February 06, 2012
The Court of Appeal has ruled that an equity partner in a law firm was not an employee and is therefore unable to take a claim for unfair dismissal against his former firm.
Martin Tiffin was a partner in firm, Lester Aldridge from 2006 until his partnership was terminated in 2008. He joined the firm as an associate in 2001, being made a salaried partner in 2004. The firm subsequently, in 2007, became a Limited Liability Partnership (LLP) and Mr Tiffin signed a membership agreement at that time as a fixed share equity partner.
Rimmer LJ, giving the leading judgement noted that “In October 2007, following the establishment of the LLP, Mr Tiffin made (in common with all other equity partners) the increased contribution to the LLP’s capital that was required of him, namely £1,250.”
He went on to recognise that the fixed nature of Mr Tiffin’s share could be likened to a salary but that the profit sharing element of his remuneration meant that he was a partner and not an employee. Commenting on the arrangement Rimmer LJ said “Although that no doubt gave him only a potentially small share in the firm’s annual profits – at any rate as compared with the shares that the full-equity partners would enjoy – it cannot simply be dismissed: and the inference is that Mr Tiffin agreed to become a fixed-share partner rather than a salaried partner precisely because it carried the promise of a better return for him. In addition, he also had a prospect of a share in the surplus assets of the LLP on a winding up.”
