Legal Firm Survey: Things to consider

By admin - April 5, 2018

Pitcher Partners recently conducted our fourth annual Legal Firm Survey. The survey was designed to gain further industry insight and to help firms make informed decisions during times of rapid change.

Download the full report here.

There are a number of things to consider when determining structure, governance and decision models for law firms:

Legal structure:

  • How to protect assets and income
  • Ease of admission and exit of partners (including CGT on introduction or sale of interests)
  • Flexibility of distributions and remuneration
  • Impact on complexity of administration and taxation compliance
  • The impact of goodwill

Governance model:

  • The desired firm culture and behaviours
  • The level of transparency of decision making
  • Ensuring accountability for decision making
  • Level of direct engagement of partners and senior team leaders

From our experience, whilst each firm will have reason for the legal structure adopted, we believe the optimal structure choices (in order of preference) are:

  1. A partnership of discretionary trusts
  2. Discretionary trust with a corporate trustee
  3. Unit trust
  4. Hybrid trust
  5. A partnership of individuals
  6. Incorporation

Irrespective of the firm’s legal structure adopted, structure will influence but should not determine the governance model you choose. Once a legal structure has been chosen for your firm, choosing and implementing a good governance model will play an integral role in a well-run firm.

Download the full report here.

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