Insurance law specialist firm moves to incorporated model
To secure a more client-focused and invested future, an insurance law firm made the switch to an incorporated model.
Wotton + Kearney recently moved away from the traditional partnership model as part of its strategic plan to boost value for clients and collate instrumental data. It joins the increasing number of small- to medium-sized law firms that have already changed over.
In conversation with Lawyers Weekly, chief executive partner David Kearney said law is a “changing game”, and firms will need to adjust to keep up with client challenges.
“You absolutely do need to convey value to your clients and you do need to work with them as they solve the challenges that they increasingly face,” Mr Kearney said. “We need to invest in our businesses and we need to respond to our client’s challenges, and corporations is certainly a way that it can be more easily achieved.”
According to the latest Australian Taxation Office statistics, there are over 15,000 legal and accounting service companies, compared to just 3,161 partnerships. The changes are coming as law firms recognise the advantages in switching to a corporation.
Mr Kearney said it is “very difficult” to retain earnings in a partnership structure and to invest in the firm’s future, but as an incorporated model, “you can retain earnings and build a better balance sheet, with an opportunity to invest in whatever is required to make us better business partners for our clients”.
The internal reactions since announcing the change has been “very positive” for W+K, with Mr Kearney pointing out that investing in the firm’s future is attractive to lawyers.
“The legal talent wants to work for a firm with a plan and a firm which is investing for the future instead of working for a firm that is about the here and now,” Mr Kearney said. “A lawyer or a broader team with even the slightest knowledge about what an incorporated model can bring knows that this is a good thing.”
By making the move, W+K will look at how it’s using data. As a law firm that specialises in insurance, it has access to a significant amount of data across a broad portfolio of clients, and so has the ability to collect and distribute this information.
“One of our challenges is how we mine data and collate it in a way that we can feed it back to our insurer clients in a form that allows them to make better pricing decisions and strategic decisions about risks,” Mr Kearney noted.
W+K’s clients have been supportive of the change and have been assured that there will be no disruption to their legal services during the transition. This includes the firm’s navigation of tax issues and stamp duty issues associated with the move.
Mr Kearney said these weren’t “significant issues” because they are “easily overcome” when reflecting on the advantages that being a corporation can bring.
“Lawyers are a bit more adverse to change than other occupations, but we are blessed with a very progressive partnership and a very young partnership too, which has many more years to practice,” Mr Kearney said. “It wasn’t hard for our partnership to see the significant long-term advantages of moving to a corporate structure.”