Floating a law firm on the stock market presents partners with an opportunity to realise some of the value inherent in their firm and to benefit from any increase in its value. It also raises major issues between generations of partners, potential partners and lateral hires.
The tax implications of incorporation produce clear advantages and very significant risks. The key tax advantage applies to partners nearing retirement. If they sell their shares, the sale should be capable of attracting business asset taper relief so the maximum capital gains tax payable by them on any proceeds will be 10%.
