You can listen to Foxed? – our latest podcast on this topic here.

Moving from one firm to another is often an exciting career move for the partner in question. But, if the new partner’s eyes aren’t open to the possible areas of risk and liability, the grass may not actually be greener on the other side.

In this blog post, we present our top tips on where a new partner should focus their attention. It’s equally important that the management of professional services firms are mindful of the following, to pre-empt the new partner’s inquiries and make sure they stand in good stead for any (polite) grilling which comes their way.

  1. Financial due diligence: an examination of documents including the management accounts and recent budgets will reveal the financial health of the partnership and allow the new partner to estimate their potential earnings. This level of scrutiny may seem excessive, but doing this work early will ensure there are no nasty surprises lurking later.
  2. Members’ agreement: the leaver provisions within the members’ agreement are critical on exit. For example, is there a waiting room clause? This type of clause aims to limit the number of partners in a particular department who can leave over a certain time period. How much will the partner’s future freedoms to plan their career be curtailed by clauses like this, and is that acceptable to them? The restrictive covenants that bind a partner post-retirement always deserve proper attention. They are at the centre of many disputes and are often a key part of a partner’s exit negotiation.
  3. Risk: what is the new firm’s attitude to risk? Partners must ally themselves with their business. If the insurance cover in the case of professional negligence is either too conservative or too lax, this may be a cause for concern and signal a mismatch in attitudes.
  4. Culture: Cultural fit means more than just whether there is a casual Friday dress code. As we emerge from the Covid-19 pandemic, the culture of a firm will be tested by how it approaches a return to the physical office space, if at all, not forgetting how communications were handled internally throughout 2020.
  5. Strategy: What is the firm’s vision for a modern law firm? What is the firm’s position in the market and are they trying to change or improve that? These are essential questions when it comes to the new partner assessing whether the firm complements or enhances their own personal brand. For firm and partner alike, buy-in and enthusiasm for a considered marketing strategy is a recipe for success.  

By Eleanor Diamond

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