New Partner Appointments at Big Firms

kennyb3

I see from the latest accountancy Ireland there has been a raft of new partner appointments at KPMG, BDO and a number of the other big accountancy firms.

I've always wondered though what happens in a downturn? As a partner you are self employed - do they just return to being directors or are they are no longer needed as the clients aren't there? Surely they can't continue with the same amount of partners in this case?

Anyone know?

ACA2015

Only Partners know how the individual agreements work exactly. I'm sure they have to bring in a certain minimum level of fees to the firm per their Partnership terms, it gets murky when a Partner just inherits a client as another retires or something but I suppose you are still bringing the fees in and the client would leave if they aren't happy.

In lots of legal firms they have equitable partnerships meaning they split the money equally. I doubt they can do that in accounting as the different service areas but if you do look at lots of bigger firms you'll see very few audit partners for example relative to % of staff employed in audit and audit doesn't bring in the fees that other service areas do so maybe they do it.

I have never heard of a Partner going back down to Director in the same firm. Partner to Consultant maybe when they reach the appropriate retirement age. To keep the Partner's incomes up in down times many appointed salaried Partners which publically gives you title but not the same status or lolly internally. The equitable partnerships that I mentioned above wouldn't do that and long term I think that's the best way to do it, you might end up losing out on some talent & fees in the short term but once you start messing with partnerships you create an imbalance in a firm. There is a good article on a US law firm, I can't link as I'm a new user, just search for #New Yorker The Collapse'