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Law Firm Partnership Agreements

Leslie D. Corwin, Arthur J. Ciampi

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“An essential guide.... It should be on the desk of every managing partner.”
Robert W. Hillman, Esq., Professor of Law, University of California at Davis,
Author, Hillman on Lawyer Mobility

Whether your firm consists of two lawyers or five hundred, Law Firm Partnership Agreements book and CD is a must for your office. This book tackles the key “life events” of a law firm partnership—formation, setting compensation, partner admissions and departures, retirement, dissolution, termination of the partnership, mergers and acquisitions, and much more.

For firms in the course of development, here is the advice you need for selecting the form of the entity—general partnership, professional corporation, or limited liability partnership—with the advantages and disadvantages of each.

Also included are a state-of-the-art model partnership agreement and other practical forms of agreement, such as a “memorandum of understanding” for lateral partners that serves as an adjunct to the main agreement. In short, You'll get everything you need to ensure that your firm's partnership agreement is up to snuff. And all forms and clauses are included on an accompanying CD-ROM for ease of use.

Filled with advice on structuring your firm to attract and keep talented lawyers, Law Firm Partnership Agreements will help your firm retain its competitive edge.

Book #00643; looseleaf, one volume, 1,098 pages and one CD-ROM; published in 1998, updated as needed; no additional charge for updates during your subscription. Looseleaf print subscribers receive supplements. The online edition is updated automatically. ISBN: 978-1-58852-080-7.

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  • Availability: Available
  • Brand: Law Journal Press
  • Product Type: Books
  • Edition: 0
  • Page Count: 1098
  • ISBN: 978-1-58852-080-7
  • Pub#/SKU#: 643
  • Volume(s): 1
  • CDs: 1

Author Image
  • Leslie D. Corwin

Leslie D. Corwin is a Partner in the New York office of Blank Rome LLP. He is a nationally recognized expert in partnership law as it relates to professional service firms, including partnership mergers and break-ups, law firm dissolutions, partner ousters, defections, bankruptcy and other partnership changes.



Author Image
  • Arthur J. Ciampi
Arthur J. Ciampi is a founding member of Ciampi L.L.C. He is a regular columnist in the New York Law Journal with his column "Law Firm Partnership Law". Mr. Ciampi has represented professional partners and partnerships both nationally and internationally for more than 20 years. He is an experienced litigator, counselor and mediator concerning partnership issues and disputes.

CHAPTER 1
An Overview of Law Firm Partnerships

§ 1.01 Partnership Defined
§ 1.02 Characteristics of a Partnership
[1] Controlling and Operating a Business
[2] Compensation as Percentage of Firm Profit
§ 1.03 Consequences of Partnership
[1] Partners’ Fiduciary Obligations to Each Other
[2] The Standard of Good Faith and Fair Dealing
[3] Good Faith and Fair Dealing in the Context of Law Firm Partnerships
§ 1.04 Informing Clients of a Change in Firm
§ 1.05 Written Law Firm Partnership Agreements
[1] Partner’s Compensation
[2] Allocation and Accrual of Equity
[3] Continuation Provisions
[4] Partnership Goodwill
[5] Clients of Partners Leaving the Firm
[6] Firm Organization and Administration
§ 1.06 Partnerships at Will
§ 1.07 Right to an Accounting
[1] Basic Rights
[2] Bringing an Action for an Accounting
§ 1.08 Partnership by Estoppel
§ 1.09 Partnership Tiers and Differential Liability
[1] Two-Tier Partnerships
[2] Vicarious Liability
[3] Joint and Several Liability
§ 1.10 Comparing the Uniform Partnership Act with the Revised Uniform Partnership Act
[1] History of the UPA and the RUPA
[2] Important Differences Between the UPA and the RUPA

