A London firm has announced it is the latest to opt into being entirely owned by its employees in a John Lewis-style arrangement.
Hodge Jones & Allen has agreed that its founder and other equity partners will sell the business to an employee ownership trust.
Patrick Allen, the sole remaining founding partner from the firm’s formation 40 years ago, said the arrangement allows the ethos of the firm to remain and ensures that loyal staff will feel the benefit.
The trust is a similar model to that of retail giant John Lewis and a handful of other law firms, where all 230 employees become beneficiaries, receiving an annual tax-free distribution up to a maximum of £3,600 per staff member.
Hodge Jones & Allen Solicitors Limited will trade and run in the same way as Hodge Jones & Allen Solicitors LLP, but 100% of the shares of the new limited company will be owned by the trust rather than the current members of the LLP. Senior partner and majority owner Allen will act as trustee, with managing partner Vidisha Joshi and Kingsley Tedder becoming an independent external trustee for corporate governance and compliance.
The firm says there will be no day-to-day change in the running or operation of the practice, but this is the best option for succession planning as Allen takes a less active role in the business.
Allen, who will remain as senior partner, said: 'Becoming employee owned reflects the people-first entrepreneurial spirit that has been the backbone of HJA since 1977. It provides continuity for our partners and staff, and therefore our clients. It is the perfect model for a firm like ours.
‘I wanted to ensure that the firm could continue to grow in the same way as I intended when I founded it over 40 years ago. We have a fantastic team and we help people who may not always be able to access advice and redress. I see this as a way in which my vision can go forward and thrive into the future.’
The firm, which has an annual turnover of more than £17m, has represented victims in many high profile cases including the Grenfell fire, the Kings Cross fire and the Marchioness ferry disaster. The firm also represented Neville Lawrence, the father of murder victim Stephen Lawrence.
Deb Oxley, chief executive of the Employee Ownership Association, said the 100% ownership model should be seen by law firms as a way to secure the future of their business and engage employees in its future success.
She added: ‘This is a pioneering move in the legal sector, at a time when many similar partnerships are challenged by the succession dilemma of securing the future of an LLP-structured firm.’
In March, West Country firm Stephens Scown LLP, with 270 staff and 50 partners in three offices, made headlines when it announced its ‘shared-ownership model’. It created a limited company, owned by the staff through an Employee Benefits Trust (EBT), which is also a member of the LLP.
The Nuttall review of 2012 raised awareness of employee ownership, and the Finance Act 2014 introduced the new EOT, with tax benefits including income tax relief on bonuses.