The main attraction of going public. For law firms, the benefits of going public may not outweigh the costs. This is partly due to the unique ownership structure of law firms. If a law firm went public, profits would no longer be distributed solely to partners, since profits that must be diverted to shareholders are dividends.
This means that partners are likely to have to accept a standard salary and be accountable to shareholders in the same way as a company's board of directors would.
Publiclytraded law firms are still a long way off in the United States. The rules on whether non-lawyers can own law firms are regulated by the state judiciary in most cases, the supreme court of each state, and there are no states that are considering changes that would come close to allowing a law firm to go public. It is the only jurisdiction that even allows non-lawyers to co-own a law firm.
That exception was established decades ago because many firms in Washington also lobby, and many lobbyists are not lawyers, but they have roles of responsibility and equity participation in their firms. Ever since the Legal Services Act allowed law firms to go public, publicly traded law firms have barely turned on The practice has become more common since the recession, which forced law firms to find new ways to grow amid flat demand for legal services and pressure to offer discounted rates. But even if its execution was uneven, Slater & Gordon's acquisition strategy demonstrates a possible justification for a law firm to enter the capital markets. Last year, Akin Gump joined the growing number of law firms asking their partners to bring in more capital, an increasingly popular strategy among firms to increase cash reserves without borrowing from banks.
Legal analysts attribute this to several factors, including volatile market conditions, the country's tax laws, and the fact that Australia is not an international legal and financial center. In most law firms, equity partners, sometimes called shareholders, are asked to contribute capital in exchange for a portion of the firm, an amount that is generally a percentage of their profits that can vary depending on their business portfolio. Throughout the history of the legal sector, it has always been clear that law firms are not like “normal companies”. Law firms never have CEOs, like a corporation would, with a partnership system in which those at the top receive a direct payment of the firm's profits, rather than receiving a fixed salary.
Regulators hope that giving lawyers access to private capital will allow them to invest in technology and other resources that could help them operate more efficiently and at cheaper rates. If you need to defend yourself against insider trading charges in Upstate New York, look no further than The Kindlon Law Firm, PLLC. If a major U.S. law firm went public, such as Goldman, it would face pressure from shareholders to keep compensation growth under control.
Law firms that need a more modest injection of capital have easy access to obtain it through other channels.