Larkin: EOT protects the future of the firm
Leading specialist firm Family Law Partners (FLP) has eschewed approaches from private equity houses to move instead to employee ownership.
Staff have received an initial £1,200 payout, which will be replicated in the summer and at Christmas – tax-free, except for those with less than 12 months’ employment, who will have to pay tax.
Co-founders Robert Williams and Alan Larkin have sold 80% of their shares in the South-East firm to an employee ownership trust (EOT), for which they will be paid over the next five or six years.
Mr Larkin told Legal Futures that they have not sold 100% “because we had early feedback that people wanted to see we were still around and had skin in the game”. He added that he and Mr Williams were “relaxed” if payment took longer.
FLP has 30 lawyers among its 47 staff and five physical offices in Brighton, Horsham, Ascot, Eastbourne and Tunbridge Wells, and five other ‘hubs’, a number likely to increase soon. As well as Mr Williams and Mr Larkin, non-lawyer managing director Caroline Warmsley is a director – she has sold her shareholding to the EOT.
It operates a fee-share consultancy model for experienced lawyers and has also led technology innovation in family law, launching in 2014 onboarding software Engage and working with Brighton University in a knowledge transfer partnership.
The firm stresses its strong focus on keeping cases out of court, with lawyers expected to have “another string to their bow”, such as becoming a collaborative lawyer, mediator or arbitrator, and it has also brought in-house complementary professionals, such as counsellors.
Mr Larkin said they first started thinking about succession a few years ago but were concerned that “partnerships have gone the way of the Dodo”.
“Sure there are some outliers – good partnerships with brilliant governance structures which don’t militate against decision making in under six months – but I’ve not encountered them in my professional life,” he said.
FLP then started to “get some nibbles” from private equity, interested in how scalable its model was and looking for a practice that could follow the example of Stowe Family Law, which was growing rapidly with private equity backing.
But Mr Larkin said it soon became “clear to us there was no way on earth we’d sell to private equity because they would dismantle the culture we had built”.
He said FLP was “not manically profit driven”, sending 15% of would-be clients away because they needed couples counselling, not legal advice.
An EOT was “the best model for preserving the culture that everyone had built and meant it would be very hard to approach us in a predatory fashion. We also thought the team deserved it. We couldn’t see any other model that would protect the firm in the future”.
Strategic decision making has moved to a five-strong body of trustees – Mr Williams, Mr Larkin, two employee representatives (one of whom is Ms Warmsley) and an external trustee, who is a criminal defence solicitor.
There has also been a “subtle shift”, with staff being encouraged to take greater responsibility for how the firm is run. Though the three directors continue to run the firm operationally, they’re “no longer trying to be benign rulers”, Mr Larkin explained.
Staff were being given financial information “that allows them to understand how impactful their contribution can be… How can you make a difference? Stop putting it all on us. It’s about you – you’re the dominant shareholder.”
The Engage software and other intellectual property has been transferred to a new company, Nova, in part because of the difficulties of valuing for the purposes of the EOT.
FLP had made Engage free during Covid to help family law firms and some 50 signed up to it. It continued to be free until last November, when Mr Larkin – who is FLP’s director of technology and innovation – said the cost of maintaining the software meant they had to start charging for it, using a ‘pay as you go’ model. Some 24 of the firms immediately signed up.
He described Engage as “much more than onboarding”, using AI to mimic human interaction in the questions it asked clients, preparing them for their first consultation with a lawyer. “It’s highly personalised and very nuanced,” he said.
Mr Williams said: “We are convinced that being employee-owned will give us an even stronger foundation to continue developing as a firm, while also offering the best possible service to our clients.
“It’s about empowering our people to feel invested in the firm’s future, which can only result in a better experience for both our clients and our team.”
Meanwhile, two other law firms have joined the EOT movement: Yorkshire and Manchester firm, Holden Smith is an £8.5m practice with six offices and more than 100 people that only opened six years ago.
Director David Bancroft said: “We founded Holden Smith to do things differently and becoming an employee-owned firm is a significant milestone in the firm’s journey.
“As we enter our sixth year of Holden Smith, it’s crucial for us to consider how we can achieve sustained growth and retain the exceptional talent that has helped shape our success.
“Becoming an employee ownership trust helps to secure the future of the firm while also aligning the interests of our employees with those of our senior leadership team and our long-term vision.”
Cumbrian firm Progression Solicitors has become employee owned after founder and managing director Anthony Smith sold his shares to the EOT.
He is one of three trustees, alongside senior associate Michele Ashton, the staff representative, and independent trustee John Parker, a semi-retired accountant. Progression has 30 staff.
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