Thinking about Partnership?

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Oregon Law Practice

Management
Practice Management Tips for Oregon Lawyers

Thinking about Partnership?

Posted on 08/04/2014
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:

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Thinking about Partnership? | Oregon Law Practice Management

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Lawyers must account for every penny of [client] funds as long as the funds
remain in their possession. This responsibility cannot be delegated,
transferred, or excused by the ignorance, inattention, incompetence, or
dishonesty of the lawyer or the lawyers 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 partners 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 partners 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.

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Thinking about Partnership? | Oregon Law Practice Management

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I dont wish to dampen anyones enthusiasm, and sometimes folks are absolutely
right in their assessment. If youve 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 persons idea. But please
dont 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

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