Insight & Advice

Advice: fixed-share partners

Salaried to fixed-share partner
Historically, non-equity partners were salaried partners and were taxed under schedule E (PAYE). This role has now evolved in many law firms to become that of a fixed-share partner. This is due primarily to a more advantageous tax position, where fixed-share partners are taxed under schedule D. The package is typically made up of a fixed, guaranteed element and a small amount of equity and/or a bonus.

Business development
You will need to demonstrate your ability to develop a business. For some firms and roles this will mean a demonstrable client following; others firms will want you to demonstrate your potential by providing levels of contacts and billings history. This must be evidenced in a business plan. There is no set precedent and each plan can be different in length and format. We can work with you to help you to produce the appropriate document.

Being a fixed-share partner
The role of fixed-share partner provides an opportunity for both sides to evaluate each other before you are invited into the equity. Although you are a partner of the firm, the role may carry no, or only limited, voting rights. As a result, control will, in reality, rest with the equity partners (or, in some larger City firms, with elected or appointed committees). As well as short-term considerations, such as salary, we will discuss with you your medium- and long-term prospects; how you can make the next step of being invited to join the equity; and the consequences of such a move.

The process
The process can often be quicker than for full-equity partners. That is because there is not always the full requirement of a partnership vote. In addition, the notice period for fixed-share partners tends to be six months rather than the 12-month period common for full-equity partners. The process can be as quick as one month but may take longer in some firms. You will be required to provide a CV and a business plan in due course, although neither may be needed for an initial exploratory meeting. This will usually be followed by a series of meetings with different partners.

Opportunities
The market for fixed-share partners is extremely buoyant. In the current economic environment, more and more partners are taking the opportunity to consider their current remuneration, their synergy with clients and their career prospects before making the commitment to equity. Law firms will instruct us on specific partner vacancies. These may arise through retirement, the need to replace departed partners or a desire for strategic growth. Alternatively, many law firms are opportunistic and will be keen to meet with strong partners in any practice area. We will work with you to understand your practice and clients. We will then recommend firms with the right synergy and potential to grow your practice further.

Salaries
Salaries for fixed-share partners will usually consist of a basic salary coupled with a small element of equity. Packages across London can vary enormously: while partners at smaller West End firms can earn £75,000 those at major international practices can earn as much as £300,000. The average starting range for City firms is £120,000-£170,000. The structure of packages can vary enormously, with some including substantial commission elements in respect of work brought in and billed. Some firms offer a wide range of deals.

When you join a firm as a fixed share partner, you should have a clear understanding of how the equity works and your potential to achieve equity (should this be something you would like).

We have substantial experience in assisting partners and those seeking a first partnership step to become fixed share partners. We will work with you at the outset to help you assess the opportunities available to you in the market and to ensure that you have the information that you require to make sure that your decision to join a firm as a fixed share partner is the right one. We will then guide you through the moving process.