Why a share scheme?
Forgive us for including ourselves as a case study, but we have chosen a different form of ownership compared with most other law firms, and we are so pleased with it that we would like to tell you more. Like the best share ownership structures, it isn’t over-complex.
We have a small number of founder shareholders – all solicitors – but an unshakeable belief that as many members of our team as possible should also be owners. Everyone here willingly takes responsibility as if they were an owner, so we think ownership should be spread widely. We have therefore chosen a different approach to ownership compared with the partnership (or limited liability partnership) model favoured by the majority of law firms, in which the ownership tends to be limited to a select group. We don’t say our model is universally better, but we do think it is right for us.
How does it work?
As a law firm, we are not allowed by the tax rules to have an EMI option plan, so we have instead taken an approach to share ownership that combines awards of CSOP options with the purchase of shares, for the whole team.
Employees are granted CSOP options, at an exercise price agreed with HMRC as current market value, exercisable after three years. At the same time, employees are also offered the opportunity to purchase some shares, enabling them to share in profit distributions through dividends, even before their options are exercisable.
We are fortunate in enjoying low rates of staff turnover, so only expect to have to deal with leavers on an occasional basis. Any employee who leaves must offer their shares for sale internally.
If you share the rewards of a successful business with your employees, those employees will have a powerful incentive to engage in the business and work - together - in ways which improve its perfomance.Robert Postlethwaite, Managing Director