Partners in SJ Berwin are owed hundreds of thousands of pounds after the beleaguered City law firm delayed paying their share of profits for six months, it emerged yesterday.
The firm, which suffered a 49 per cent fall in partners’ profits last year, made its last quarterly profit distribution to partners in February and suspended scheduled payments in May and August.
Its partners, whose average share of profit fell from £802,000 to £410,000 in 2008-09, still receive their standard monthly drawing of between £12,500 and £17,000 but that amounts to only a quarter of the average partner’s annual compensation.
Rob Day, the firm’s interim managing partner, said that the suspension was prompted by falling revenue and would be reviewed in October, before the next scheduled payment in November.
“Partners are the owners and funders of the business. We pay profit distributions when it is prudent and appropriate to do so,” he said.
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“If we slow down the payment of distributions, we are asking equity partners to provide short-term additional funding to the business.
“We think it is a better solution than alternatives such as increased bank borrowing.”
SJ Berwin, known for its strengths in private equity and commercial real estate, was a high-flying mid-market firm in the boom years.
Its profits soared beyond those of similarly sized rivals, with its top partners making as much as £1.2 million.
It moved into impressive riverfront offices with views of London’s Tate Modern gallery.
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However, the firm was badly affected by the slump in transactional work after the credit crunch.
Revenue fell 14 per cent to £184 million and it made 40 redundancies and closed its media finance division.
A number of firms, including Eversheds and LG, have reduced or delayed partner drawings this year to preserve working capital.
In 2007-08, the last accounts that it filed at Companies House showed that SJ Berwin had cash of £5.1 million. It declined to comment on its present cash position.