Top 10 Financial Errors: #9 Avoid Having a Written Office-Sharing or Partnership Agreement

Max Amsterdam once said: “Business is the art of extracting money from another man’s pocket without resorting to violence.”

The purpose of having a written agreement between all parties in the firm is that everyone then knows the terms of the arrangement between them: the expectations, the consequences and the means to implement those consequences. Failing to have such an agreement between lawyers is the equivalent of a shoemaker’s children running around barefoot.

Office-sharing agreements cover issues between solos sharing the same office suite. Common issues include management of the suite, lease payments, confidentiality, signage and sharing of the costs and services of common employees.

Every partnership agreement should cover management issues, capital contributions, income-sharing and compensation issues, disability, adding new partners, voluntary partner withdrawal, partner expulsion and dissolution.

Further, every partnership agreement should incorporate the requirement for adequate life and disability insurance to ensure that, should someone die or become disabled, there is proper compensation for the partnership share, and that the firm can pick up the pieces and carry on the business. Inadequate insurance can leave a deceased partner’s family and the remaining partners financially stuck or, worse, in litigation.

It can be very difficult to negotiate a partnership agreement. Be prepared for some tense moments. However, negotiating an agreement  – partnership or office sharing  – in advance is far less tense than litigating the issues later.