CHAPTER 2
Choice of Entity for the Firm

§ 2.01 Factors in Choosing the Organizational Entity
[1] Tax Considerations
[2] Vicarious Liability Considerations
[3] Other Considerations
§ 2.02 The Law Firm General Partnership
[1] Characteristics
[2] Essential Elements of a General Partnership for the Practice of Law
[3] Capital Contributions
[4] Agency Relationship; Powers of Partners
[5] Fiduciary Relationship
[6] Ethical Responsibilities
[7] Decision-Making
[8] Income Sharing
[9] Liability of Partners
[10] Professional Liability Insurance
[11] Other Insurance
[12] Recourse and Non-Recourse Obligations
[13] Liability for Leasehold Obligations
[14] Incoming, Outgoing and Retiring Partners
[15] Dissolution and Winding Up
§ 2.03  Professional Corporations
[1] Practicing Law as a Corporation
[2] Characteristics
[3] Taxation
[4] Formation and Operation
[5] Shareholders’ Agreement
[6] Purchase of Shares
[7] Fiduciary Duties
[8] Ethical Responsibilities
[9] Voting
[10] Income Sharing
[11] Vicarious Liability
[12] Employees
[13] Dissolution
§ 2.04 Limited Liability Partnerships
[1] Generally
[2] Characteristics
[3] Tax Status
[4] Vicarious Liability
[5] Formation
[6] Operation
[7] Conversion
[8] Contribution and Indemnification Agreements and Their Impact on Vicarious Liabilities
[9] State LLP Laws
§ 2.05 Limited Liability Companies
[1] Generally
[2] Formation and Operation
[3] Control
[4] Operating Agreement
[5] Voting
[6] Vicarious Liability
[7] Dissolution
[8] LLC Mergers
[9] Taxation
[10] Converting to an LLC
§ 2.06 International Law Firm Structures
[1] The Swiss Verein Structure
[2] Australia, the United Kingdom and the ABA Rules of Professional Conduct
[3] Public Investment and the Conflict of Interest Between Clients and Investors

CHAPTER 3
Setting up the Firm

§ 3.01 Preliminary Matters
[1] The Firm Name
[2] State Law Which Will Govern Firm Disputes
[3] Term of the Partnership and Withdrawal of a Partner
[4] Location
[5] Choice of Fiscal Year
[6] Statement of Purpose
[7] Financing the Firm
§ 3.02 Partners and Partner Classification
[1] Equity Partners
[2] Non-Equity Partners
[3] Transition Partners and Retired Partners
[4] Former Partners
[5] Other Partner Designations
§ 3.03 Associates
§ 3.04 Relationship of Partners Toward Each Other
[1] Fiduciary Duties of Partners
[2] Limitations on Outside Interests
[3] Professional Responsibility and Partnership Expulsion
[4] Keeping Partnership Information Confidential
[5] Client Retainer Agreements and Their Application to New Clients and New Matters
[6] Client Files
[7] Partner Restrictions on Incurring Firm Obligations
[8] Bank Accounts
[9] Opinion Letters
[10] Prohibition on the Transfer of a Partner’s Interest in the Firm
§ 3.05 Alternatives to Actions at Law
[1] Mediation
[2] Arbitration
§ 3.06 Amending the Partnership Agreement

CHAPTER 4
Management Structure

§ 4.01 Defining Management Responsibility
[1] Determining Management Structure
[2] The Committee System in General
§ 4.02 Partnership Voting
[1] One Person-One Vote
[2] Majority and Super-Majority Rule
[3] Weighted Voting
[4] Proxy Voting
§ 4.03 The Executive Committee
[1] Establishment
[2] Authority
[3] Partnership Voting on Executive Committee Actions
§ 4.04 The Management Committee
§ 4.05 The Practice Development Committee
§ 4.06 The Practice Management Committee
§ 4.07 Other Committees
[1] Budget Committee
[2] Ethics Committee
[3] Bias Complaint Committee
§ 4.08 Committee Chairpersons
[1] The Managing Partner
[2] The Administrative Partner
[3] Director of Finance
§ 4.09 Committee and Partnership Meetings
[1] Committee Meetings, Membership and Reports
[2] Partnership Meetings

CHAPTER 5
Partnership Income and Assets

§ 5.01 What Constitutes Partnership Income
§ 5.02  Partnership Assets and Liabilities
[1] “Partnership Net Assets” Defined
[2] Accounts Receivable
[3] Work-in-Process
[4] Investment Opportunities
[5] Leasehold Adjustments
§ 5.03 Distribution of Distributable Partnership Income
[1] “Net Income” and “Distributable Income” Defined
[2] Distribution of Net Income
[3] Distributions to Former Partners
[4] Expense Allowances
[5] Partners’ Capital Accounts
[6] Pension Plans
[7] “Allocable Income” Defined
[8] Tax Allocations and Other Tax Matters
[9] Tax Disputes Involving Non-Equity Partners
§ 5.04 Types of Partner Compensation Systems
[1] The Compensation Committee System
[2] The Formula System
[3] The “Equal Partners” System
[4] The Proprietary System
[5] The Seniority/Lockstep System
[6] The “Eat What You Kill” System

