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Asha Vadher
Regional Contracts team
London office
Fixed Share Partners
There are very few law firms that are all pure equity partnerships. This structure is very much in decline. Most law firm partnerships have several different levels. Historically, the first entry into a partnership was salaried partnership. This was, and still is, a role which is taxed under schedule ‘E' (PAYE). Today this role has, in the main, been replaced by fixed share or ‘B' equity positions. These roles are taxed under schedule ‘D' and whilst individual structures can vary enormously, these are typically made up of a fixed, guaranteed element and a small amount of equity and/or a bonus. Many of these fixed share roles have no voting rights.
Packages vary from £80,000 at the smaller law firms through to £300,000 at major international practices.
The recruitment market at this level is very active. Many law firms prefer to recruit at this level rather than at full equity, as it is easier and quicker to get an offer agreed internally since there is often no need for a full partnership vote. Also, if an individual is found to be unsuitable, there is a reduced notice period of 6 months as opposed to 12 months. This level is often used as a ‘getting to know you' period before equity is considered. The types of recruitment of fixed share partners can be divided like this:
- Opportunistic - This market exists in any economic climate. A large number, if not most law firms, are often interested in bright young partners who have solid client followings and strong client development skills.
- Strategic - As the economic confidence increases, the market continues to improve dramatically.
Many law firms seek partners at this level due to economic benefit. Hiring at this level allows the firm to become acquainted with individuals before they introduce them into equity.
When firms need to build up a practice they will normally look at hiring an experienced equity partner initially and then look to hire partners at this level to bolster the team before going on to hire assistant solicitors.
Client followings are normally expected, but there are always exceptions to the rule depending on market conditions, area of specialisation, specific circumstances and particular need. Current areas where followings are often not essential include: tax, pensions, finance areas and, as the market improves, corporate.
