Taylor Wessing to move to full equity partnership

Taylor Wessing is set to become an all equity UK partnership in a move that will nearly double the number of partners with an equity stake in the firm.

After more than a year of consultation on the issue, 95% of partners voted yes to the proposal last week.

Of Taylor Wessing’s 102 UK partners, 52 currently have full equity status. The firm’s 50 fixed share partners will transition into the equity partnership on 1 May.

It is understood that once the move has been completed there will be no distinction in terms of banding or preference between current equity partners and those who were remunerated on a fixed share basis.

Though there will not be a firm wide capital call to implement the change, fixed share partners will face a modest increase amount of capital they have to put into the firm in order to bring them fully in line with their proportionate share of equity contributions.

Managing partner Tim Eyles said the move was a “very exciting change” that he hoped would “improve the sense of belonging [at Taylor Wessing]“.

He added: “We like the idea of giving everyone the same base interest in and sense of ownership of the firm, so that we can deliver the best possible service to clients.”

The move to an all equity partnership in the UK will not affect the firm’s superpointer style profit pool, which distributes profit to its global offices, and moving more people into the equity will not affect the structure of the firm’s equity ladder, according to Eyles.

The move to a full equity partnership was prompted, in part, by HMRC rules that came in to effect in April 2014 under which non-equity partners have to contribute at least 25% of their fixed share salary in capital to be classed as partners rather than staff, allowing the firm to avoid paying national insurance contributions.

A partner at the firm told Legal Week: “There was frustration in a lot of firms around the short time frame we were given by HMRC…but we’d moved so far, so we started thinking we should be doing something more than that and going the whole way.”

However, discussions were being held on the move to a full equity partnership prior to that rule change.

Taylor Wessing’s most recent accounts show that partners more than doubled their overall capital contributions to the firm during the last financial year on the back of HMRC’s new policy being implemented.

“The HMRC change was the catalyst, but we would like to think we would have come to this conclusion anyway,” says Eyles.

The firm set up a committee to review the firm’s structure in February last year, on which half of the members were fixed share partners and the other half full equity partners. The consultation process involved full partnership meetings, along with a number of group discussions and one to one sessions.

Other firms to have moved to an all-equity structure in the past include Akin Gump, which changed its firm-wide structure last January, and DLA Piper’s non-US business, which took on an extra £30m in partner capital as a result of the move to an all-equity partnership structure in May 2012.