Thinking about Partnership?

A potential partnership between lawyers sparks many issues – capitalization; entity formation; allocation of profits, losses, income, and expenses; restrictions on partnership authority; division of management duties; decision-making; withdrawal; and more.

But the most important consideration is often ignored: basic compatibility.

Do good friends make good partners?

Not necessarily. The interests or characteristics that draw two or more people together as friends do not always translate well to the business world.  This includes the practice of law.

Sometimes money gets in the way.  Or you could be polar opposites when it comes to work ethic or work style.

Maybe you are two peas in a pod with the same dislikes, which can be deadly.  The example that comes to mind is accounting.  Billing, recordkeeping, accounting, and reconciling can be outsourced, but should still be supervised.  As partners, the buck stops with you:

Lawyers must account for every penny of [client] funds as long as the funds remain in their possessionThis responsibility cannot be delegated, transferred, or excused by the ignorance, inattention, incompetence, or dishonesty of the lawyer or the lawyer’s employees or associates. A lawyer may employ others to help carry out this duty but must provide adequate training and supervision to ensure that all ethical and legal obligations to account for those monies are being met. In re Mannis, 295 Or 594, 668 P2d 1224 (1983) (lawyer reprimanded although he was unaware employee was commingling funds).  Excerpted from A Guide to Setting Up and Using Your Lawyer Trust Account, published by the Professional Liability Fund (2014).

How to size up a potential partner

For two lawyers considering a partnership, compatibility can be gauged best by joining forces as solos in an office share.  Each lawyer maintains his or her own practice, following the usual recommendations for an office sharing situation.  See the Professional Liability Fund (PLF) form/practice aid, “Office Sharing Guidelines” available on the PLF Web site.  

In an office share you can assess your potential partner’s work ethic, work style, and work habits first hand.  You will also learn how your potential partner approaches division of responsibility and money when the time comes to allocate and pay office share expenses.  You have the option of collaborating on individual cases while maintaining your independence.  This will give you intimate knowledge of your potential partner’s capabilities as a lawyer.

If the office sharing arrangement is successful, and you can come to terms on partnership formation issues, you are likely to have a successful union.  If the office sharing arrangement is not successful, you can accept the experience as a “lesson learned” and terminate the office share without the mess of a formal partnership dissolution.

For those who are convinced they have a winning partnership

Occasionally I meet two lawyers who are absolutely convinced they will form the perfect partnership.  They forge ahead, without the benefit of an office share experience, and later regret their decision.

I don’t wish to dampen anyone’s enthusiasm, and sometimes folks are absolutely right in their assessment.  If you’ve known each other for years, and “just know” it will work I would ask you to do this simple exercise first:

Schedule a time to get together with your potential partner.  Bring two legal pads and two pens.  Allow fifteen minutes for each person to make a list of the goals he or she has for the partnership.  Each person should be able to answer: what do I hope to get out of this?  How will partnering up be a significant improvement over my current working situation?  Exchange lists.  What you learn may surprise you.

Note:  Each set of potential partners can decide how long to allocate to this process, but there is an advantage in keeping the list-making phase short and sweet: limited time is more likely to result in someone writing down the first (unedited) thoughts that come to mind.  Limited time also forces participants to be succinct.

Understandably, such an exercise will always be one person’s idea.  But please don’t initiate such a meeting and arrive with a list prepared in advance.  If you prefer a mulling and polishing period, tell your partner several days in advance so each person has an equal amount of time to prepare.

All Rights Reserved [2014] Beverly Michaelis

 

 

2 thoughts on “Thinking about Partnership?

  1. Pingback: The Year in Review – Top Posts in 2014 | Oregon Law Practice Management

  2. Pingback: Do Good Friends Make Good Partners? | Oregon Law Practice Management

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s