Jonathan Molot re-examines the law firm partnership model
When Patrick Allen, senior partner and majority owner of UK solicitors Hodge Jones & Allen, decided to retire, the firm faced a difficult question—one prompted by the law firm partnership model: where would it obtain capital to continue operating? Due to the rules governing law firm ownership, Allen could not retain his ownership stake in retirement. He had already transferred management, but this did not solve the problem of capitalisation—a problem that continues to plague law firms.
Unwilling to break up the firm or merge it with another, Allen and his management team decided to do something novel: they created an employee ownership trust. The new ownership structure will benefit its 230 employees, all of whom will receive yearly tax-free distributions up to £3,600 depending on the firm’s profits, thereby incentivizing even greater performance and promoting a vibrant work culture. Allen will stay on as a senior partner and act as a trustee while gradually transitioning to retirement, which will allow