CHAPTER 6
Changes in Relationship Among Partners

§ 6.01 In General
[1] The Affect on a Partnership of a Withdrawal
[2] Continuation of the Partnership
[3] Procedures To Follow When There Is a Change of Relationships
[4] New Office Space and the Confidentiality Concerns of Voluntarily Withdrawing Partners
§ 6.02 Procedures for Admitting New Partners
[1] Promotions of Associates to Partner
[2] Laterals
[3] Equity vs. Non-Equity Status
[4] Execution of Partnership Agreement
§ 6.03 Withdrawal and Termination
[1] Voluntary Withdrawal and the Enforceability of a Notice Requirement
[2] Involuntary Termination
[3] Solicitation of Clients and Tortious Interference with Firm Clients
[4] Solicitation of Partners and Associates
[5] Access to Client Files by a Withdrawing Partner
[6] Withdrawing Partner’s Access to Partnership Confidential Information
[7] Withdrawing Partner’s Interest in Unfinished Assignments
[8] Confidential Exit Agreement on Involuntary Withdrawal
§ 6.04 Retirement
[1] Formulating a Retirement Policy
[2] Mandatory Retirement
[3] Gradual Retirement
[4] Covenant Not to Compete on Retirement
[5] Ongoing Private Practice of Law
[6] Responsibility for Partnership Debts
[7] Funded and Unfunded Plans
[8] Small Firms and Sole Practitioners
§ 6.05 Death
§ 6.06 Disability
§ 6.07 Incompetence
§ 6.08 Leaves of Absence
[1] Sabbaticals
[2] Vacations
§ 6.09  Temporary Withdrawal

CHAPTER 7
Dissolution

§ 7.01 Dissolution Defined
§ 7.02 Termination Defined
§ 7.03 The Role of the Partnership Agreement
§ 7.04 Causes of Dissolution
[1] Withdrawal of a Partner
[2] Dissolution by Expulsion of a Partner
[3] Bad Faith Dissolution
[4] Bankruptcy of a Partner
[5] Death of a Partner
[6] Incapacity
§ 7.05 Duty to Wind Up Affairs of the Partnership
[1] Obligations of Partners After Dissolution to Partnership
[2] Partner’s Authority to Bind Partnership
[3] Duty To Finish Unfinished Business
[4] Sharing of Profits and Losses Upon Dissolution
[5] Contingency Fees of a Partnership in Dissolution
[6] Judicial Dissolution
[7] Appointment of a Receiver
§ 7.06 Valuing a Law Firm’s Goodwill on Dissolution
[1] Agreeing that Goodwill Has No Value
[2] Client’s Choice of Counsel and Goodwill
[3] Goodwill as an Independent Asset Capable of Valuation
[4] Valuing Goodwill
§ 7.07 The Valuation Expert § 7.08 Agreements on Dissolution of the Law Firm
[1] Agreement Between and Among Partners of a Dissolving Firm
[2] Agreements with Third Parties

CHAPTER 8
Buying, Selling or Merging Law Practices

§ 8.01 Sale of a Law Practice
[1] The ABA Model
[2] The New York Example
[3] Sample Sale of Law Practice Agreement
[4] The Sale Price
§ 8.02 Merging a Law Practice
[1] Client Concerns
[1A] Due Diligence and Confidentiality
[2] Sample Merger Agreement of Two Law Firms
[3] De Facto Mergers
§ 8.03 Tax Aspects of a Law Firm Merger
[1] Definition of a Partnership Merger
[2] The Terminating and the Continuing Partnership
[3] Tax Construct of a Merger
[4] Tax Consequences of a Merger
[5] Tax Return Requirements
[6] Consequences of Merger-Tax Attributes
[7] Professional Corporations
§ 8.04 Standstill Agreements
§ 8.05 Buying, Selling and Merger Discussion Check List

CHAPTER 9
Law Firm Bankruptcies

§ 9.01 Partnership Bankruptcies
[1] Chapter 7 vs. Chapter 11
[2] Venue of the Bankruptcy Case
[3] Getting Started: Practical Considerations
§ 9.02 Eligibility for Relief Under Title 11
[1] Generally
[2] Partnerships in Dissolution: Eligibility to Be a Debtor
[3] Authority to File Voluntary Petitions
[4] Authority to File Involuntary Petition
§ 9.03 Effect of Filing: The Partnership Agreement and Status of the Partnership
[1] Introduction
[2] The Partnership Agreement as an Executory Contract
[3] Status of the Partnership and Interests in the Partnership
§ 9.04 Property of the Estate
[1] Generally
[2] Contribution Obligations of Partners
[3] Recoveries from Avoiding Powers
[4]  Section 723: Rights of Partnership Trustee Against General Partners
[5] Property of a General Partner's Estate
§ 9.05 The Automatic Stay
§ 9.06 Claims and Distributions
[1] Section 723(c) Revisited
[2] Section 508: Effect of Distribution Other Than Under Title 11
[3] Partners vs. Creditors
[4] General Partners vs. Limited Partners
[5] Current vs. Former Partners
[6] Landlord Claims
[7] Plan Provisions Providing for Non-Debtor Partner Releases and Injunctions
§ 9.07 Fraudulent Conveyances and Unfinished Business

Table of Cases
Index