- Half of law firm partners surveyed said setting up their own firm was a career ambition (up from 39% in 2021).
- 44% of partners say having their own firm would give them greater quality of work .
- Four in ten partners named a greater share of profits as a motivating factor behind their ambition to start their own firm.
London, January – A survey of 200 UK law firm partners reveals that half aspire to set up their own firm, notwithstanding an uncertain economic outlook. This is more than the number whose career plan involves taking a senior leadership role within their current firm (46%).
The ”new normal” working arrangements appear to be influencing this trend – many respondents cited improved work-life balance and independence as motivating factors for setting up on their own. As the corporate cost of living rises, at a time when clients are less likely to accept substantial increased fees, law firm operating margins are facing a squeeze. 35% of partners say they are looking at reducing numbers of support staff, and a similar percentage (34%) are looking at reducing numbers of fee-earners.
40% of surveyed partners felt retaining a greater share of the profits for reinvestment would be a serious benefit of running their own firm, although the research indicated some variation between firms of different sizes (two-thirds of partners in the largest firms (with revenues in excess of £500m), compared with partners in smaller firms (0-100 lawyers) who were primarily motivated to set up a firm to achieve a greater quality of work. Setting up a new firm in the current economic climate may be daunting – recession is forecast and interest rate rises create a challenging borrowing environment. But new firms need not go it alone – partners seem to have an increasing interest in working with external sources of finance to fuel their growth plans. 78% of partners would consider a lending facility from a 3rd party, and 75% of partners would consider external ownership.
Ellora MacPherson, Managing Director and Chief Investment Officer at Harbour said: “Despite the economic headwinds, it seems partners are still attracted by the flexibility and financial benefit of setting up their own firm. A potential downturn in the UK economy need not be a barrier to creating something exciting that fulfils personal ambition, as well as delivering quality work for clients, at a cost-effective price.
“With law firms and their partners having weathered turbulent economic times during the pandemic, it is clear that many are looking at alternative options for their future careers. Our survey shows a real appetite to break out of the traditional mould, not just amongst partners at the largest firms, but also smaller firms, and across the regions.
“At a time of high interest rates, specialist lenders to the legal sector, who understand lawyers and law firms, are well-placed to provide attractive finance options for those wishing to set up a new business.”