Talking to many law firm partners, one would think the subject of profit sharing, ownership and capital structures is akin to rocket science.

Take it on trust, however, that it is not – so long as one key principle is always kept in mind: that is, the need to separate the sharing of profits from the underlying ownership of the firm.

There will always be a link, but if one treats the business like a limited company paying the partners a fair commercial reward for the work they actually do – be it fee-earning or management – but then on top of that, a dividend as a reward for ownership of the firm, then that unlocks the confusion.

That’s not to say that there will be no need for some difficult disc...

To continue reading

This article is part of our subscription-based access. Please pick one of the options below to continue.

Already registered? Login to access premium content

Not registered? Subscribe