Going to enter a law partnership - well here's what you need to know then
Do Not Do It
For many people, the best advice is to walk away. You need to carefully consider if there is anything that can be gained that you cannot achieve without the partnership. The problem is that most people ignore this advice and will enter a partnership anyway. If you are going to ignore this advice, you need to carefully look at the other points to ensure that you are correctly protected in the partnership.
Document Everything In The Partnership
If you are going to enter a partnership, you need to get everything in writing. You also need to have a plan for unwinding the partnership. You should also detail who gets what money and the effort that is required from each of the partners. The more details you have about the partnership the better.
It is important that you carefully and fully negotiate every aspect of the partnership. During the negotiation, you should also cover how you are going to be sharing fees and paying all of the expenses. Everything should be covered in great detail and if you survive the negotiations, you will have a detailed plan for the partnership.
Look to the Future
One of the biggest issues law firms have is that they don't look to the future. There are a lot of changes in the industry - this post from IDEX discusses them.
Make It Office Sharing
If things start to get difficult when you are negotiating the partnership agreement, you should consider backing off and simply having an office sharing agreement. This agreement does not share your finances. You will be able to maintain separate funds and accounting systems, but still be able to collaborate and share other aspects of the business such as staff and backup coverage. You do not have to be full partners for this to work for you.
Assume That It Is Not Going To Work
While no-one wants to think about their partnership failing, you should assume that it is not going to work. You should think about this as an experiment and not get overly emotional or too emotionally involved. There is a chance that the partnership will work and then you can become committed to it, but becoming committed too early could lead to problems for you.
Assume Joint Liability On Everything
Any financial commitments that you make need to be personally guaranteed by both partners so you share liability for everything. You need to ensure that your partner has assets on the line. If you have a partner without any assets then a personal guarantee is worthless and you will be left with the liability. You need to ensure that both of you are in the game together and have something to lose.
Get Separate Phone Numbers
It is important that each partner has a separate phone. There is no need for a main number even if your partner insists on this. You need to get your own number on all marketing and business cards. This is important that you should not take this advice lightly.
Have 3 Websites
You need to have a website for the firm and a website for each of the partners. If you need to have a blog, you should do the same thing. You need to have an online presence of your own so focus on your own website and keep the firm website simple.
Do Not Get Credit
Do not get a firm credit card or any form of credit line. If you are going to be using credit, you need to do this on your personal accounts. You should also ensure that one partner does not contribute more to the partnership than the other.
Have Separate Bank Accounts
If you need to, you should create a trust account for the firm and have separate operating accounts for each partner. You should not open a joint account. This will keep everything simple, but will also keep everything separate.
Create Separate Entities
If you are going to create an entity, and there is no reason to, you should create one for each partner. Talk to your own lawyer about this so you can easily unwind the partnership should something bad happen.