An equity partner is a person who holds a partnership, who is entitled to a portion of the profits and losses, who holds a capital account with the company and who can advance or tap into the company`s coffers. “Partners have the opportunity to ask for changes,” says Adam Pekarsky, division head at Robert Half Legal, a North American law firm. “It`s a lever. If you are a superstar accountant who has been invited to the partnership after only a few years and the company runs the risk of crossing the street to another company, you can request changes. The company needs you more than you need. The partnership agreement should cover the decision-making process on important issues. Otherwise, the company may stagnate if partners can simply bypass decision-making. Law firms generally operate as a general partnership or, to the extent permitted, as a limited partnership (Limited Liability Partnership, LLP). If the compensation is discretionary, in some companies a compensation committee has absolute authority over the amount. The other extreme is that the entire partnership votes each year on the compensation of each partner (the “Night of the Long Knives”). Some companies do not publish a table with partner compensation, so you only know your own compensation, but not that of others. You also need to know what rules may apply to professional behaviour. In B.C, for example, the professional conduct manual contains a rule that the client`s right to choose his own lawyer cannot be limited by a contractual or other agreement. When a lawyer leaves a law firm to set up his own firm or to join another firm, it is mandatory for both the outgoing lawyer and the registry to inform the lawyer`s clients of their right to choose who they wish to represent.
The main drawback of being a salaried partner is being able to be an outside partner. As part of a general partnership, this means that you remain potentially responsible for the company`s debts and obligations. So, while you have a stable partner as an employee, you want to make sure that you receive all of the compensation from the pleasure partners for any commitments made by the partners or the company. (The partnership agreement generally defines the basis on which partner partners can compensate other partners or the partnership in case of debt.) In large companies, the partnership offer is usually a take-it-or-leave-it offer. But in a small local business, it is a mistake to think that you cannot ask for changes for fear that the partnership offer will be withdrawn. Expect you to get back what you paid, even if some companies may lose some, or even all, of your capital if you leave the partnership within five years of the purchase. (In this sense, your capital contribution is not a good investment and should instead be considered a “membership fee” giving you access to a profit-sharing club.) Note that there should be no refund deduction if your departure from the business takes place at his request. Also think about competitive alliances.
If you leave the company, the agreement may prevent you from taking customers with you (as the “property” of the company). It is not uncommon for you to see alliances that prevent you from speaking to clients one year after your departure or from establishing your own practice within a certain perimeter of the office. While the legal effect of such clauses is questionable, especially if they are distressing, the last thing you want is a dispute over your right to act for clients you have brought yourself to the company. Partnership agreements are rarely amended, and only when necessary; z.B. when merging with another law firm. If you want to negotiate a point from the partnership position that is proposed to you, say, their compensation, it is unlikely that the agreement itself will require changes.