The Gazette 1978

GAZETTE

APRIL 1978

SOCIETY OF YOUNG SOLICITORS SECTION

Legal Practice Mr. Semple also drew attention to the changed tax position of the young Solicitor who becomes a partner. Most of the problem would be that he would be taxed on a preceding year basis. This can be of benefit if profits are rising but it may cause problems if profits have been falling in the years before he becomes a partner. Mr. Semple made reference to the distinction between being taxed on an earnings basis or on a cash basis which was further elaborated by Mr. Murray in his talk on Solicitors taxation. Finally under the heading of Income, Mr. Semple drew reference to the importance of having proper professional indemnity insurance and also other general insurance for the partnership assets. 2. Job Satisfaction. Under this heading, Mr. Semple dealt with five major matters: (i) The nature of the work of the firm. Whether or not the firm is a group of individual practitioners each dealing with a wide range of areas or whether there was a greater or lesser extent some specialisation and departmentalisation in the firm may effect the possibilities and progress of the practice in the future. In the larger towns and cities, specialisation is nowadays the more effective way of dealing with clients problems. (ii) How decisions are made in the firm. Mr. Semple regarded this as the most important aspect of the organisation of the partnership team and recommended that some machinery be established among partners for the making of decisions even if this only consists of an informal arrangement e.g. regular partnership lunches where matters can be discussed. For larger firms, more formal procedures may be appropriate. (iii) StaíT morale and pleasant working conditions. Mr. Semple highlighted the need to strike a balance between over-plush surroundings that may scare clients off and old fashioned, dirty offices which may be indicative of the way the present partners' minds work in this regard. (iv) Good organisation. Mr. Semple stressed the importance of an efficient system of storage and retrieval of documents such as title deeds, or wills etc. and of the efficient organisation of typing sernccs. (v) Hobdays. Mr. Semple said that it was the custom in his part of the world to give four weeks holidays plus public holidays. 3. Capital Mr. Scmplc first mentioned the items which required to be financed to allow Solicitors' business to be carried on and the way in which the amount of the finance required can be reduced. He said that the general practice

Partnership in a Mr. Walter Semple, a partner in one of the largest firms of Solicitors in Glasgow, gave the opening lecture on the above subject to the recent Seminar of the Society held in the Great Southern Hotel, Killarney on the 8th and 9th April. Mr. Semple's paper was aimed primarily at the young Msistant Solicitor to give him some idea of what was involved if a partnership was offered to him; he was also anxious, however, to deal with the subject in a way that would be of interest to those who were already partners. Mr. Semple dealt with four matters that a young Solicitor should consider when offered a partnership: 1. Income possibilities. 2. Job satisfaction. 3. The capital structure of a partnership. 4. Proper retirement provisions. 1. Income Mr. Semple made no apologies for placing a requirement for a reasonable income at the head of his list.. He advised a young Solicitor, when invited to become a partner, to ask for the last three or preferably five years accounts of the firm to examine the trends of gross fees, expenses and profits. Profits should be keeping pace with inflation. The ratio of gross fees to expenses should be around 50:50 in a medium sized firm and slightly more in a large firm. The prospect of future profits should be considered and in this regard the areas of law in which the firm practises should be considered as should also the present partnership structure. Is the firm too reliant on old partners whose health or capacity to continue may be in doubt? Mr. Semple also recommended specialisation and departmentalisation in a larger firm and the introduction of systems, including time costing, to enable the results of various departments to be compared. He felt, however, that a time costing system should never be used as a basis of profit sharing as many other factors governed that question. On the question oi whether a new partner should be an equity or a salaried partner, Mr. Semple felt that it was best that a new partner should have a share in the equity from the first. The postponing of a decision in this regard could give rise to considerable difficulties later on. Mr. Semple also felt that it was a great mistake for a firm to be other than as generous as it reasonably can to an incoming partner. An incoming partner should have an income which is sufficient to cover adequate life insurance and pension arrangements, a reasonable contribution towards capital and still allow him a spendable income which is more than a spendable income of a qualified assistant. A prospective partner should ensure that there is^good financial management and control in the firm. Mr. Scmple rccommcndcd monthly financial statements including a simple form of profit and loss account and balance sheet showing also partners' drawings.