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Thinking about starting a law firm with a partner? A working law partnership is more than just a legal agreement to share profits and losses. A successful partnership requires advance planning. Here are some suggestions about selecting a partner with whom you are compatible and forming a partnership.
Prepare to be flexible. Your partnership probably will gravitate toward the better book of business. That means either you or your potential partner may end up practicing in the other partner’s area. If neither of you is willing to do this, think about taking on a partner who practices in your area only. Choose a partner you like and get along with, but don’t stop there. Find out if that person is a good businessperson. Discuss how they do business, their marketing techniques, how they handle clients, and their future goals. You should analyze whether your future partner complements or merely duplicates you. By “duplicates” I mean: Do you share the same friends, attend the same clubs, church, social activities, etc.? Do you have the same interests and hobbies? Selecting a “duplicate” as a business partner decreases the chief benefits of the partnership: exposure to different clients and potential clients.
Be sure your partner is adequately financed. Remember, you are taking on a partner who is going to be sharing in profit and losses, not hiring an associate. Don’t get stuck with the full cost of rent, payroll, equipment, and other costs of the business. Sit down with your potential partner and develop a comprehensive business plan. Among the items that should be in the plan are general duties of the partners, marketing the firm, and practice areas. The plan should also address client files and how clients are going to be distributed among lawyers. Your business plan should also include a three- to five-year financial plan.
Make sure you sign a formal agreement. Once you have a business plan, you are ready to enter into an agreement. It may not be romantic, but your agreement must cover the possibility of a split up. Discuss who will have access to the telephone numbers, arrangements for unpaid bills, who moves or stays in the location, and who gets the files. Add an arbitration clause so that you both don’t end up in litigation or in court. Some states have laws that regulate professional partnerships. Be sure to review them before finalizing any partnership agreement.
Choosing a business partner is roughly analogous to getting married. It is not unusual for the discussion process to go on for as long as a year or more. If necessary, you and your prospective partner can enter into an “of counsel” relationship, which will allow you an opportunity to work together while you determine whether or not the partnership will work for you. Planning ahead can help to ensure a successful and longtermpartnership.
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