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Australian law firm offers senior employees opportunity to own shares

Posted in Australasia, Business Models, Culture

Employees own shares in this dynamic 105 year old Australian law firm M+K Lawyers, headed up by National Managing Director Damian Paul. M+K has embarked on a remarkable growth strategy around a unique business model and culture. Damian agreed to answer some questions:

Sean: Your business model is unique and was the first of its kind in Australasia – how has the firm grown since this model was introduced?

Damian: Somewhat late in our over 100 year history, the new model took effect in July 2008! Since then, over the past 3 years, the firm has grown in revenue by 150% to A$50m, in staff by over 100% to just over 300 and from one office to locations in all key east coast centres; New South Wales, Queensland, Victoria and Tasmania.

Sean: How would you describe M+K Lawyers?

Damian: A national commercial law firm, operated in a corporate, businesslike structure.

Sean: How does it work?

Damian: An incorporated legal practice (ILP) in each of the 4 states in which we currently operate (News South Wales, Queensland, Tasmania and Victoria), each 100% owned by a parent company which, in turn, is owned by M+K directors and employees.

Sean: Why did you choose this model?

Damian: We saw it as the model most suited to helping us acheive our growth ambition to become the leading law firm in Australia for middle market clients.

Sean: What take up has there been – from other firms and from staff ?

Damian: In a relatively short time since July 2008, seven law firms have joined us (including the foundation firm, Macpherson+Kelley). Senior employees have the opportunity to invest in the firm by buying shares in our parent company, thereby acquiring a stake in the national firm.

Sean: Have other firms in Australia followed your example?

Damian: Not that I am aware of.

Sean: What are the legal and structural implications e.g. non-partner ownership in the firm?

Damian: Unlike a partnership, our Principals (our “partner” equivalents) are employees who are paid an agreed salary, participate in bonuses based on performance and, if a shareholder, receive dividends and capital growth on their shareholding.  The model enables people other than Principals to own shares and about 15% of our shareholders are non-Principal employees.

Sean: What are the benefits? Employment brand impact?

Damian: The main benefit is that we have been able to attract good quality people to join us who would not have done so otherwise. These are people who were attracted by the model and saw its clear benefits over operating a partnership model.  This growth, in turn, has enabled us to make the firm more visible and to strengthen our brand within the profession nationally. This continues to open doors that would otherwise have remained closed to us.

Sean: What have been some challenges?

Damian: Regardless of your model, the main challenge for any leader of a professional service firm (particularly one that is growing) is to protect the firms values, avoid taking on misfits while driving consistency and discipline across a team of people that have come from various backgrounds and law firms.  Fortunately in our case, over one half of our people work in our foundation firm in Victoria and we have used this firm as the platform for maintaining alignment and driving change in other states.

Sean: How did it impact the firm’s culture?

Damian: Positively.  It has certainly given a lift to the staff to see the firm grow and to feel a part of a dynamic organisation that has a clear direction and a strengthening brand.  And we have so far been successful in ensuring that new firms and people who join us, share our existing values.

Sean: What has it meant to the firm?

Damian: While only still very early days, in the space of 3 years we have gone from a single state law firm to having an east coast presence to having successful growing businesses in all key eastern states of Australia. We have attracted very good people. We are now making in-roads into new clients and industry sectors which would not have been possible for a single-state law firm.

Sean: Looking to the future what are your dreams for the M+K model and brand?

Damian: To become the the recognised leading national commercial law firm for mid market businesses, with a presence in all major Australian capital cities and other strategic locations.

Sean: What should I have asked and didn’t?

Damian: What makes you think you can pull it off?!  The quality of the people I have around me, particularly at Board level, who have built very successful Australian law firms in prior roles.

A unique business model coupled with a strong culture and focus on recruiting and developing high calibre staff  seems to have M+K Lawyers very well positioned for the future.