Partnership Formation
Professional Firms
We advise on all aspects of partnership formation for professional firms, whether trading as conventional partnerships or as LLPs.
We understand that these structures are seldom off the peg and that understanding the relevant partnership culture and ethos is core to our approach. Partnerships range from highly consensual and flat management structures, where partners all have a high degree of control over the running of the business, through to more corporate management styles.
We will work with you to understand your approach before starting substantive work. Key issues to discuss may include:
- the likely demographics of the partnership in terms of leavers and joiners
- admission of new partners
- whether there will be junior or fixed share partners and how they will progress to equity
- profit sharing
- sunset or "shedding"
- catering for when things go wrong- disciplinary procedures, and anti-discrimination provisions
All of the above must be set in the context of an understanding of the longer term outlook for the firm and its agreed strategic goals.
We provide tailored advice informed by our experience both in advising clients and from our own experience as an LLP which underwent conversion from a partnership in 2004.
Family and Farming Partnerships
All partnerships should have a written partnership agreement. Some partnerships, particularly family partnerships, do not have written agreements and, perhaps without knowing it, rely on the terms implied by the law instead. The terms implied by law may not be what the partners intend and are likely to cause particular problems when there are unforeseen events such as divorce or death (which automatically dissolves a partnership without a written agreement) or disputes between the partners.
A written partnership agreement will:
- set out the rights and responsibilities of the partners (including how the profits or losses of the business are shared)
- detail which assets will become the property of the partnership
- set out the decision making structure and voting rights
- provide for what happens on the death of a partner – should the partnership continue
- detail how the remaining partners can buy out the deceased partner’s share
There should also be provision allowing for the retirement of partners and in some cases the ability to expel a partner if he is guilty of particular misconduct.
All Partners and Associates in
Partnership Formation.