Lawyers more wary of chasing the holy grail of union

SEEING HOW DEEP A FIRM CAN DIG INTO ITS POCKETS IS AS IMPORTANT AS AMBITION, WARNS PHILIP HOULT

In the dim but not so distant past, associates would snap up partnership without a minute's thought, grateful to have been asked to join the club.

'People are no longer going into partnership quite as blindly,' says Ronnie Fox, senior partner of Fox Williams and a leading partnership lawyer.

'We advise clients to ask a number of questions about the financial performance of the firm.'

Among the financial issues that Mr Fox suggests a prospective partner should seek comfort on are the firm's budgets - has the firm been making its budgets, and if not, by how much have they been missed? Other important financial considerations include the ability of the business to generate cash, the profile of its debtors, its borrowings and the existence of any major claims against it.

'Brighter people are now asking about cash flow and how the partnership is financed,' says Mr Fox.

'But we have been advising partners to ask these questions for some while and not many do.'

When Tony Roe was being considered for partnership at Reading firm Boyes Turner four years ago, he asked the firm to allow an accountant he had instructed to look at the relevant documentation.

'The firm was extremely accommodating - indeed I think they would have been surprised if I had not asked,' says Mr Roe, who is a co-author of the fifth edition of Becoming a Partner, which is published by the Young Solicitors Group.

'I have come across people who have not asked for the information and have found themselves in all sorts of trouble.

The quest for the holy grail of partnership should not get in the way of proper business sense - you are a lawyer and should act like one.'

But it is not just purely on the financial side that any would-be partners should seek to satisfy themselves that they are making the right decision.

According to Richard Linsell, a partnership specialist at City firm Mayer Brown Rowe & Maw, it is also essential to look at the strategic direction of the business.

'The biggest risk to watch out for now is joining a firm that is heading for financial underperformance,' he says.

'It is all about having a focused strategy, quality clients and quality people.

You need to look at the people you are joining and whether you can be successful in your market sector - this is true whether you are in Blackburn, Plymouth or London.'

This includes an assessment as to whether the firm has a well-balanced portfolio of business that protects it throughout the various stages of the business cycle.

For many firms, counter-cyclical departments such as litigation and insolvency have very much come into their own over the past couple of years.

Mr Linsell also says potential partners should assess the firm's partnership agreement carefully, if there is one, and analyse whether or not there are suitable restrictive covenants.

'If you have not got an agreement, you are going into a partnership at will,' he points out.

'This can be terminated on the whim of any one individual partner.

It is a risky position to be in if there is a bust-up.'

Another increasingly important issue for many potential partners is the attitude of the partnership they are joining towards seeking limited liability partnership (LLP) status.

There may, for example, be continued resistance among senior partners to conversion because of the financial disclosure requirements of the regime.

'Gradually people are becoming more aware of the risks of becoming a partner,' says Simon Young, management consultant, former managing partner of Exeter firm Veitch Penny and author of a new Law Society book New Partners Guide to Management.

'Firms have wanted people to come into partnership and they have said no.

Personally I think one of the reasons that LLPs will gradually take off is to help overcome that hurdle.'

Of course, the amount of due diligence a would-be partner needs to do will often depend on an associate's individual circumstances.

Jayne Schnieder, a corporate lawyer and one of two partners made up at Anglo-German firm Taylor Wessing in the UK this year, says the fact that she had trained at the firm and been there all her career made an important difference to her attitude towards joining the partnership.

'You know everybody and even though when you were an associate you may not necessarily have been privy to the ins and outs of the finances, you have a pretty good idea about how the firm is run,' she says.

In the days of a highly mobile profession, not everyone is so lucky, which for most lawyers makes doing a more formal assessment all the more important.

Only then can associates give themselves a positive answer that they are joining the right partnership for them.