February 04, 2015
Partner Departure Tip: Locate Your Partnership Agreement and Read It
If you are a partner in a law firm, your partnership agreement is the key document that defines your rights and obligations as a partner. It can govern everything from how you get paid, to how the firm is managed, to what liabilities you have agreed to assume. In addition, it most likely has specific terms that impact how you should properly withdraw or depart from your partnership when the time comes. However, the longer you serve as a partner in a firm, the further removed you often are from what is actually contained in the partnership agreement (which also may have been amended numerous times over the years.)
When things are running smoothly, you rarely find the time, or the need, to revisit those terms. However, when attorneys are at a critical juncture in their careers and it is time for a transition, whether the result of lengthy consideration or an unexpected opportunity, many are hard pressed to locate their partnership agreement and are not familiar with its critical terms. Even attorneys who know exactly where to find the agreement are concerned that they will telegraph their intent to leave (even if it is only a possibility) by suddenly asking for a copy of the partnership agreement without explanation.
To avoid this predicament, even if you do not anticipate leaving your firm any time in the near future, make sure you have a complete copy of your current partnership agreement (or shareholder agreement if applicable) in your personal files. Also, keep copies of any amendments to these agreements, along with relevant firm handbooks in your possession as well. Finally, acquaint (or reacquaint) yourself with what is in these documents. If your firm partnership agreement has a provision that requires a partner to give six (6) months’ notice prior to departing or a liquidated damages provision for failing to comply with specific terms, you will want to know that well in advance of planning to transition from the firm. Don’t forget that one essential component to planning a successful firm departure is a thorough understanding of your rights and obligations with respect to your current partnership agreement.