A law firm in Sussex has become the latest employee-owned law firm, with its former owner saying he expected more to follow suit.
Meanwhile, staff at a firm that became employee owned last month are in line for their first profit share of £500 each.
Bennett Oakley has 25 staff and offices in Brighton, Burgess Hill, Hassocks and London offering a broad range of personal and business services. All will enjoy an equal share of the firm’s profits annually, with new recruits eligible to become employee owners after a year.
Outgoing managing director Simon Elliott, who is retiring, told Legal Futures that the idea to transfer the firm into an employee ownership trust (EOT) came initially from the experience of his wife working at a company that went through the process, rather than as part of his retirement planning.
He said he saw “how her workplace changed” for the better as a result. Other options, such as a trade sale or management buyout “wouldn’t have felt right”.
“I’m leaving the firm in a very strong position,” he said. “I have seen how hard everyone has worked around me, and I owed it to them to preserve the business.
“Employee ownership avoids the risk of redundancies or cultural changes that a trade sale would bring and secures the business for the future.”
He recounted hearing many other law firm owners complaining about the difficulties of selling their firms so they could retire. “It’s a win-win for everyone. I am a little surprised why not more law firms do it. I’m sure it will get more popular.”
The leadership team that has been in place for the last year will continue to run the firm. Sarah Rowland becomes chief executive, James Leighton managing director and COLP, and Samuel Cash operations director and COFA.
Mr Cash said that once staff understood the implications, especially that they were not taking on any risk, “there was no hesitation” about embracing it.
“I don’t think there’s a downside – if there is one, we haven’t found it yet,” he said.
Following an independent valuation of the business, Mr Elliott has sold 100% of the firm to the trust. He has received an initial payment – Mr Cash said “we agreed a figure that would leave us enough working capital and reserves to keep it profitable” – plus deferred consideration to be paid over time.
Until then, Mr Elliott will be one of the four directors of the trust, but he said he did not intend to interfere with the running of the firm.
EOT rules do not require staff to receive equal profit shares but Mr Cash explained that the leadership team and Mr Elliott decided it was the “fair” approach to recognise that all staff contributed in different ways: “If there wasn’t someone there to answer the phones, there wouldn’t be legal work for the fee-earners to do.”
The firm’s “short-term vision is to settle into new way of life”, but longer term Mr Cash hoped becoming employee owned would “set us out from the rest”. It had already helped with attracting staff.
EOTs were introduced by the government in 2014 to encourage long-term employee ownership, and one in every 20 private company sales is now to an EOT, with Bennett Oakley thought to be the 14th law firm to do it.
Oliver & Co in Chester made the move last month and, on LinkedIn yesterday, managing director David Owen wrote: “Fabulous news at Oliver & Co yesterday, when it was announced that the first profit share since becoming employee-owned last month, would be made in November.
“Subject to having been employed at Oliver & Co for six months, every employee will now receive a payment of £500 income tax free! We are already seeing the benefit of being an employee-owned business!”