Partners at Ashurst have voted in favour of a single yearly profit payment to replace quarterly distributions.
The firm said in a statement it will bring partners up to date so all profits up to 1 May 2016 will be fully paid out and all profits in future years will be paid out within 12 months of the end of each financial year. The changes required a 50% vote to pass and as a result a £1m net increase in capital will be made by the partnership.
The changes mean that partners will receive outstanding distributions in May 2017.
Ashurst global managing partner Paul Jenkins (pictured) 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.’
Ashurst’s monthly drawings will continue but the payments, which are already considered high within the market, will rise by approximately 5%.
The proposed changes come after the firm halted quarterly distributions in August following disappointing 2015/16 financial results, which saw profit per equity partner drop by 19%. The firm is to restart its distributions this month.
Earlier this year Ashurst partners voted through fundamental changes to its remuneration system in a bid to retain star partners, including stretching its lockstep and allocating equity share to salaried partners.
Changes included adding an extra ten points to the top of the equity ladder, which currently starts at 25 points. The top of the ladder will now plateau at 75 points, while the bottom of the ladder will remain unchanged. A performance-based bonus pool for both equity and non-equity partners will also be brought in.
Salaried partners will receive part of their remuneration as a full equity share, although it is not clear what the ratio will be. The changes come as part of a strategy by the firm to drive high performance and collaboration.
victoria.young@legalease.co.uk
Read more: ‘Comment: Looking forward to Ashurst’s decline – The outlook worsens for a proud City institution’
Read more in-depth coverage in: ‘Don’t look back in anger: Ashurst leadership tries to rally partners but the drift continues’
