The following is an update of “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.
Perhaps you and your potential partner are “two peas in a pod,” sharing the same dislikes. While that may sound like a basis for bonding, it can also be a deadly combination. 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. If neither of you has an interest in tending to law firm finances, you may quickly find yourself out of business.
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 Website.
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 please do this simple exercise first:
Schedule a time to get together with your potential partner. Bring two legal pads and two pens. Allow ten or 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.
Obviously you can approach this exercise any way you like, but here are my suggested ground rules:
- Keep the process as spontaneous as possible. If the exercise is your idea, resist the temptation to work on your list in advance.
- Write down the first thoughts that come to mind. Don’t edit yourself to please your potential partner or you defeat the whole purpose of the exercise.
- Keep it succinct. The next ground rule should help with that.
- Stick to the time limit. If one or both of you can’t put your goals down in writing in ten or fifteen minutes, that alone should make you pause.
- Be open to whatever the other person has to say.
As a wise man named Lee Rosen once pointed out, “lawyers can be nasty.” We are, after all, human beings. If we don’t get along, odds are we will take it out on each other. Finding someone compatible to partner with is incredibly important. The experience should be positive, rewarding, and gratifying. Life is too short for anything less.
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