Linklaters, Pinsent Masons and Fieldfisher are among the firms considering a reduction or a delay to the distribution of profits to their partners amid the COVID-19 pandemic disruption, according to people at the firms.
Profit distributions are typically paid out to partners on a quarterly basis, based on estimates for the firm’s profits in the coming financial year.
Each of the three firms is currently deciding whether to pay the full amount at the usual time, according to people with knowledge of the situation at each firm.
Pinsents senior partner Richard Foley told Law.com International’s Legal Week: “Businesses around the world are trading in circumstances that none of us have faced before; we’re no different. In light of this, our focus is understandably on the health and wellbeing of our people, our clients and our suppliers.
“Right now, the guiding principle for most businesses is prudence. Ordinarily around this time of year, we make a quarterly distribution to our partners. Whether we will do so and if so, in what amount will depend upon how events unfold over the coming days and weeks.”
The deliberations around partner profits were first reported in the Financial Times Monday.
Pinsents previously delayed its partner distributions in October due to the firm failing to hit billing and cash collection targets at the start of the financial year.
A survey conducted by Legal Week revealed that many lawyers are concerned about losing out on bonuses, job cuts and delays in billing as a result of the Covid-19 pandemic.
Delayed payments could have a significant impact on firm finances. Analysis by Smith & Williamson last year showed that at the end of the 2018 financial year, the top 50 U.K. law firms were waiting to be paid a total of £5.6 billion in unpaid client invoices between them.
Over the same period, clients took on average 121 days to pay U.K. top 50 firms.