25 May Howdy Partner
Recently I have found myself becoming a regular watcher of the TV game show The Chase. No doubt you are familiar with the part of the show where a contestant is offered a choice of various financial rewards in return for answering additional questions. It never fails to amaze me how often an intelligent contestant, who has successfully answered a range of difficult questions, suddenly bauks at the opportunity of earning an extra $50,000 in return for answering one more question. Similarly, when meeting candidates for senior roles, many tend place undue weight on the risk and under value the reward.
Partnership offers the pathway to you being rewarded, in a more direct way, in line with the firm’s financial success. New partners introduce additional capital into a firm – either upfront or over several yearly payments. These funds are sourced from either the partner’s personal resources or a loan provided by the firm via its bankers. Within the partnership structure equal profit sharing among partners is still the norm, or in the case on limited company structures dividends based on individual share holdings. To encourage diversity, some firms distribute profits in relation to a partners personal and team billings less attributable costs. Both these last two options make it easier for lawyers to enter partnership earlier in their careers as well as accounting for part-time partners/directors.
In recent years there has been a trend whereby up and coming senior lawyers view equity partnership as problematic and stressful, rather than an amazing career opportunity. They feel uncomfortable in a role that has both higher but more variable levels of remuneration. As a result, the rise in the number of salary partners is producing a bulge in the traditional pyramid shaped organisational chart. This preference for salary partnership is perceived as offering an acceptable increase in personal income, while minimizing the perceived risks.
Of course, you may decide that your enjoyment at work comes from the legal work that you do, and that running a business holds no appeal. But, from my own experience, working in a role where you have an ownership stake is definitely more enjoyable, self-fulfilling and rewarding than working as an employee. Of the many people I have placed in senior and partnership roles, over the years, all have had no regrets about their decision to step up.