Becoming a partner in a law firm: Is it worth it?

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I was interviewed recently by LawFirmAmbition about the most common questions surrounding the topic of becoming a partner in a law firm. Here are my answers to the first five frequently asked questions. 

1. Is it worth being a partner?

It very much depends on the circumstances. Becoming a partner can be the pinnacle of the career of a lawyer, with increased reward and recognition. However, there are risks that go with those rewards that need to be carefully considered.

The questions and answers below highlight some of those potential risks and rewards. At the end of the day, it is very much down to personal choice based on the answers to the points raised, the particular circumstances and your own risk appetite.

2. What are the different levels of partner?

There can be many different levels of partner. Most of the differences are more internally focused than externally. To the outside world, a partner is generally a partner and all may be considered to be of the same level of seniority.

In practice internally, individual partners in a firm often have different levels of seniority, reward, risk, voting rights and capital.

Typically the different levels are:

• Salaried partner – although a partner to the outside world, remains on the payroll as an employee and an expense of the partnership, usually at a fixed salary; few if any voting rights; and no capital invested in the firm.

• Fixed share equity partner – usually self-employed (subject to certain tests for members in LLPs in particular); receives a fixed profit share out of the profits generated by the firm; has certain but typically restricted voting rights; and has a small amount of capital invested in the firm.

• Full equity partner – self-employed; receives a percentage of the profits generated by the firm; has voting rights; and has a larger amount of capital invested in the firm.

There can be levels in between these, particularly in a lock-step situation where partners move from fixed share to full equity in steps over a period of time. In such circumstances, the rewards, voting rights and capital usually increase with each step.

3. How can I improve my chances of being offered partnership?

With any promotion, it helps to be seen to already be undertaking the role that you are looking for. That tends to be the case in law firms making internal promotions to partner.

Partners are usually required to have high levels of personal fee income and to generate work for themselves and/or others. Such pre-partner ‘rainmakers’ are easily recognised in the firm and are usually on the radar of the partners as ‘partners of the future’.

However, it is not just enough to be a consistently high biller. Individuals looking to become a partner will also need to pass the ‘good egg’ test:

• be a positive ambassador for the firm
• help others within the firm
• undertake projects on behalf of the firm
• be seen as a safe pair of hands
• have strategic and commercial nous
• be popular in the team

Particularly in larger firms, it can be difficult to demonstrate these skills. It is important to find a way to let them be seen and valued by the partners, without shouting too loudly. Showing that you are keen for partnership and the future success of the firm will help, but being too demanding will not. A fine balance needs to be reached.

You may also want to look into development programmes that help potential partners learn (and then demonstrate) their business skills, in areas such as business development, people development, financial management and strategic management.

4. Where can I find help in deciding whether to accept an offer of partnership?

It is important to understand:

• the terms of the offer
• the impact that will have on your rewards
• the additional responsibilities you will take on
• the additional risk that you will take on
• your obligations under any governance document such as a partnership agreement

Your decision on whether to accept will most likely balance the pros and cons of these, depending on your own personal risk/reward outlook. Having another person to discuss the factors with will often help the reasoning to crystallise in your own mind.

As well as informal conversations with your family, with fellow lawyers and existing partners in the firm, you may want to consider formal discussions with a specialist adviser. You should aim to have a series of questions for the law firm management team that will allow you to become comfortable in deciding whether or not to accept.

5. What information should I be asking for before I accept the offer of partnership?

We suggest that, as a minimum, prospective partners should initially ask for:

• an offer letter that outlines the deal being put forward and exactly how it will work
• the full annual financial statements of the practice for the last three years
• the monthly management accounts from the end of the last financial year to the current month
• the relevant governance document ie partnership agreement/members agreement/shareholders agreement
• any forecasts that may have been prepared

If the firm is unable or unwilling to provide the above, then that in itself may be an indication that the offer is not right for you.

Reviewing this initial information can prompt a list of questions or requests for further information to be raised with the firm’s management team.