices.
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