Best Practice: Decision-making and governance for a 2-partner firm

Asked and Answered

By John W. Olmstead, MBA, Ph.D, CMC

Q. Another attorney and I are planning on starting a law practice together. He has a larger book of business and 10 years more experience. Initially he will have a 60 percent ownership interest and I will have 40 percent. Compensation will be determined based upon these ownership percentages. How do you suggest we structure our decision-making and governance?

A. I would not recommend using ownership percentages for decision-making and governance. I suggest that you be equal partners in this regard - one head - one vote. Of course this would mean that if you actually took a formal vote you could be deadlocked. Hopefully, the two of you have similar goals and a common desired sense of direction for the firm. If so, you should be able to come together most of the time using a consensus approach. When you can't - some give and take will be required. If you can't the firm may not last.

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John W. Olmstead, MBA, Ph.D, CMC, (www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com