In defence of partnership – London firm moves to full equity

Marshall: LLP model has proven highly successful

Well-known law firm Anthony Gold has bucked the trend of firms adopting a corporate structure by moving to a full-equity partnership.

The 35-partner South London practice, which celebrates its 60th birthday this year, said the shift gave partners a similar stake in the development of the firm’s strategy.

The proportion of law firms operating as pure partnerships has plunged over recent years – from a third in 2010 to just 12% this year, according to Solicitors Regulation Authority figures. The proportion of LLPs has grown less dramatically, from 11% to 16% in the same period.

While 17% of firms were incorporated companies in 2010, the figure is now 54%.

We reported earlier this week comments that “partnership is dying” as a model, though it remained “an option”.

Anthony Gold handles various types of law but is particularly known in areas such as social housing, personal injury and family. It has 66 other fee-earners.

The firm became an LLP in 2020 but with effect from 1 May 2023 converted to an all-equity partnership, with a small number of temporary exceptions.

It said the nature of the business, with lots of contingent work, required long-term capital investment by its owners and a full ownership model gave partners the freedom to undertake increasingly specialist work.

Managing partner David Marshall explained: “In an uncertain time for many law firms, the vote of confidence by our partners in our core values and financial prospects is extremely welcome and secures the future independence of the firm…

“Becoming an equity owner allows all partners to play a full part in the development of the firm’s strategy, with everyone invested in it to a similar degree, and thereafter a greater autonomy to individual partners as owners in how to develop their personal practice to achieve that strategy.”

By contrast, he went on, a partnership owned by a small number of equity partners with a lot of fixed share/non-equity partners could not avoid creating “something of a disconnect between the interests and rewards available to different kinds of partner”.

The all-equity model enabled “both fair reward for personal contribution and equitable distribution of firmwide profit”.

Also, as Anthony Gold is an alternative business structure (ABS), it could extend that opportunity to non-solicitor members of the LLP.

Mr Marshall – a leading personal injury lawyer and chair of the Law Society’s civil justice committee – said the firm engaged strategic corporate finance advisers, Price Bailey, to review all of the options, including external sale and investment and various models of internal reorganisation.

“A key driver for us was to ensure that we could maintain our culture, which had proved highly successful in achieving long-term sustainable growth. Tax benefits achievable from various corporate models we looked at were generally short term and would have involved making irrevocable changes to achieve them.

“The LLP model is not the only game in town any more but has proved remarkably successful for many years. It still allows flexibility of profit sharing, capital investment and succession which limited company models often look to try to replicate, but usually rather clumsily.

“For us, a firm with a high proportion of partners to other staff, many of them handling complex litigation work, much of it long-tail and on a contingent basis, the all-equity model best allowed us to maintain our culture, retain value in the business for the partners themselves, rather than external parties, and to enable a fair division of that value between the partners over time.”

Anthony Gold is also moving into new offices in London Bridge later this month, with social housing staff in its Elephant & Castle office joining them. The firm will retain its high street presence in Streatham, which mainly handles private client work.

Meanwhile, Leigh Day – the law firm known for its campaigning approach to human rights through litigation – has become an ABS so as to bring in four business services staff as partners: finance director Gurveer Virdi, head of professional ethics and risk management Viviana Marcus, IT and facilities director James Harrison, and HR director Fiona Allen.

Leigh Day now has 71 partners and over 750 staff across offices in London, Manchester, Leeds, Liverpool and Chesterfield.

Managing partner Chris Benson said: “I am delighted that we now have the ability to recognise the skills and dedication of lawyers and non-lawyers in the same way.”

He said the change was driven by his wish to involve a wider group of staff in the partnership contributing to the business “rather than for any capital or other investment purposes”.

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