Two lawyers walk into a room and decide to form a partnership.
Both lawyers have been out of school for nine months. One has a job that stinks. The other has been struggling to start a solo practice. Don’t get me started on the wisdom (or lack thereof) of these two going into business together.
They get all excited about their new law firm. They come up with a name, find a graphic designer to create a logo, start working on a website, and create a really cool spreadsheet detailing their plan for ever-increasing revenue and profits.
Then they sit down for the discussion of how to split those profits. It goes well, and after a few drinks, they’ve hammered out a deal.
Each partner will receive one half of the profits. They’re going 50/50. They’ll split everything after expenses.
Are they doing it right? Nope. They’ll likely end up shutting down the partnership in a big fight over money.
How could they have done it better? They could have come up with a plan that recognizes each partner’s contribution and value and paid out the profits based on that plan.
How do you develop such a plan? You do it by thinking, talking, and negotiating. It’s hard. It’s fraught with emotional issues, and it raises conflict. That’s why they didn’t do it. They took the easy way out.
Here are the options for your new partnership:
- Do it the easy way, and close it down when the fight gets too ugly.
- Work hard at the outset to figure out a plan that compensates each of you in a manner that satisfies the partners. That way, you’ll survive together for a longer period (but don’t count on forever; we’re lawyers after all).
Take the easy path, and be certain of disaster. Take the harder path, and you get a chance.
Which path will you take?
