Advice for legal professionals to help you stay in control at every stage. From associate through to making partner, retirement and beyond.

Legal Professionals: Stay in Control of Your Finances

Financial planning for lawyers takes a specialised approach. Your complex legal career comes with the need for a fast-evolving financial plan to keep things on track. At Keyplan Wealth, we provide tailored advice to support you through every step, with a goal to help you keep more of what you earn.

Common financial pitfalls for lawyers

As a legal professional, work often takes priority. The financial shifts you experience in your career can be easily overlooked in a demanding role, leaving your personal finances open to missed opportunities.

Without a financial plan that adapts with your career, you could get caught off guard by punitive marginal tax rates, a surprisingly large tax bill, or cashflow inconsistencies. Staying aware of your situation and making proactive, strategic financial movements can keep you in control and out of these pitfalls.

What should I plan for financially in my legal career? 

Financial considerations for associates

From early associate you quickly face important financial decisions.

• Should I overpay on my student loan?
• Are extra pension contributions a better choice?

These decisions should be made based on your individual circumstances such as your salary and age, and with your short and long-term goals in mind.

Financial considerations when approaching promotion

Strategic financial planning becomes especially crucial in the one to two years before promotion to partnership. At this stage, your primary objective should be preparation – building a significant cash reserve specifically for handling the predictable challenges you’ll face as a new partner. This reserve will become your war chest.

Understanding law firm partner finances

Are partners in a law firm self-employed?

When you make partner, you become self-employed for tax purposes. Your predictable monthly net pay packet disappears, replaced by drawings from the partnership. This means a switch from PAYE to self-assessment, leaving the responsibility of tax and national insurance payments on you.

How do law firm partners get taxed?

As an equity shareholder, you’re now taxed on the firm’s profits even if they haven’t been drawn, or if they’re used to repay your partnership loan. Additionally, HMRC requests payments on account in advance, meaning your first year tax bill as a partner can get very heavy.

Pension planning for lawyers

Retirement planning for associates

With retirement planning, time is your ally. The effect of compounding growth means contributions made early in your career are significantly more valuable than those made later. By starting to build a substantial pot early on, the growth on that capital does much of the heavy lifting.

Retirement planning for law firm partners

As a partner, the responsibility for retirement funding shifts entirely onto you. Without employer contributions, you need to make your own contributions accordingly. The years before you step away from work are an ideal time to seek specialist advice. Here, you still have time to make significant changes – like adjusting your savings rate, optimising tax wrappers, and sequencing income.

Financial planning can be easily overlooked in the lead up to retirement. During your final years of work, it’s essential to have a full understanding of what you have, where it’s held, and how it fits with your future needs.

Financial advice for retired legal professionals

Implementing a set strategy at the start might seem like a job done, but retirement is not static, and does require ongoing financial planning. Often within the first one to three years, existing plans can change enormously.

Careful management during this time is vital. While we support you in building the right investments during your career, retirement is where we shift into fifth gear.

You could end up paying more tax than necessary over many years if your cash flow isn’t well structured from the start. With constant changes to tax rules and ongoing government adjustments, it’s important to stay on top of evolving regulations.

Taking control

Financial awareness is key for optimising your decisions in line with your goals. Often, timing is paramount when it comes to opportunities, so a proactive approach can stop things slipping through the net.

You don’t want to be worse off than you could have been had you taken timely, strategic action to prevent avoidable losses.

Through your long and rewarding career as a legal professional, advance planning can make your financial journey smoother. As your wealth grows and your needs evolve, proactive wealth management helps you keep more of what you earn.

Financial advice for lawyers

At Keyplan Wealth, we support solicitors and legal professionals with financial guidance at every career stage and beyond. Speaking to a specialist can bring simplicity to managing your growing wealth.

If you’re currently navigating a career transition, or need some guidance on how to optimise your finances, you’re welcome to book a 30 minute no-obligation consultation with Alex – our Partner and Principal with two decades of experience in financial services – to explore your options.

The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time.  The value of any tax relief is dependent on individual circumstances.