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Legal Consultants

Welcome legal consultants: as you well know, the traditional legal consultancy platforms have blazed a critically important trail for the industry, establishing a realistic route to independence for many lawyers, but the model is starting to creak.

To begin with, lawyers operating in the traditional consultancy model, via personal services companies, are likely to start paying between £5,000 and £20,000 more per year in taxes over the coming year or two as corporation tax rises to 25%, the higher rate of dividend tax holds at 39.35% (but now applies on earnings over £125,000) and the dividend allowance reduces to just £500 per year.

The double tax hit of corporation tax and dividend tax for operators of personal services companies (PSCs) is becoming very burdensome.

To compound that situation, the fees charged by many of the incumbent platforms are fairly significant, with most platforms charging between 25% and 40% of a lawyer’s fees. When those fee retention figures are combined with increasing tax rates, many consultant lawyers are only taking home 30 – 40% of the fees they generate, net of platform charges and taxes.

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The reliance on PSCs itself seems increasingly clunky and old fashioned in the contemporary working environment, where IR35 reform remains a pressing issue in Whitehall, meaning that consultant lawyers (and the consultancy platforms themselves) are facing increasingly high risks of unpaid employment taxes and NICs, plus penalties, under the updated regime governing off-payroll workers in the private sector.

Consultant lawyers are also raising concerns with some of their platforms. Complaints we have heard relate to the quality of lawyers being brought into their organisations and the speed of growth of those organisations, leading to ever larger rosters of lawyers, with less and less focus in terms of their brand and practice, diluted culture and a reduction in overall quality, leading to reputation risk.

Finally, many consultant lawyers often feel segregated from the management function of their organisations. By and large, strategic decisions in the consultancy platforms are taken by a central management staff and are imposed on the broader lawyer community.

Despite the consultancy model only being built up over the last two decades, and despite it being intended for the world of modern work, recent developments and its own thirst for growth have put its future in doubt.

Lawyers’ lives can and should be extraordinary and fulfilling, particularly for the more enterprising amongst us. Indeed the consultancy model was developed primarily to support lawyers seeking a better life and these are laudable aims and significant achievements.

It is against this backdrop that Clearlake’s new and unique model was envisioned and built.

Clearlake is carefully designed to deliver the optimal practising vehicle for entrepreneurial, independently minded lawyers in the contemporary environment.

We operate as a limited liability partnership. Our lawyers join us as full equity partners in our LLP, meaning they enjoy the most efficient and stable tax regime available to workers in the UK, that of a self-employed individual. Our lawyers take home typically around 85% of their fees before tax, meaning up to 25% more, net of costs, charges and taxes, than they would with the large consultancy platforms.

Our partners also have no requirement to run or administer a separate PSC, they are simply paid directly, net of tax, into their personal bank accounts on a monthly basis. They retain all of the independence and control of the consultancy platform model and leave behind any IR35 concerns.

Our partners also play a pivotal role in our strategic decision making. As full equity partners, they are part and parcel of our decision-making process. Our lawyers are our business and they play an integral role in shaping our organisation as it develops and we discuss and agree every aspect of our development in our quarterly partnership meetings.

Finally, our firm is not backed by investors demanding immediate growth, which means we have the significant advantage of being able to grow cautiously and at a steady pace, only bringing in the people that we think are right both for our organisation culturally, but also to retain our core focus as a City practice.

Please explore this website to learn more about each aspect of Clearlake and use the contact forms or our contact details to get in touch with our team today. We can send you more information about how Clearlake might be a fantastic next step for your career.

We also run a regular Thursday lunchtime webinar providing an informal 20-minute introduction to Clearlake, hosted by our recruitment team. Register now for the next session that suits you:

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Partnership Core Features
Partnership Core Features

A quick two-page summary of life as a partner at Clearlake Law

Zahra Clements Recruitment Director

Zahra Clements
Lawyer Relations Manager

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