Promotion to partnership is a major milestone in the career of most ambitious solicitors. While many prospective partners are fully aware of the additional client and management responsibilities this will bring, few are prepared for the financial implications. When an individual is promoted to the equity, there are rather more financial considerations than simply owning part of the business and sharing the firm’s profits.
Partnership is defined in the Partnership Act 1890 as “the relation which subsists between persons carrying on a business in common with a view of profit”. Under the Limited Liability Partnerships Act 2000, partners may form a separate corporate entity known as a limited liability partnership (LLP), which, as the name implies, limits the liability of the partners for the firm’s debts.
