What Does a Partnership Lawyer Do?
A partnership lawyer, as the name implies, helps clients understand how to start and maintain a partnership. One thing is for certain: understanding what partnerships are and how they are created is not the easiest thing to do.
A partnership is a business in which two or more persons share its profits and losses. It’s important to know that this does not mean that one of the partners must handle all of the day-to-day activities. That’s the great thing about partnerships: partners can divide up the decisions and duties among themselves. This is typically done via a partnership agreement, although I’ve also seen very simple partnerships created with handshake agreements.
A simple partnership agreement should spell out most of the issues that need to be addressed. These issues will typically include (but are not limited to) the following: The more specific the partnership agreement , the better off the partners are in the long run. Bob and Tom may have no problems when the partnership is first formed. However, without an agreement, it’s easy to see how those two will have problems down the road.
A partnership lawyer can help you recognize issues you’ll likely face down the road and try to work them out now. A partnership lawyer can also help create the partnership or review documents created by non-lawyers. It’s easy to understand why so many start-up partnerships (and some that have been around for quite some time) utilize the services of a partnership lawyer.
When Should You Consult a Partnership Lawyer?
A Partnership lawyer is not the most commonly needed business attorney, unlike a corporation or LLC lawyer. However, there are times when a business should hire a Partnership attorney. The first time a business should consider hiring a Partnership attorney is obviously if they need to create an agreement for a Limited Liability Partnership (LLP), a Limited Partnership (LP) or a general partnership. The second time a business might consider hiring a Partnership lawyer is when a business has a dispute among partners or shareholders that is not able to be resolved amicably. The third time, a business should consider hiring a Partnership lawyer is when the business wants to legally dissolve their business. Therefore, a Partnership lawyer can have a large impact on a company during some of the most important transactions a company will typically encounter during its existence.
Key Services of a Partnership Lawyer
If the partnership or limited liability company (LLC) is owned by many partners, or if it is a "hands-off" affair where one or two partners entirely run the business while others participate only with a financial interest, there may be little interaction among the owners of these entities. However, partners in small partnerships and LLCs tend to interact with each other much more frequently than the owners of large companies do. The work of a partnership lawyer often involves getting involved in the many levels of relationships that exist with owners, managers and other professionals. The range of services we provide to partnerships in the San Diego area varies according to the specific needs of their owners. Some of the services we provide include: preparing and revising bylaws and other documents, consulting with partnerships in regard to various issues, being there when there is a dispute among owners and representing partnerships when litigation is unavoidable.
Benefits of Engaging a Partnership Lawyer
Engaging a partnership lawyer has many advantages, which begin with ensuring the company’s compliance with the law. These obligations touch upon a broad range of potential legal issues. For example, the partner lawyer will help to ensure that the company observes all of the requirements imposed by the business organization statute in the state of incorporation. This statute may set forth a number of strict notice and record-keeping requirements; failure to observe those requirements can result in significant problems for the company. A partnership lawyer will also ensure that the partnership documents comply with applicable law and will interpret them and advise on compliance with the terms thereof.
The partnership lawyer also engages in significant preventive lawyering by helping to ensure compliance with fiduciary duties, such as the duty of good faith and fair dealing, the duty of loyalty and the duty of care. These can be affected by a number of issues, such as breach of contract and fraud.
One of the most important services provided by the partnership lawyer is helping to avoid disputes and dealing with any disputes that arise. The partnership lawyer will work with the company to ensure success in limited partner relationships through surefire and fair investment agreements. When conflict arises , the partnership lawyer will seek to resolve it through negotiation and mediation. If these methods fail, the partnership lawyer will represent the partnership in legal proceedings, including appeals. The partnership lawyer will also work with the partnership to ensure its dissolution proceeds smoothly and in compliance with the law.
Employment Agreements. The partnership lawyer can assist the company in negotiating favorable employment agreements with key stakeholders and advisors such as employees and advisors (both legal and financial). A well-drafted agreement can lay out the expectations and responsibilities of the various roles in the company, allow for the targeted retention of key employees, and help to avoid disputes and misunderstandings which could adversely affect the company.
Planning for the Future. Aside from dealing with current issues, a partnership lawyer will help to plan for the long-term needs of the partnership. For instance, the partners may want to create an estate plan to ensure a smooth transfer of their interests in the company, either during life or at their death. Without advance planning, the company may fall apart, costing the partners significant sums of money and time.
Selecting the Right Partnership Lawyer
When choosing a partnership lawyer, there are several factors a business should consider. The first is expertise. Does the lawyer have experience and specialization in partnership law? Are they part of larger firm that has a particular reputation and specialization? Sometimes your best referral is a friend in the same profession. In this case, reaching out for assistance with partner agreements can be beneficial. They would likely have been through the same process and can guide you in bringing on a new partner in your own business. Finally, if it seems as though you are not able to gain consistent communication or information, it may be a sign that it is not the right fit. When starting a partnership, it is important for businesses to think carefully about the hiring practices. They might even consider exploring pre-established partnerships in order to research the lawyers involved. Most lawyers will have additional certifications that may be indicative of their expertise. Moreover, the questions that a lawyer asks when initially meeting with you can be profoundly insightful to their specialization.
Common Legal Disputes in Partnerships
Partnership disputes often involve the kind of everyday conflicts that arise out of failed expectations. However, there are a handful of more entrenched issues that lawyers frequently encounter when assisting with or litigating partnership matters. One of the most common reasons for partnership conflict is that one or more partners feel as if another party to the matter has violated the terms of the agreement. In the event that a dispute is pursued in court, providing evidence of how and where an opposing party breached the agreement will be essential to receiving some form of legal relief. Another common issue involves the liability of the partner to third parties. Simply put, in a general partnership, each partner is personally liable to the partnership creditors , while members of a limited partnership are not personally liable for partnership obligations beyond their capital contributions to the partnership. This is a complex matter that will require the thorough examination of both partnership and employment agreements; an experienced lawyer can clarify the precise liabilities that are ascribed to each partner. Related to this topic is the division of profits generated by the partnership. This control can become a deeply personal issue, especially if one partner spends far more time on account of the business than another. Well-written agreements include provisions that account for all potential divergent interests. Additional common issues involve the changes in ownership or management of the partnership. Since changes like those do not require the approval of all parties in order to go forward, it opens the door for disagreements and lawsuits.