SJB postpones partners' quarterly profit payments to boost cash flow

SJ Berwin has held back quarterly profit distributions due to be paid to partners in February to improve cash flow at the firm. 

The City firm, which made the previous payment in November in full, confirmed that it had opted to postpone paying partners their most recent profit distribution on the back of a large January tax bill and increased investment internationally. 

Monthly drawings have been paid as normal. 

Senior partner Stephen Kon said: “We pay partners from available cash flow, which is a prudent way of managing the business. We had a big tax bill at the end of January due to our increase in profitability following our rebound from the downturn and we continue to make significant investment into the business, including opening a new office in Luxembourg, relocating our Paris office and making a significant number of lateral hires. 

“We like to maintain adequate cash reserves in the business. We are building these reserves and will be making further profit distributions to partners in due course.”

The firm saw revenue rise 6% in 2011-12 to £180m, against a 1.4% climb in profits per equity partner to £635,000. It previously held back around £18m in partner profit distributions between November 2008 and the beginning of 2010 to improve cash management during the recession, going on to repay what was owed. 

SJ Berwin’s move comes after Ashurst restarted distributions this quarter after deferring its November quarterly payment.

News of the delay comes as SJ Berwin looks at establishing a presence in Australia. The firm is understood to have been sending partners to Australia where King & Wood Mallesons has been mooted as a potential partner.