Partnership planning: Considering partnership

Becoming a partner for many solicitors working in a partnership, can be seen as the pinnacle of their legal career, opening doors to increased reward and recognition, entering the world of self-employment and enjoying the benefits that come with it. However, becoming a partner comes with varying risks and rewards that you should consider before stepping up. It ultimately boils down to your circumstances and attitude to risk. 

Does partnership align with your career goals and ambitions? 

It's imperative to reflect on your long-term career goals and whether a partnership aligns with your aspirations. Consider whether you're looking for the increased responsibility, leadership opportunities as well as the potential financial rewards of being a partner.

Does partnership align with your current skill set?

Partners are often expected to contribute to the firm's growth by bringing in new clients and generating revenue. This requires partners to build networks of referrers who will feed the pipeline with new work. 

It's important to look at your ability and interest in business development and maintaining client relationships before taking the plunge, as this will be a key focus for you as a partner. 

Have you considered the financial implications?

One of the challenges new partners face is how they will be paid. In stepping up to partner, you may shift from being an employee and earning a salary to being self-employed and owning a stake in the firm. This shift has a direct and immediate impact on how you are paid, how your pension works and how your tax liabilities are paid, making  your financial and working worlds more interwoven. 

You will also face the immediate responsibility of putting capital into the firm, making it imperative to ensure your personal finances are in order to fund this and manage the step into partnership. 

Evaluating the risks

When you become a new partner, you will be expected to make a capital contribution to the firm upfront, the amount varying depending on the partnership, perhaps with additional contributions being required from time-to-time. Those stepping up to partner will often take out a substantial loan to invest in the firm, on which  they will then need to make repayments and pay interest. Alongside tax, national insurance, and their own pension as they would now be self-employed. 

Becoming a partner also comes with the need to understand risks external to yourself, such as potential legal risks and know how to take appropriate steps to mitigate them for you, the firm and its clients. 

Stepping up to partner comes with a variety of benefits and risks, as with any big career decision. You will need to assess the shift in your role, responsibilities, and expectations, be ready to lead on strategy and make expert decisions in the best interest s of the firm and your clients. 

Before you make the decision to accept an offer for partnership or start the transition process, it's advisable to have candid conversations with current partners and senior colleagues and thoroughly assess how the partnership aligns with your personal and professional goals.