Top partners at Eversheds, the UK’s eighth biggest law firm by turnover, have been told that they will not receive their regular share of the firm’s profits for the next six months.

In the latest sign that the global economic slowdown is causing pain in the legal industry, the firm confirmed that it has decided to postpone payments to equity partners scheduled for November 2008 and February 2009.

Equity partners — those who own a share of the business — are usually paid their slice of profits quarterly.

David Gray, the senior partner, and other senior managers will review the decision for future quarterly payments in March when the firm assesses its capital requirements for the following financial year.

Mr Gray said the technique was necessary to help improve the firm’s cash management position.

Cash management is a perennial issue for law firms whose partners often expect payment for their share of profits on work which has been completed but not yet paid for by the client. Firms are often forced to borrow money to bridge the temporary gap between money coming in and going out.

Mr Gray said: “We are being prudent in relation to partner capital. If we do not keep working capita at the targets we have set, we will not pay distributions.

“It is hard-edged management but we will not increase our borrowings to pay partners when it is partners that can do something.”

Although Eversheds is thought to be the first firm to suspend payment of partner profits, it is one of several that have initiated redundancy programmes as they adjust to a tighter economic climate.

Eversheds redundancy programme is likely to affect around 30 lawyers plus an unspecified number of support staff. Other firms to have kicked off redundancy programmes include Freshfields Bruckhaus Deringer, Halliwells, Cobbets and Howard Kennedy.

Many other firms will reduce staff numbers by not replacing staff who leave or by managing out poorer performers.

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