QUEENSLAND FIRMS jumped at the gun this week as the Legal Profession Act 2007 allowed the them to incorporate.
Gilshenan & Luton Lawyers was one of a number of firms to embrace the reforms this week, which allowed it to move from a traditional partnership model to a unit trust, with a corporate trustee.
Stuart O’Neill, who was a partner in the firm last week and a director this week, said the changes are very welcome.
“They’ve opened up a range of structuring options that previously weren’t there. We have very carefully reviewed those options and come up with a structure that is perfect for us and will ensure our continued growth in the direction we want to go,” he said.
But the firm is not just making the change for the sake of it, O’Neill was keen to explain.
“This change has been a 12 month project. In fact, the changes that are happening now are the culmination of a great deal of work and energy that has been building for two or three years. We haven’t gone into this process lightly, and we’ve embraced the legal reforms as part of a new direction that the firm has been moving to for quite some time,” he said.
O’Neill said that Gilshenan & Luton Lawyers was unlike some New South Wales firms in this way. “One of the difficulties that other firms — certainly in the NSW experience — found is that they made the change just for the sake of change and without properly thinking through and canvassing all the issues.
“We’ve put a lot of effort into tying everything off and ensuring that we’re well geared to grow in the direction we want to go. It’s not just changing the structure, it’s also aligning the brand, reorganising our internal processes, bringing on board all the software and resources and tools that will equip us to grow as we want to grow,” he said.
Carter Newell Lawyers, another Queensland firm, has also been looking at incorporation. In a letter to an external board of Carter Newell, which has been in place for about 10 years, CEO Peter Ellender wrote that the implications for the structure of the industry are considerable.
“Lawyers will no longer be constrained or protected by the partnership model where all funding has to be provided by the partners and all profits have to be distributed fully to them, leaving no retained earnings in the business nor the ability to share profits with other parties,” he said.
But Lawyers Weekly has learned that although Carter Newell was expected to be one of the first Queensland firms to incorporate, it will not be incorporating from the start date of the reforms this week as reported by Brisbane Legal recently. The firm said there were some factors still to consider and iron out. Some delay was expected as Lawyers Weekly went to press this week, but the firm would not clarify what was the cause.
UK legal business magazine The Lawyer reported last month that Carter Newell is looking to take advantage of the new laws by the end of the year.
Ellender said Australian law firms are facing challenges that may not necessarily be resolved by an influx of capital and by bringing in outside shareholders. He said firms in the marketplace need to assess how to grow in a mature market, provide excellent clients service, and retain, attract and develop talent, as well as ensure efficiencies in service delivery.
He also said that access to capital and the ability to share profits with other parties will enable the industry to consolidate and become more structurally streamlined.
For Gilshenan & Luton Lawyers, the changes will mean more than changing the legal setup of the practice. It has also reviewed its branding and practice management systems. It has also reorganised its practice groups to make them more focused, said O’Neill.
For the lawyers in the firm, the changes will be considerable. The term “partner” will be abolished, and replaced with “director”, a title to be given to all senior practitioners.
As well, the firm anticipates the new model will enable profits to be shared with lawyers at the firm who are below the traditional partner level.
“It will permit people other than senior partners to effectively invest in the firm and be remunerated for their performance in ways that previously were not possible. That is one of a variety of strategies to ensure our lawyers perform the best they can for the benefit of our clients and the firm. It’s win-win for our staff, the clients and the firm generally,” said O’Neill.
Other titles, including associate, senior associate and lawyer will remain. The firm was proud to note as well that it has a corporate services team that looks after the administrative aspects of running the practice. This, said O’Neill, allows the lawyers to get on with legal practice.
“Whereas in many firms our size and ilk that haven’t gone down this road, partners can easily be distracted by practice management concerns that perhaps they are not trained or qualified for. I am sure now all those administrative functions will be performed correctly.”