Training Contract UK : Partners not Shareholders � Law Firms are Different

Training Contract Firm Profiles
Addleshaw Goddard	Dechert LLP	Olswang
Allen & Overy LLP	Denton Wilde Sapte	Pannone
Ashfords	DLA Piper	Penningtons
Ashurst	Freshfields Bruckhaus Deringer	Shearman & Sterling LLP
Baker & McKenzie	Government Legal Service	Simmons & Simmons
Barlow Lyde & Gilbert	Hammonds LLP	SJ Berwin LLP
Beachcroft LLP	Herbert Smith	Slaughter and May
Berwin Leighton Paisner LLP	Irwin Mitchell	Stephenson Harwood
Bevan Brittan	Jones Day	Veale Wasbrough
Bird & Bird	K&L Gates LLP	Walker Morris
Browne Jacobson	Latham & Watkins	Watson, Farley & Williams LLP
Burges Salmon	LG	Weightmans LLP
CMS Cameron McKenna	Lovells	Withers LLP
Davies Arnold Cooper LLP	Mayer Brown International LLP

April 22, 2008

Partners not Shareholders - Law Firms are Different

Margin not Profit

Unlike limited companies which aim to maximize total profits for their shareholders, almost all law firms operate as partnerships or LLPs.
With no shareholders to worry about, the profits are distributed across the partners. Therefore they are incentivised to maximize profits per equity partner (PEP).
This makes them potentially more concerned about maximizing profit margins (by keeping headcount down, for example) rather than increasing revenues by adding fee earning partners.
The same is not true about companies since the shareholders care only about margin in as much as it affects profit.
Most companies would happily exchange a small decrease in profit margin for an increase in profit. Quite the opposite can be true of partnership law firms.

Partners not Board Members

Law firms usually take decisions by reaching a consensus amongst the partners. If they don't, partners can defect to rival firms or set up their own, leaving the firm to disintegrate.
Therefore, legal practices tend to behave more cautiously than their clients.

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