Silk, and the Year After

The difficult second album is one of the more reliable patterns in popular music.

The first one is made slowly, often over years, with no expectations attached and material accumulated across a whole life. The second is made in eighteen months, under contract, by someone who now has an audience, a budget, and a set of people with opinions about what should happen next. The talent is unchanged. Everything around it isn't.

Taking silk has a comparable shape, and it comes with better notice.

The dip

The pattern is well enough known within chambers that most new silks are warned about it, usually informally and usually late.

Junior work steps back first. Solicitors who instructed you as a junior stop, either because the rate no longer fits the case or because they assume it won't. The silk work that replaces it arrives more slowly, because the market has to reposition you, and because the cases that need leading counsel are fewer, larger and slower to come to court. There is a gap, and it can run for the better part of a year.

Meanwhile the costs of practice do not move at all. Chambers contributions, clerks' fees, the practising certificate, insurance. If anything, some rise with seniority.

What makes it manageable

It is one of the few income shocks in professional life that arrives with several months' warning, and that is worth more than it usually gets used for.

The obvious response is reserves. If you know that receipts may thin for two or three quarters while fixed costs continue, that is a number that can be estimated in advance and held back rather than discovered in arrears.

The less obvious response concerns pensions. A dip year is, counter-intuitively, often a good year for contributions. In the years leading up to silk, income may well have been high enough for the annual allowance to have been tapered, possibly to its floor. A year of lower income may take you back out of the taper. And unused allowance from the previous three years can be carried forward, subject to the separate constraint that tax relief is capped at your relevant earnings for the year.

The interaction is fiddly and it depends entirely on the numbers. But the general shape, that the lean year may offer more pension capacity than the fat ones did, is the opposite of what most people assume, and it is worth checking rather than assuming.

The third response is simply not to cancel things. Income protection and life cover are precisely the wrong economies to make in a year when income is uncertain, and reinstating cover later means being underwritten again at an older age.

The other direction

Not everyone who takes silk sees a dip, and some see the opposite. Practices differ, sets differ, and a silk who steps up in a market with unmet demand may find the transition seamless.

The point is not that it will go badly. It is that the range of outcomes in that first year is much wider than in any of the ten before it, and planning for the wider range costs very little when you have six months' notice that it's coming.

This article is general information based on legislation in force at the date of publication, which may change, and is not personal advice. Individual circumstances differ considerably. The value of investments can fall as well as rise and you may get back less than you invest.

Altor Wealth Management LLP advises barristers and other self-employed professionals from our offices in Hook, Hampshire, and across Surrey, Berkshire, Sussex and Kent.