The Right And Wrong Reasons To Form A Partnership

Like marriage, partnering should be for the right reasons. Make sure you're making the right decision.

Years ago, I read about a marriage prenuptial agreement that was incredibly specific as to each spouse’s responsibilities, right down to the husband’s obligation to put the toothpaste cap back on the toothpaste tube. Most people thought it was a prenup gone wild. The spouses, however, clearly approved of and signed on the dotted line because it illuminated all the expectations each had of the other. Neither was in the dark about their marital responsibilities, and where there is transparency there are no surprises.

Understand this. Partnerships are like marriages. Half will last a lifetime, the whole being greater than the sum of its parts; growing together, getting stronger through adversity and compromise. The other half will end up in a bitter and nasty separation and dissolution, fighting over assets and the custody of the “clients.” Therefore, the burning question that must be asked and answered thoughtfully is, “To partner or not to partner?”

Like marriage, partnering should be for the right reasons. However, most lawyers enter partnerships for the wrong reasons borne out of fear of the unknown, doubt about their own capabilities, and a lack of understanding about what a partnership truly means. Do you really need a partner and all of the emotional and financial entanglements it entails in order to assuage those fears? The answer is a resounding “no.”

These are the wrong reasons to partner with another lawyer:

I want someone to bounce ideas off of.” As a rule, most lawyers are very generous with their knowledge and will give invaluable guidance if asked. It is important to maintain relationships with your peers, law school alumni, your bar associations, and online educational sources and you will get ample guidance and mentoring you need to get confident. Continuing legal education can also provide a great base for practical knowledge and an opportunity to network with others in your area of concentration. Depending upon your office selection, should you choose a shared suite or similar environment, you will have a built-in sounding board without the financial intimacy.

I want to be able to take a vacation and know my clients are being taken care of.” (And from the client’s perspective, “Who will take care of my legal matter if you are not available?”) Any solo will tell you they have strong reciprocal relationships with other solos or small firms and they cover for one another when necessary. It is very important you have a dialogue with your clients about a planned or unplanned absence even if the client never asks because it is a legitimate concern of clients who hire solos and an unspoken inhibitor to being hired.

I don’t want to take all the financial risk.” If you are going out on your own, you are taking a calculated risk, period. If you wish to defray cost, how you set up your office, whether working in a suite of other lawyers with shared services or setting up shop by yourself, will determine your cash outlay and financial risk. If you’ve already invested nearly $150,000 in your legal education, is a few more thousand any riskier?

Sponsored

I’m not very good at (fill in the blank).” Sharing your profits with someone simply because you are not good at one particular administrative task or marketing or (fill in the blank) and another lawyer does it well is not a reason to take on a partner. It is a reason to hire someone proficient in that skill whether as a part-time employee or even to explore outsourcing independent contractors. There are a number of wonderful programs or vendors who can aid you. If they don’t work out, you get another program or vendor. It’s not so easy to disentangle yourself from a partner. I’ve yet to see a partner with a free trial period.

I want to partner with someone who can teach me.” Again, sharing the profits in exchange for guidance you can pretty much get for free to low cost if you are properly networked, belong to the right associations, and take part in online education, is just giving away your hard-earned dollars.

Do not take on a partner out of fear. You will be living and breathing this partner morning, noon, and night. You are depending upon this person for your livelihood while making them the caretaker of your professional reputation.

The short list of the right reasons to take on a partner is:

  • You share a similar vision of where you want to go with your law practice and how you want to get there and are committed to being in it for the long haul.
  • You respect each other’s ability as a lawyer and trust the other to make decisions in your absence which will be binding upon you.
  • Each of you has something of comparable value to bring to the partnership, skill sets which compliment and enhance each other.
  • Both of you recognize your equal responsibility to develop business and bring in clients.
  • You share a work ethic and morals. (Partnership brings both benefits and liabilities, and you do not want to be vulnerable to the ethical missteps of a partner who does not necessarily share your values).
  • You work well together.

Sponsored

Partnerships can be a wonderful experience when entered into for all the rights reasons and with the right partner. If you decide to partner, make sure you have a partnership agreement that clearly spells out all the financial agreements between the partners not just while you are together, but also should you part company… right down to who puts the toothpaste cap back on the toothpaste tube.


Susan Cartier Liebel is the Founder and CEO of Solo Practice University®, an online educational and professional networking community for lawyers and law students who want to create and grow their solo/small firm practices. She is a coach and consultant for solos, an entrepreneur mentor for LawWithoutWalls.org, a member of the advisory board for the innovative Suffolk School of Law – Institute on Law Practice Technology and Innovation, an attorney who started her own practice right out of law school, an adjunct professor at Quinnipiac University School of Law for eight years teaching law students how to open their own practices, a frequent speaker, and a columnist for LawyersUSA Weekly, The Connecticut Law Tribune, The Complete Lawyer, and Law.com. She has contributed to numerous legal publications and books offering both practical knowledge and inspiration. You can follow her on Facebook, Twitter, LinkedIn, and Google+, and you can email her at Scl@solopracticeuniversity.com.