“Recently my firm have offered me a role as a salaried partner and informed me that I am being promoted. My salary will remain the same because they cannot afford a paying fee but I will be invited to partnership meetings and asked to assist with the management of the firm. What should I do? “
This is a very common occurrence in law firms up and down the UK at the moment. Firms are finding it hard economically and there is an increasing reluctance to share the equity and profits in a law firm due to shrinking margins. I suppose you could say that this has been the case for many years and equity partners have always been reluctant to share the profits unless there is an obvious benefit for them.
Salaried partnership is something to think about very carefully indeed. I remember doing work experience many years ago in a law firm in Yorkshire with an wise old solicitor who was working as an assistant solicitor on a good wage at the time. He had been offered salaried partnership with his firm and he had politely declined. The reason for this was that he would get the same money as he already did but for increased risk to his professional career and for more work, as the partnership expected him to take over some of the management roles.
It is important to bear this in mind. Whilst being a partner of a law firm is a great achievement and very often the pinnacle in your legal career, it also carries considerable risks and disadvantages.
Firstly, as a salaried partner you take on some of the liability for any wrong doings in the law firm. This means that if any disciplinary proceedings are brought then it is likely they will be brought against you as well as others in the firm. If you decide to go and set up on your own and take on your own professional indemnity insurance there may well be risks there as well. If you come from a practice that has a bad professional indemnity insurance record then this will have an effect on your own efforts to obtain professional indemnity insurance later on.
Furthermore, if there is no salary increase but an expectation that you undertake some of the management of the business, then in actual fact it is not a promotion but a demotion because you are now taking on two roles instead of one and getting paid less money per role.
Make sure if you decide to consider a salaried partnership role seriously that you check the accounts carefully. Get a copy of them and pay an accountant to go through them with you.
By doing this there will be no hidden surprises that come back later also ask to see the bank statements for the past year so that you can check that nothing untoward is going on from that angle as well.
Some firms like to offer written terms for partnership but others have been pretty notorious over the years at not offering anything in writing. It is important to get this and make sure that the partnership agreement is water tight. If you are going to become a partner consider the position with restricted covenants. Do you really want a restricted covenant in the contract that prevents you from taking clients with you to another firm if there is going to be no paying increase and you are going to be expected to share the burden of management? Afterall your fellow partners are likely to be able to walk away and take clients with them.
Even if you agree to a restricted covenant it is very often the case that partners write to all their clients to advise that they are leaving and to state the firm they are going to. This may minimise any effects a restricted covenant has on you from this angle.
In summary make sure that you are taking the salaried partnership for the right reasons. It has to be a genuine step up to benefit your career and not simply an excuse for someone at partnership level to give you more work to do.