Cornish law firm, Stephens Scown LLP, has formally agreed a new shared-ownership model with the regulators and tax authorities, which could open the way for other partnerships and professional services firms to follow suit.
The scheme is a shared ownership and profit model similar to that operated by John Lewis. Stephens Scown, with over 300 staff and a turnover of £17 million, is believed to be the biggest law firm to implement such a scheme.
Under the scheme, all profits over a certain minimum threshold will go into a pool, with half being retained by the firm and half being shared equally among all participating members of staff.
This means that receptionists will receive the same bonus amount as a fee-earning lawyer.
It is anticipated that the scheme will see the bonus pool for staff and the average allocation increasing dramatically. Last year, the average bonus was around £1.3k. This year, it is anticipated to be well in excess of £2k.
Stephens Scown has structured the scheme by creating a new company, Stephens Scown Limited, which is a member of the partnership (LLP) and is entitled to a share of profits equal to the bonus pot. The new company is owned by the staff through an Employee Benefit Trust.
Managing partner, Robert Camp, explained: “This is all about giving everyone a real stake in the business.
“No matter what role someone has, we are all part of the same team and I wanted part of everyone’s remuneration to come from an equal sharing of profits.”
“I’m delighted that the new scheme has now been given the green light after several years of discussion and work. I believe it will have a tremendously positive impact on the firm. Back office support staff in particular will feel much more involved as we will all be working towards the same goal.”
Stephens Scown’s scheme has been officially approved by the Solicitors’ Regulation Authority (SRA), and will begin from its new financial year starting May 1 – though will apply to the bonus pot for the current financial year (May 2015 – April 2016).
While John Lewis has become well-known for its shared ownership scheme, few other partnerships have followed suit – though there have been signs that it could begin to spread.
Accountancy firm Grant Thornton and, most recently, law firm Mishcon de Reya have announced their intention to introduce or consult on introducing similar schemes.
Limited companies and PLCs are actively encouraged by the Government to operate employee ownership models which see staff purchasing or being given shares and receiving dividends, and there are tax incentives for corporates to do so. But for the non-corporate (partnership) sector who don’t issue shares, the situation has been different.
“I hope our scheme shows other partnerships a way forward,” Camp added. “This model could become a blueprint for thousands of partnerships across the country, in law, accountancy and many other professional services sectors.”