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For firms considering integrating employee ownership structures into their business models, one principal outlined the essential steps to take in adopting this emerging approach effectively.
Speaking on a recent episode of The Boutique Lawyer Show, Melanie Heffernan, the principal of South East Lawyers, listed the key practical steps law firm owners must follow to successfully transition to and implement an employee ownership structure.
In the same episode, she addressed the feasibility of implementing an employee ownership structure within the legal profession.
Heffernan explained that the employee ownership model operates on the principle that “all the profits derived from the business is split between the employees”.
However, she emphasised that the model goes beyond just financial gains, as employees also receive “a stake in the management team” and take on responsibility “for running the whole operation”.
She went on: “It is the employees making the decisions on how the company is steered, how it's managed, and those decisions are made from a what's best for the business and best for the employees perspective”.
With the transition to an employee ownership structure being a gradual process that presents several challenges, Heffernan provided a clear and structured roadmap for law firms seeking to implement this model effectively.
The first step in implementing this structure, as outlined by Heffernan, is for law firm leaders to conduct comprehensive research on how other businesses have successfully adopted this model.
Heffernan explained that this research would enable leaders to gain an understanding of the “types of businesses that operate in these structures” and “ the perceived benefits” of implementing this model.
“There are some great resources in Australia; there's employee ownership in Australia, but there are also great resources in the UK to explain the pros, the cons, the reasons that you might do this,” she said.
The next step that Heffernan outlined involves law firm leaders clearly defining the firm’s purpose prior to adopting the employee ownership structure.
She stressed the importance of considering key questions, such as; “Is your purpose to make money? Is your purpose to bring everybody together collectively? Is your purpose to upskill your staff? Is your purpose succession planning?”.
Heffernan believes that “the next five years” will be a critical period to determine where more firms will experiment with or adopt this model, “particularly as the succession plan of firms rolls on and we start to have the senior members of law firms retire”.
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