Partnership in a law firm can be incredibly alluring for employees. It conjures up images of prestige, status, respect, increased financial prosperity and a sense of achievement in a career. Itis the pinnacle for most solicitors in small high street law firms. However, beneath the enticing promise of partnership, there can lie hidden motivations and pitfalls. It’s critical to approach any partnership offer with caution, prudence, and a thorough investigation. Law firms often offer partnership—or equivalent senior roles such as directorship or shareholding—as a reward for loyalty, competence, and dedication. In the best scenarios, these offers stem from genuine appreciation and a sincere belief in your long-term contribution to the firm. Partnership serves as a mutually beneficial bond, cementing your relationship and committing both parties to shared success and growth.
Isn’t the world a great place to be?
Unfortunately, the motivation behind a partnership offer isn’t always altruistic or even straightforward and here are a few of the more nefarious reasons we have come across!
1. Genuine Commitment or Strategic Ploy?
At its best, a partnership offer signals genuine regard for an employee’s talents and strategic intent. One cunning plan some law firm owners have is to find a partner to run the business on a day to day basis in future whilst they conitnue to take a hefty chunk of the profits to fund their lifestyles in retirement.
Make sure that if you are offered a partnership there is some benefit to it – for example we often see salaried partners in firms where there doesn’t seem to have been a lot of benefit to the individuals other than the prestige and status of the title ‘partner’. Firms might even leverage the prestige and perceived status of partnership to minimize or defer salary increases. If you are going for salaried partnership without any equity, think about negotiating at least some element of profit share or bonus. Also think about asking for equity – there are other ways of paying for it without just handing over cash.
2. A Mask for Financial Instability?
Be alert to signs of financial distress. Firms that face dire financial challenges might use the lure of partnership to encourage you to invest, which shifts the risk onto you. In these cases, your partnership isn’t just a career milestone—it becomes a financial lifeline for a struggling business. Once a partner/owner, you almost always take over a percentage of the risk, both regulatory and financial.
3. Hidden Risks and Liabilities
Occasionally, less scrupulous firms might seek partners as scapegoats for impending legal or financial crises. We have seen this happen a number of times, and the back of the Law Society Gazette is littered with SDT cases where solicitors have ended up part of a case simply by virtue of being a partner. When you read through the judgement (and we occasionally have to do this when checking out potential locum candidates), their crime seems to have been simply to have agreed to become a partner. Circumstances tend to be very unfair but also avoidable. New partners can unwittingly find themselves accountable for the actions of others, especially in cases of fraud or mismanagement.
How to Protect Yourself
When presented with a partnership offer, protect yourself by following these essential steps:
Negotiate Terms Clearly: Never accept partnership in lieu of a pay rise. If salaried partnership, get a profit share arrangement of some sort if you can.
Review Financial Records: Insist on full transparency regarding the firm’s financial health. Personally I would ask to see the last 3 years of accounts – check the profit and loss accounts in particular.
Have the accounts reviewed by an independent accountant who can detect any underlying financial issues or irregularities.
Ask to see the last professional indemnity insurance proposal form and the claims history for at least the last 5 years.
Get an independent market valuation. Happy to oblige if needed!
Conduct Due Diligence: Investigate all aspects of the firm’s operations. Know exactly who controls the firm, their reputations, and their operational history.
Motivations: Carefully evaluate why the partnership is being offered now. Are you genuinely being rewarded, or is this a strategic move to manage expenses, liabilities, or expectations?
