Law Firms: A Unique Business Model
Law firms face many of the same challenges as businesses in other sectors; however, there are also many additional complications unique to the legal business model.
For starters, law firms operate in a heavily regulated environment, with the Solicitors Regulation Authority (SRA) continuously updating and introducing new rules and regulations. The ever-changing legal compliance landscape requires law firms to be adept at consistently navigating the various challenges the regulations pose.
Law firms also typically operate business models which are heavily people-focused. Firms rely upon their lawyers to generate work, provide highly specialised advice, invoice fees, and carry out managerial responsibility, marketing and compliance.
The increasing utilisation of the alternative business structure (ABS) model has also opened up the legal sector to ownership by non-lawyers and private investors.
This has increased competition in the sector and broadened the options for succession planning to include investment activity and different growth strategies. Many firms consider other structures, such as employee ownership trusts (EOTs).
Technology is also significantly impacting the business models operated by law firms. Many firms continue to operate on the chargeable hour model, but with an increasing prevalence for fixed fees, as technology solutions continue to help automate certain processes.
Additionally, there are several other charging and funding methods common to the legal sector, including conditional fee agreements (CFAs), damages-based agreements (DBAs), contingent fee arrangements, after-the-event insurance (ATE) and other case funding arrangements, which each bring about additional complications in the context of legal advice.
Our Services for Law Firms and Lawyers
The unique business model law firms operate increases the requirement for specialist advice. The professional services team at Myerson are vastly experienced in dealing with these types of issues:
- Choosing the correct structure and vehicle: We can advise on the right structure for your law firm, from the traditional law firm to an ABS, as well as the partnership model, a limited liability partnership (LLP) and a private (or public) limited company.
- Ownership models: Structuring the partnership or membership of the company is crucial; we can advise on matters such as treatment of goodwill, equity and voting rights/decision making, fixed share vs salaried partner models, employee share schemes and EOTs.
- Law firm constitutions: We regularly advise on and draft Equity Partnership Agreements, Fixed Share Partnership Agreements, Salaried Partner Agreements, Shareholders Agreements and Articles of Association.
- Acquisitions, exits and mergers: Law firms have to navigate many additional complications which do not apply to most M&A work, including how to "test" the valuation of the firm (e.g., include/exclude goodwill and WIP calculations), the use of clawback mechanisms, the transferability of client retainers (including CFAs and DBAs), the treatment of client monies and disbursements, as well as general regulatory matters. We also deal with the exit of partners/directors/shareholders, including dealing with the transfer of their shares, notices and apportionment of liabilities.
- Employment and HR matters: How to navigate the issues in a people-focused sector, including talent retention, incentivisation, disciplinary matters and the operation of TUPE in the context of professionals.
- Dispute resolution: We also assist law firms in resolving disputes, including disputes with partners/directors/shareholders, third-party disputes, regulatory matters and debt collection.
Myerson also advises lawyers/solicitors on their personal legal affairs, including advice in connection with:
- Equity Partnership Agreements, Fixed Share Partnership Agreements, Salaried Partner Agreements, Shareholders' Agreements and Articles of Association.
- Liability issues in the context of being an Equity Partner, Fixed Share Partner or Salaried Partner.
- Employment contracts, disciplinary matters, settlement agreements and other HR matters.
- Wills, trusts, personal wealth and succession planning.
Some recent examples of our work include the following:
- Acting for a multi-disciplinary legal practice on its incorporation from a partnership to a limited company structure, including drafting bespoke shareholders agreements and articles of association;
- Advising a firm of solicitors about it becoming an Alternative Business Structure (ABS), including guidance on the Legal Practice Act 2007 and drafting its constitution;
- Negotiating the successful exit of a director/shareholder from a firm of solicitors established as a private limited company in circumstances where the relationship between each of the shareholders had broken down;
- Advising on and setting up a Trust Corporation to enable a practice to provide trust / private client support through a limited company;
- The appointment and termination of senior partners/members of a legal practice, as well as advising on and providing the relative provisions in its constitution to allow for fixed-share partners; and
- Mergers of firms of solicitors (sole traders, partnerships, LLPs and companies).
Receive a 10% discount on our fees when you join Myerson Connections - our referral scheme for law firms, solicitors and those operating in the legal sector.
We have been discreetly growing Myerson Connections over the past few years and have a membership of well over 100 law firms, ranging from sole practitioners to large national law firms.
Sometimes a client or prospect will ask you to undertake work other than your area of specialism. You may have a conflict of interest or need more capacity to complete the work. Rather than turn down the business and risk losing your client relationship, you can confidently assist your client through Myerson Connections.
It is free to join, with no minimum term, and enables you to offer your clients access to a wide range of specialist legal services, not just those you practice.
Other benefits include*:
- A 10% discount on our fees when we act for you, your law firm and your colleagues;
- Referral fee payments of 8% of our profit costs on matters referred by you to us and an additional 15% of any conditional fee uplifts we receive;
- Access to our trusted network of specialist advisors, experts and professionals;
- Regular newsletters and legal updates;
- Easy tracking of your referrals and fees;
- Priority invitations to training, seminars and events;
- A range of fixed-fee packaged services that you can pass on to your clients; and
- Assistance with practice management and compliance issues from our in-house experts
*Subject to terms and conditions.
Meet Our Specialists
Home-grown or recruited from national, regional or City firms. Our specialists are experts in their fields and are respected by their peers.
Mohammed Akeel Latif
Akeel is a Partner and Head of the Corporate Team
Terry is a Partner in our Corporate and Commercial Teams. Terry is also the Head of the Brexit Team at Myerson
Chris Wilson is the Head of Business Development and leads the Myerson Connections Team
Contact Myerson Solicitors
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