It is rumoured that 18 out of the top 20 firms of accountants have profit-related pay (PRP) schemes.

But research published this week shows that the uptake is much lower in firms of solicitors.

PRP, which offers tax incentives to both employers and employees, was introduced by the government in the Finance (No.2) Act 1987.

It links a portion of employees' pay to the financial success of their employers.

LawGroup UK, a national network of over 80 independent firms of solicitors, surveyed its members to discover the PRP adoption rate.

The findings differed radically from what had been anticipated and showed that the perception of PRP had changed since its conception.

Of 63 firms which responded, 42% currently ran a PRP scheme.

Large, multi-sited firms employing between 50 and 100 staff were considerably more likely to have PRP.

The research showed that most schemes were registered in 1995 and were related to the need to award pay increases in a difficult financial climate.

A spokesman for Harrowell Shaftoe said: 'We feel that the PRP scheme has given the staff an increased interest in the success of the firm and has enabled us to attempt to increase their rewards whilst controlling our overheads.'The three main reasons member firms gave for setting up a PRP scheme were: to increase staff performance and motivation; to reduce salary costs; and to give pay rises that could not have been funded any other way.

There was no overall pattern to the types of scheme used by firms.

Each practice used different features in the implementation and administration of their scheme and had different ways of assessing PRP, although the vast majority based it on their profit and loss accounts.

Some 13% of firms said they were not going to consider PRP.

The principal reason given was the undesirability of disclosing profits to members of staff.

However, the majority of respondents who did not have PRP did have other bonus schemes which they offered as an incentive.

Firms which had adopted PRP felt that the disclosure of profits to staff should not be a deciding factor.

Some even viewed it as a positive advantage in that employees could see for themselves that the partners were not taking all the profits.

Susan O'Donnell, a partner at Turner & Debenhams, said: 'Our general policy is that salary increases will now be through PRP.

This has taken away the pain of the annual salary review.

Any additional increases will be on a merit basis.' On ce it had been in operation for some time, most firms realised that their initial rationale for setting up a PRP scheme was no longer valid.

Whilst PRP did reduce salary costs, it was not thought to have increased performance or to motivate members of staff.

However, one firm reported that stationery was now being ordered in a more cost-effective manner as a direct result of PRP.

This initiative was the exception and not the rule.A key finding was that staff perceptions before and after the introduction of PRP had changed.

While the majority viewed it with suspicion at first, believing that partners would not be introducing it unless there was something in it for them, most had come to accept PRP over time.

None of the firms surveyed identified PRP as a recruitment aid, leading to the conclusion that it was seen as a salary substitute rather than a bonus.Over 53% of the firms which did not have PRP were considering putting such a scheme into place.

Approximately half of these admitted that their reluctance was due to the initial amount of administration required.

This contrasts strongly with the 93% of firms with a scheme in operation which felt that the administration was far from complex.

Many of those who did not have PRP, however, considered the financial costs of the initial set-up of PRP to be too expensive.

They also felt that PRP did not give enough scope to reward or penalise individual performance.

The government initially set up PRP as a way for firms to offer incentives to staff.

However, it is now used as a method of reducing one of the largest overheads in any firm of solicitors .

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its pay roll.

Half of the firms said that they would discontinue the scheme if the government withdrew tax relief.

Like many such ideas, PRP is not serving the purpose for which it was intended.Factors in introducing PRP-- Would the firm and employees really all be better off if PRP were introduced?-- Are the time and money necessary to set up PRP available?-- How can the benefits of PRP be explained to the staff, who will be asked to give up a percentage of their salaries?-- Can the idea be sold to at least 80% of employees?-- Who is going to produce the profit and loss account which has to be certified by an independent accountant as representing 'a true and fair view'?-- Will the partners want members of staff to know the firm's profits?-- Will all members of staff be included in the scheme or will part-timers and people in their probationary period be excluded?-- How will existing salary levels and lengths of service be taken into account when distributing the scheme?-- Will PRP be paid out monthly or will it be one large payment at Christmas