New structures assist law firm change
“I have noticed even people who claim that everything is predestined and we can do nothing to change it, look before they cross the road.” Stephen Hawking
Corporate vehicles and alternative business structures now offer significant opportunities.
A few law firm partners we meet view incorporation of a partnership or LLP purely as a device to extract capital value from the firm. But more and more now see it as a genuine commercial opportunity to pass some ownership and management control to others, whilst staying closely involved as a shareholder to continue contributing towards, and benefiting from, the firm’s future growth and success.
For those further down the track, it seems inevitable that retired lawyers with majority or minority equity stakes in law firm companies will become common-place within the next few years. Dividend pension planning, you could call it.
And for the entrepreneurs in the sector, who see their legal career as part of a wider business agenda, they won’t even need to retain a practising certificate now that alternative business structures allow non-lawyers to own law firms. Their business ambitions are becoming more achievable by the day.
From what we are seeing, the profession is taking a completely fresh look at what ‘succession’ really means. The game has changed and, by recognising the distinction between management succession and ownership succession and that succession planning does not have to mean retirement planning, new and potentially exciting options are opening up.
O’Connors LLP is a law firm that advises other law firms on structures, SRA regulation and insurance and comprises lawyers who are highly experienced in working with law firms, alongside their other advisers. We have particular expertise in handling mergers and acquisitions, conversions and incorporations (including ABS applications).