Equity Partners

With partnerships now viewed as more commercial entities, the market for equity partners is thriving.

The majority of law firms will always consider the opportunistic acquisition of partners with sizeable followings, as a means of increasing the profits per partner within the firm. More strategically speaking, in today’s economic climate there are various scenarios which could lead to a new hire. These include:

  • replacement of departing or retiring partners
  • desire to expand a specific practice area
  • satisfaction of existing clients’ needs

Salaried and Fixed Share Partners

The number of UK top-100 firms boasting a pure equity partnership has dwindled to single figures. Today, the historical ‘salaried partnership’ role has, in many cases, been replaced by the position of Fixed Share Partner, or else the position of Fixed Share Partner has been introduced as an intermediate step between Salaried Partnership and Equity Partnership. Taxed under schedule ‘D’, rather than ‘E’, Fixed Share Partners receive a fixed draw, along with a token number of equity points and/or a bonus.

Salaried and Fixed Share Partnership is often the entry point for lateral hire, as a full partnership vote is not usually required and, as such, the time and effort involved in agreeing an offer is greatly reduced. Packages vary from £80,000 at the smaller law firms through to £300,000 at major international practices. Salaried and Fixed Share Partnership generally carry reduced voting rights in respect of financial matters, but in all other respects they are treated the same as full equity partners and require attendance at partners’ meetings.

Whilst client followings are normally expected, there are always exceptions to the rule depending on market conditions, area of specialisation, and other circumstances.

Partner Designates

Such an individual can be recruited externally either as a true partner designate, with a given timeline to partnership – for example, in the next intake of partners – or, an individual may be given immediate partnership at a similar level if there is great strategic need. In general, the minimum level of post-qualification experience necessary to be considered as partner designate is 7 years.