Lawyer Monthly Magazine - August 2019 Edition

What Changes When You Become Partner and How to Prepare for Them Becoming a partner at a law firm is a significant achievement and a monumental stepping stone in any career. While it is certainly a milestone to celebrate, it also marks a time of change and adjustment. When making the transition to partner, you will need to develop an understanding of the key financial information you will now see, changes in the way you will be taxed and how to use your earnings as efficiently as possible and prepare your finances for retirement. Accounts and management Becoming a partner within a law firm inevitably comes with increased responsibilities and pressures. These include the demand to bring in new work, introduce capital to the Limited Liability Partnership (LLP) and, underpinning all this is the fact that, as a member of the LLP, you are an ‘owner’ of the business which comes with certain responsibilities. Understanding of the financial information presented to partners is essential in ensuring that you are able to meet the financial performance expectations placed on you internally by the firm, as well as meeting your statutory responsibilities as a member of the LLP. The LLP is required to prepare and file financial statements. For entities of a certain size, these will need to be audited. While this task will usually be performed by the finance team, as a member of the LLP, you are legally responsible for truth and fairness of its financial statements. From an individual perspective, you will need to be able to understand certain metrics that are used to measure performance targets, both for the partnership and its members and to understand the management information provided internally, in order to understand how you will share in the firm’s profits. To navigate this, a new partner is required to have a degree of financial literacy that, quite possibly, training and experience to date have not provided. Types of financial information On a basic level, a partner will need to identify what financial information is being reviewed, and have an understanding of the terminology used in each situation. These include: • Statutory information/ LLP Financial Statements - aimed at reporting the performance of the LLP as a whole to external stakeholders 20 WWW.LAWYER-MONTHLY.COM | AUG 2019 Special Feature By Nicky Owen, Ryan Ketteringham & Phil Smithyes, Crowe