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’

 

 

Ashurst is to get rid of its quarterly profit distributions in favour of a single yearly profit payment, in a move subject to a partnership vote.

Ashurst’s monthly drawings will continue but the payments, which are already considered high within the market, will rise by approximately 5%. Partners are expected to vote next month on the changes and 50% of the partnership must agree to the change.

If the vote is approved by the partnership, partners will receive remaining distributions that are due next May. In order to make the payments, Ashurst expects a £1m net increase in capital will be made by the partnership.

A spokesperson at the firm said: ‘we are planning to introduce a new distributions policy at the beginning of the next financial year that will see us paying a single annual distribution within 12 months of financial year-end. Partners will receive the remaining distributions that are due this year, relating to 2015/16 in May 2017. This completes the process of harmonising partner payment arrangements that we discussed at the time of merger.’

Ashurst will adopt a hybrid model of its own legacy payment system and legacy Blake Dawson’s, which historically paid out its partners on a yearly basis.

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.

As yet it is unknown whether the full share of profits will be paid out to partners or whether they will just receive a portion, as Ashurst has historically paid out less than partners are owed each quarter if it has insufficient funds to pay all partners.

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 10 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.

madeleine.farman@legalease.co.uk

Ashurst partners are set to receive their quarterly profit distributions this month after payments were delayed earlier this year.

A partner at the firm confirmed that quarterly profit distributions are expected this month after Ashurst halted its August payout to partners following disappointing 2015/16 financial results, which saw profit per equity partner drop by 19%.

Former partners have told Legal Business the firm had also failed to pay out its February quarterly partner drawings this year and it is understood a hefty tax bill in January contributed to the firm’s inability to pay.

As yet it is unknown whether the full share of profits will be paid out to partners or whether they will just receive a portion, as Ashurst has historically paid out less than partners are owed each quarter if it has insufficient funds to pay all partners. However, those within the firm and outside confirm that, in comparison to other firms, Ashurst makes significant monthly payments.

The firm posted its second year of falling revenues following its merger with Blake Dawson in 2013 with turnover falling 10% to £505m while PEP took a significant hit, dropping 19% from £603,000 from £747,000. Following the disappointing performance, in July the firm voted through changes to revamp its lockstep in a bid to retain heavyweight partners.

It has been a rocky year for exits with a number of office heads most recently leaving the firm. Brussels managing partner Carl Meyntjens left in September and Abu Dhabi head Alastair Holland left for New York-based Curtis, Mallet-Prevost, Colt & Mosle. Meanwhile, Singapore head Shaun Lascelles is leaving for Vinson & Elkins with fellow corporate partner Keith McGuire joining PwC Legal.

However the firm saw two U-turns with Nigel Ward, who resigned for Paul Hastings, and James Parry, who was set to join Gibson, Dunn & Crutcher, choosing to remain at the firm.

madeleine.farman@legalease.co.uk