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Addleshaws plans to disband third partnership tier as Scottish merger beds down

Management at Addleshaw Goddard is planning to ultimately phase out its third partnership class, which has been created to accommodate the firm’s merger with Scottish practice HBJ Gateley.

When the merger goes live in June this year, Addleshaws will have three partnership tiers, A, B and C, with B the most senior tier as it contains full equity partners.

The C tier, introduced for the Scottish merger, includes only HBJ partners, but some HBJ partners also sit in the top two tiers at Addleshaws. Partners will be expected to move out of the C class when they are able to bill at rates similar to current Addleshaws partners.

One partner at Addleshaws said the C category has been created for those at HBJ who, on the face of it, wouldn’t be A or B partners under Addleshaws’ existing structure, ‘because obviously the Scottish market means lower rates, lower costs, lower turnover’.

‘If there wasn’t the C category, the relative size, the number of partners and the balance of voting would be skewed. HBJ Gateley is a £20m turnover firm, we are a £200m firm and, proportionately, [HBJ] may have more partners than we do. If they were all admitted to partnership and given votes at the same rate as existing Addleshaws partners, they would have a disproportionately large say given their contribution to the cake. That is the only reason C has been created.

‘We will do away with C as people settle into where they should naturally fit. At Addleshaws we have legal directors, which can be a transition to partnership – or a step sideways – that is our upper tier of seniority below partner. Maybe a C at HBJ is equivalent to an AG legal director, but they are called partners.’

However, recently re-elected Addleshaws managing partner John Joyce (pictured) said: ‘We are not going to go into different categories [of partner]. We just treat them all as partners. We don’t distinguish in our firm at all between fixed share and equity partners.’

A spokesperson added: ‘We don’t and won’t discuss the internal workings of our partnership but there are no plans to change any part of the partnership structure.’

Following a partner vote in November last year, Addleshaws will take over HBJ Gateley’s three Scottish offices in Aberdeen, Edinburgh and Glasgow. The union will see HBJ senior partner Malcolm McPherson join the Addleshaws board. Joyce and senior partner Charles Penney will retain their roles.

Last month Legal Business revealed that Addleshaws has reached a decisive stage in its discussions with US firm Hunton & Williams. It was also revealed in January that Addleshaws is in talks to merge with German outfit Luther.

Read more: ‘Welcome to the John Joyce show: Addleshaws’ head aims to push national firm centre stage’