One of the most traitorous task is setting up a law office partnership. Sounds so great in the beginning to have someone to work with every day, to share your problems and joys, to equally contribute to the financial end of things…..Ah, what does that sound like?
OHMYGOODNESS! MARRIAGE!!!!
Yes, indeed, a partnership is fraught with all the dangers of marriage and then some. What starts out with a honeymoon period can easily end up in a financial and emotional mess involving many more people than in a marriage. Let’s start by looking at the essential elements of a healthy partnership:
1. Partners have the same set of values, including legal ethics.(If your partner wants to fudge on your JOINT tax returns, how would you feel?)
2. Partners have a high tolerance for change and re-evaluating the partnership.( Change is the only thing that never changes)
3. Partners have approximately the same work ethic.( Do you like to work 8 hours a day and go home? Does your partner work 12 hours a day and weekends?- guess who ends up feeling resentful)
4. Partners are willing to acknowledge their individual short-comings and recognize their partner’s strength and weakness.( Obviously, one of the advantages of partnership is to share the work….can you figure out who should be responsible for what and stick to it).
5. Partners consistently strive to keep the partnership on an “equal” level.( this is hard to do if you become the partner of your former boss, or one partner has a lot more experience or money than the other).
Now what are the necessary things that partnership must have:
1. A written partnership agreement including ALL the problems and contingencies they can think of (death, sickness, financial ruin, etc.) Also include a written agreement as how to handle gross disagreements about the firm. Will you go to a mediator, etc.
2. Insurance policies in the approximate amount of ½ the worth of the firm on each partner, naming the other as beneficiary. (You don’t want to end up as partner with your expired partner’s wife or husband—-unless you have been involved in something really hinkey)
3. Disability insurance on each partner (this can be the making or breaking of a partner who gets ill…if there is enough insurance to cope with every day living expenses, most times the healthy partner can continue to run the firm, until the disabled partner can return, while not crippling the firm.)
4. A joint agreeable neutral CPA (this helps to keep the playing field level).
5. An iron clad agreement to meet with each other and review business matters on a weekly basis. This should be calendared and sacrosanct. This is also a time for goal setting and reviewing any changes you want in the office.
6. A meeting to let your families know what you are doing and what their responsibilities will be if you die while the partnership is still in force.
Just like you would advise your client to consult an attorney before entering into a partnership, that is not a bad idea for those envisioning a legal partnership. Either a coach or a counselor or attorney (not a friend of either of you) can act in this way, pointing out all the good and bad stuff. Then you can make a thoughtful decision.
Next week we’ll look at some of the ways you can ”partner” on a limited basis and obtain many of the goodies without the dangers of a true partnership….in the meanwhile, keep smiling and peddling….