Source: The Marc Rosenberg Blog, September 4, 2018

The following includes excerpts, reproduced with permission, from a blog entry by Marc Rosenberg. In it, Rosenberg lists 12 questions prospective partners should ask in evaluating a partnership offer and that current partners should ask to ensure that their “house is in order” before extending a partnership offer. Here are the first five:

• Does the firm have written criteria for making partner? Are the criteria reasonable?  Attainable?  By the way, it’s perfectly reasonable and even appropriate for there to be a major subjective criterion based on the partners’ sense of trust and comfort level with a prospective partner.
• As a new partner, what will be your role? Beware if the firm wants you to continue functioning as a staff person, working on the partners’ clients, without being allowed to act like a partner.
• Does the firm have a partner agreement, spelling out sensitive but critically important provisions such as death and disability, mandatory retirement, partner duties, and prohibitions, causes for expulsion, managing partner duties, voting, etc? No one should agree to be an owner in a business without a signed partner agreement in place.
• How is voting structured? As a new partner, if your ownership percentage is small and voting is based on ownership percentage for all issues, you won’t have any say in important decisions. Voting should be one person, one-vote except for major issues such as mergers, changing the partner agreement, and a few others.
• How is compensation allocated?

• Is the system performance-based instead non-performance-based, the latter of which includes pay based on ownership percentage, pay-equal or seniority?
• A compensation formula that is so heavily skewed towards book of business that a new partner cannot possibly earn a decent compensation level.
• A compensation formula that is so heavily based on billable hours that partners are encouraged to hoard staff-level work instead of delegating it.

 For the complete entry, read “Partnership Offers: Questions Prospective Partners And Firms Should Answer.”