Why incorporate your practice?
A corporate structure allows fee earners to focus on clients and makes your firm more nimble, says Simon Leyland
More law firms of a certain size are now choosing or considering to become a limited company. It's a step that we've recently taken at Maxwell Hodge.
It's a radical restructure for a traditional partner-led law firm like ourselves, but the driving motivation behind it is we want to make the firm more dynamic and flexible in what is an increasingly competitive market.
The structure of a limited company has many benefits, from enabling us to access external investment easier and freeing up revenue to invest in growth. Most importantly though incorporation has given us the chance to completely re-invent our traditional management structure.
As a limited company we have a better shape for growing the firm. Particularly, from my perspective, is that as a limited company we have an understood capital structure, so it makes us more attractive for external investment, should we need it to drive further expansion.
The primary motivation for us though has been the re-invention of our management along more corporate business lines. The firm will now be run by three company directors - my colleagues Denise Scoular, Claire Banks, and me.
This will have a huge impact on the firm, as our traditional management structure was partner led, with more than seven partners making the operational decisions. While we managed to make this structure work, having so many people's input has its consequences, meaning more staff had to be consulted and decisions couldn't be taken quickly. We are now in a legal sector very different from even five or ten years ago and a law firm, like any other business, has to be able to react quickly to market trends, make decisions fast and be far more dynamic to be successful. For smaller law firms the partner-led structure will probably still work, but once a law firm grows it simply isn't an efficient way of doing things.
The new management structure with all decisions in the hands of three company directors, will allow the other directors and managers to concentrate on case work and not spend time on operational decisions and meetings, freeing up valuable billable time for them. This should have an impact on our bottom line and also further improve our client service allowing all of our lawyers to focus on the clients, and the legal work rather than worrying about the running and operation of the business. SJ