One In, All In: Stevens & Bolton moves to all-equity partnership model

October 14, 2019

2 min read

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What's going on here?

Regional outfit Stevens & Bolton has levelled the playing field for its partners by implementing an all-equity partnership model, making good on its 2017 strategic plan.

What does this mean?

Law firms operate through the business entity of partnerships, with the majority choosing limited liability partnerships (LLPs). All such firms have a partnership agreement, which stipulates how profits are to be shared among partners. An all-equity partnership model, like the one Stevens & Bolton is implementing, entitles all partners to a percentage share in profits. Ordinarily, some partners would get a percentage cut (equity partners), where others would just receive a salary (salary partners). Of course, sharing in profits is only made possible with strong revenues. 

This move aims to bridge the gap between junior and senior partners. The decision was made in a bid to stimulate more unity amongst the firms’ partners. Richard King (the firm’s managing partner) noted that “the new structure makes for a more collegiate firm”, adding further that being more cohesive is in line with how they envision operating as a business presently and in the future.

Lawyers at the firm will be delighted to learn that this scheme will run concurrently with the firm’s regular bonus programme.

Why should law firms care?

Stevens & Bolton’s implementation of an all-equity partnership represents a wider incipient trend towards greater equity sharing in the legal services industry. In 2015, Taylor Wessing also introduced the model to reinforce the collaborative nature of its partnership.

Both Stevens & Bolton and Taylor Wessing have implemented this model to make their firm’s culture more inclusive. However, this model may not suit all firms. For some individuals, a meritocratic “eat what you hunt” model is more motivating. Unlike that model, an all-equity partnership does give preferential rewards to partners who generate more revenue than others. This drawback may precipitate partners moving to firms who privilege individual rather than collegiate efforts.

Furthermore, an all-equity partnership may not be attractive to individuals who want to pursue a long-term career with the firm. For instance, Slaughter and May utilises a lockstep model for their partnership, in which the equity shares of partners are determined by their seniority within the firm. The majority of Slaughter and May’s partners have served the firm since they were either trainees or associates, so they have skin in the game. For those trainees who want to be rewarded for their loyalty, a lockstep model outweighs an all-equity model. 

Ultimately, all partnership models have benefits and drawbacks. Lawyers may be drawn to firms’ partnership models for various reasons, such as rewards for client development and long-term loyalty. It follows that a firm’s partnership model is likely to affect the culture it wants to generate amongst its lawyers, and the type of individuals it can recruit.

Report written by Marselia Ong

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