A Yorkshire law firm has introduced a ‘tailored equity’ scheme to act as a “stepping stone” between being a salaried partner and full equity.
Howard Willis, head of personal injury and clinical negligence at Chadwick Lawrence, said the firm was applying to become an alternative business structure and aimed to offer tailored equity to non-lawyer partners too.
Mr Willis said the firm’s existing partners had identified a gap in its fee-earner progression structure from salaried to full equity partner, particularly as “quite a few younger solicitors are not as enthusiastic about taking this step as they used to be”.
He went on: “The biggest thing for us is retention. Everyone has been poaching everyone else’s staff, and paying huge salaries.
“We’re keen to retain our best colleagues and give them progression opportunities, otherwise we could lose them. Quite a few of them have been approached by recruitment consultants over the past 12-18 months.
“We’ve created a stepping stone between salaried partner and equity partner – an extra layer of fee-earner progression. This enables us to protect ourselves by keeping the best of what we have.”
With the arrival of six tailored equity partners this autumn, Chadwick Lawrence now has 16 partners, 220 staff and eight offices in Yorkshire.
Mr Willis said ‘tailored equity’ meant the equity was tailored to each of the six solicitors who joined the scheme – two from the firm’s employment department, one from conveyancing, one from regulatory, one from probate and one from litigation.
They have each received a fixed share of the equity – and signed the firm’s LLP agreement – in return for contributing a much smaller amount than they would need to if they became full equity partners.
As part of their package, they receive a share of the firm’s profits, like other equity partners, plus a bonus based on agreed objectives.
“They’ve all signed up to very specific objectives. We’re not ruling out the opportunity for them to make further contributions in the future,” Mr Willis said.
Although the scheme was designed with retention in mind, Mr Willis said it could be offered to new recruits in ”exceptional circumstances”, depending on their qualities and following.
He said there was a financial benefit to the firm in having equity partners and its balance sheet was improved if the firm was financed by equity rather than debt: “We’re viewed as more secure.”
He added that Chadwick Lawrence has “no interest” in moving out of Yorkshire and was focused on “consolidating its position” in the county.