it should be discussed and agreed upon before the parties enter into any formal partnership relationship . Otherwise , there will be conflict , resentment , and some level of animosity between the partners which is counterproductive or even destructive to the partnership . In my years of experience working with law firm owners , I can say that money is the number one reason most partnerships break up .
As with core values and vision , it is essential that you take the time , up front , to critically explore your strengths and weaknesses as well as those of the prospective partner . If you share the same strengths and weaknesses , then recognize this up front , and commit to bringing in additional staff to cover the weak points .
Personal Compatibility : Perhaps this goes without saying , but you need to genuinely like and respect your partner if you want the partnership to succeed . Lawyers entering into a partnership will be spending a lot of time together , so it ’ s important that each one gets along with the other on a personal level . If you can ’ t be friends , it ’ s difficult to build a successful law firm together .
Financial Compatibility : Money is always a big deal , in partnerships as in a marriage . For a smooth partnership , it is important to discuss financial matters and be in alignment here as in other critical areas . Each person should be up-front about their financial expectations and should have a clear understanding of how profits and expenses will be divided among the partners . This should be outlined in a partnership agreement .
Communication and the Need for Crucial Conversations : As with any successful marriage , strong partnerships require ongoing and honest communication . Lawyers should be able to communicate effectively with each other and should be able to resolve conflict in a professional manner . If you and your prospective partner have difficulty communicating with one another at the outset , you are destined for problems . If you hope to build and grow a successful law firm you will need to have crucial conversations at the outset , to determine if you are aligned and compatible , and you will need to continue having crucial conversations throughout your partnership . For this reason , I highly recommend that every law partner read “ Crucial Conversations : Tools for Talking When the Stakes Are High ,” by Patterson , Grenny , Mcmillan and Switzler . This book is a valuable resource that gives excellent guidance on how to approach the important but difficult conversations that are a necessary part of any partnership , but that most lawyers try to avoid .
Throughout your partnership , you should continue to confront difficult issues head on by having crucial conversations as the need arises in your law firm . Do not be an avoider , putting concerns and problems on the back burner because they don ’ t just go away . Instead , unresolved conflict will eventually 22 x The Trial Lawyer explode , and be far more destructive and harder to repair than these matters would have been had you confronted the issues much earlier in the relationship .
One of the best ways to keep communication lines open and healthy between partners is to plan and execute a Partners Retreat at least once per year . This should be a 2 or 3 day meeting , and it should take place away from the office . Ideally , you should consider bringing in a facilitator to help guide you through the meeting ’ s agenda and to help all the partners remain focused so they can address the key issues that need to be discussed .
Here are some questions to ask yourselves in the retreat : 1 ) How satisfied are each of you with the partnership ? 2 ) What do each of you want from the firm , both professionally and personally ? 3 ) What do each of you see as the biggest problems and challenges the firm is currently facing ? 4 ) What do you want the firm to look like in five to ten years ? 5 ) Are each of you willing to commit to doing what it takes to get the firm from where it is to where you want it to be ? Lastly , take time at the retreat to review your firm ’ s core values and determine if everyone is still in agreement as to each specific value . Update and revise these values as needed .
Compatibility Analysis : Oftentimes it is difficult to thoroughly assess someone else ’ s mind set , core values , and such . Many people cannot or will not be completely open or honest with you . That being said , I rely heavily on Jay Henderson ’ s Real Talent assessments to help me determine if I can successfully work with someone . I use it in PILMMA hirings , but I also use it before entering into business partnerships . The insights I receive from this evaluation are invaluable to me . I encourage you to do the same type of analysis as part of your preparation to enter into any form of partnership with another lawyer .
Your Best Partnership : The Nonequity Partnership Alternative
If you don ’ t already have a true equity partner in your law firm , my advice is to not take on an equity partner . If you have a lawyer that you really want to keep and they ’ re committed to the law firm , you can make them a nonequity partner . Nonequity partners receive a percentage of the profits and can be as involved in decision making as you choose for them to be . They can sit on the firm ’ s advisory board , and you are free to confer with them , but you don ’ t have to obtain their agreement on anything . This arrangement keeps the control of the firm solely in your hands . In this arrangement , when you get ready to exit your law firm , you can sell an equity part of the firm to your nonequity partners . They already have a sense of ownership in the firm and at that point , you can receive the monetary rewards from selling the practice or a portion of it to them .