In this second video in a series focusing on Private Equity investment in professional services firms, Managing Partner Clare Murray and Partners Corinne Staves and Zulon Begum discuss the key issues in relation to remuneration that firms should be thinking about when considering PE investment for their firm. Watch the video here and see below for further details.
In this video, Clare, Corinne and Zulon discuss:
- Shift in Remuneration Models: How external investment changes the business model from a traditional, annual profit distribution to prioritising long-term capital growth, offering salary, performance bonuses and equity stakes.
- Equity and Good/Bad Leaver Provisions: How are “good leavers” and “bad leavers” defined in equity buy-back and exit scenarios?
- Incentivising Rising Stars: Offering equity or tax-advantaged share schemes to attract and retain junior talent. Competitive salaries and incentives are essential for younger professionals under financial pressure.
- Structural and Regulatory Shifts: Hybrid models with LLP and limited companies are common for PE-backed firms, bringing the benefit of remuneration and governance flexibility.
- Cultural Implications: Can PE investment undermine partnership culture? The importance of retaining partnership values, bringing continuity during the transition. PE investors often seek to preserve successful partnership culture, while driving growth and discipline.
- Competing without PE: How can traditional firms stay competitive and attract and retain top talent?
- Performance Management & KPIs: What does performance look like under PE? KPIs such as billable hours and profitability remain, but enforcement is stricter. KPIs must be fully aligned with the firm’s growth strategy, bearing in mind different partner cohorts facing different capital realisation timelines.
- Be Prepared: What can firms planning PE investment start doing now to prepare? The importance of addressing underperformance and setting clearly defined KPIs. PE should be a strategic growth choice under strong leadership – not a last resort to fix underlying problems.
Watch the first video in the series, The Private Equity Proposition: Strategic Considerations for Law Firm Management.
Our next video in this series will focus on governance, preparation for PE investment and how your constitution will likely change post-investment.
If you would like to discuss any aspect of private equity investment in relation to your firm, or if you have any questions arising from this recording, please contact Managing Partner Clare Murray, or Partners Corinne Staves or Zulon Begum.
Corinne is participating in the panel discussion Private Equity in Professional Services: Strategic Insights for Firm Owners at the forthcoming 6th Annual IFSEA Conference on Risk, Reputation & Ethical Leadership Issues for Executives, Founders & their Advisers, taking place on 17 June 2025 in London. Find out more about the conference below and register your place here.
