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You should also ask yourself some financial questions too.
Am I willing to sacrifice my own paycheck so that my staff can get paid? How should we treat partners who do not pull their weight? Am I willing to be “partners” in the truest sense of the word? Am I willing to float my partner when they get cancer or their spouse gets sick or their child dies? How much do I have in savings? Am I generating enough to keep me and others busy consistently, and what is the track record for that?
Chief
And from the opposite side, what’s the spread among the partners and can I live with my comp being cut in tough times so that certain rainmakers are kept happy
Chief
I’d want to know about buy in (the amount, how financed, when returned, any penalties for leaving), firm debts (long and short term), how the firm covers the time between partner distributions and money coming in, any deals with partners and how many, etc.
Buy in, percentage, timing of draws, whose responsible for benefits (I.e., do you foot your own or does the firm cover it as a guaranteed payment), three years of financials to see what your comp will look like and general health of firm, and cash reserves.
If you’re an associate now (not a non-equity partner) I’d also ask about how taxes are handled and whether the partnership has negotiated a health insurance rate with any insurance providers. From what I understand paying your own insurance is a hefty chunk of change once you become partner.
This thread is very informative.
Ask to see an example cash flow statement for a full year. Ask if budget has been met or exceeded in the past five years. If the firm has incurred debt, is it recourse to the partners?
Pro
Following. This is very interesting!
There are attorneys who you can consult for succession planning and things like that and you may want to consult one for this.
Partnership in a firm is like marriage. It can be difficult and messy to unwind. So, look at what the partnership agreement says about situations involving incapacity, forced retirement, buy-outs, etc.
What happens if you or another partner dies? Is there money in reserves (such as a whole life insurance policy owned by the firm) that will pay out at death to help buy the partner’s estate out of the firm?
The comments here are right on. What is the financial buy in, what is your percentage interest, are there any guarantee compensation to certain partners, what are the retirement benefits, do partners have to pay income taxes on phantom income.
How much are buy-ins typically? Is the pull out penalty a real thing? How much? What other restrictions are part of this bag? How do comp distributions work? Like is it guaranteed base salary plus draw like a commission sales person?
This is all so complicated. Is it even worth it? (Half joking)
It really does depend on the situation. There are def firms out there where the risk coupled with the potential upside doesn’t outweigh the predictability and consistency of a Senior Associate / non-equity partner / counsel salary.