In most law firms, assistants and associates are promoted each calendar year automatically and receive a corresponding salary increase. Volatile and uncertain economic environments aside, you almost always will be making more money next year than you are this year. This makes it easy to establish a savings regime and finance a lifestyle.

Now with partnership, there are expectations of greater wealth and influence. So it may come as a nasty shock to find out your income is (temporarily) less than it was before.

The new partner pay wars

In the early days of partnership, many new partners find that their net take home pay has reduced when compared to their previous positions. It is not unusual for income to be lower in the first two years, and only return to pre-partner levels in year three.

There are a few reasons for this. Fundamentally, the market determines associate salaries, but profits determine partner pay. The two don’t always match up. Inside the City bubble, NQs can make £90,000 or £100,000 a year, often with a chunky bonus to boot. And you can’t slip a cigarette paper between the salaries of senior associates and junior partners in many firms.

More immediately, you’re self-employed now, which means you may have lost your benefits.

Those pesky extras

Most major law firms in the UK will provide employees with a bonanza of benefits in addition to their basic salary—private medical cover, travel insurance, life insurance cover, and meals after a certain hour to name a few.

The transition from employed to self-employed when becoming a partner means that, for many, some or all of the employee benefits that you previously took for granted now disappear, and you are left to make your own provision. The firm may offer a separate (and often enhanced) package for partners but, whichever way you arrange your benefits, there’s going to be a cost attached.

What do you need to consider?

If you are on the road to partnership, you should start to put in place plans to minimise the impact of benefits reduction on your personal position sooner rather than later. The last thing you want is to be left in the lurch with no insurance policies in place if you were unable to work due to serious illness, for example.

On the upside, you have a tremendous window of opportunity to review the level and appropriateness of the benefits as you transition to your next career and life stage. The group medical cover you enjoyed as an employee might have been adequate for a single person, but you will have very different requirements as a parent of two young children living in a home with a substantial mortgage.

Commit to a review now while you’re getting your financial house in order.

Adrian Johnson