Does anyone know how attorney partnerships work?

You always see someone on a TV show making partner. How does that work? I'm wondering if there are applications in other fields as well.

It depends, usually an attorney has to work in a firm structured in such a way that it is run or managed by partners (as opposed to shareholders or members), and excel in their practice area and bring in business. At some point they may receive an offer to become a partner, and often this also means buying in and investing in the firm, in some firms it does not, it just depends.

It usually involves years of hard work and a high level of consistent success, and in many larger firms, it really is a big deal.

I'm wondering about the mechanics of the partnership relationship. The buy in, what that means, how much $ or %, how long before you're totally vested, what happens if you fire them (they fire partners on TV) and how they get bought out.

I think one takes your money and the others take other people's money. That said I could have a simplistic view.

No, here's how it works with law partners: each of them takes a bodily protuberance (could be a limb, could be your head, etc ) to hold onto while one... well, you get the picture. They rotate so everyone gets some. Once they are all done and you are out of cash they drop you and go on to the next one regardless of whether your problem is fixed.

Making partner usually just means you get some sort of income interest in the business. Some don't even give you that. You are just an employee with a title. To me, you aren't really a partner unless you get some equity ownership. That rarely happens in the bigger firms.

I need to know how they work that Equity interest, because that's the only way what I'm thinking about will work.

Everything I know about these partnerships I learned on TV so I may have a pretty skewed view of reality, but since so far I haven't been able to find any real info on how these things work I was hoping that the all-knowing GRM collective would have some insight.

I know they exist. I know there's some sort of ownership (the key issue for me), but I don't know why an owner would do it unless there's some of cut out to keep them from ending up owning the company and some way to terminate people.

Do you realize that nationwide 40% of all mortgage originations were turned down in 2011. WHY? Partially it's new qualifying guidelines but mostly it's poor originations and follow through. You'd think with fewer loans to go around the people would be working harder on loans, BUT as of April, 2011 they made it illegal for a lender to pay a Loan Officer anything but a small salary or hourly wage and consequently the loan quality has gone downhill and the process itself is taking much longer with fewer loans being approved because no one has any great incentive to get the loans to closing because they get paid anyway.

This year they are working on the same type of law to do the same thing for loan processors compensation. You can't pay any kind of bonus to anyone, not even a Christmas bonus. No extras of any kind can go to anyone.

Here's the big thing for me, the OWNER can be paid by way of a K1 which means a partnership arrangement might be a way to get around this and to be able to hire some people who care. We turned down less than 4% of our loans last year, but that has taken super vigilence on our part and once the processors pay gets cut we won't be able to maintain that rate.

We've maintained less than a 4% turndown rate since 1984 but we've had every person on staff be paid by the loan closing so everyone has had an incentive to get to the closing table. When no one is compensated by success (a closing) I will need to trim staff to be able to maintain good service. The people you can hire for the money we're allowed to pay aren't the cream of the crop.

You are asking the wrong crowd the wrong questions.

The short answer to your question is that EVERYTHING is negotiable. Contracts and agreements can be made with absolutely any terms in them that both parties agree to.

The slightly longer answer to your question is that you need a lawyer to make sure the contract is legit and enforceable.

So, there is probably a way in which a decent partnership agreement could be worded that was beneficial to all parties, but you will ABSOLUTELY need a lawyer familiar with insurance law to draft it.

Every law firm partnership is different, all governed by their partnership agreements. Generally speaking, with a general partnership the profits flow out in the same proportion as the ownership interest. For your situation I suggest you speak to a good business lawyer, not about how their partnership is set up (they won't tell you) but about how they can structure something that works for your situation.

If I can figure out how the things work then I can see if it's worth dropping the loot to talk to an attorney. I need to explore the possibilities before I explore the details.

mattmacklind wrote: It depends, usually an attorney has to work in a firm structured in such a way that it is run or managed by partners (as opposed to shareholders or members), and excel in their practice area and bring in business. At some point they may receive an offer to become a partner, and often this also means buying in and investing in the firm, in some firms it does not, it just depends.

Other types of businesses have partnerships as well - ad agencies, consulting firms, engineering or architecture firms and so on. It generally works as described above.

SVreX wrote: The short answer to your question is that EVERYTHING is negotiable. Contracts and agreements can be made with absolutely any terms in them that both parties agree to. .

This, along with Pigeon's explanation, is the answer to your question. "Partner" is not a term of art. What it means depends on the particular partnership agreement.

chuckles wrote:

SVreX wrote: The short answer to your question is that EVERYTHING is negotiable. Contracts and agreements can be made with absolutely any terms in them that both parties agree to. .

This, along with Pigeon's explanation, is the answer to your question. "Partner" is not a term of art. What it means depends on the particular partnership agreement.

And most partnerships aren't partnerships. They are LLCs or S-Corps.

What you are looking for is a Professional Corporation. Most law firms in Texas are set up as PCs. The rule is that you have to provide a professional service that requires a license in order to set one up. You could put one together on the cheap using Legal Zoom. How you handle terminations and keep other partners from taking over the organization would be controlled by the Articles of Incorporation or the Bylaws and if you need to get that right, you need to be talking to an attorney specializing in corporate formations. There are tax implications relating to this so you will need an accountant experienced in PCs as well.

http://texassecretaryofstate.com/?page_id=293

https://litigation-essentials.lexisnexis.com/webcd/app?action=DocumentDisplay&crawlid=1&doctype=cite&docid=4-23+Texas+Transaction+Guide--Legal+Forms+23.syn&srctype=smi&srcid=2986&key=065aca2e65a31adf3781344a622272eahttp://texassecretaryofstate.com/?page_id=293

The law firm I work for does quite a bit of this kind of stuff.

And you are close to me.

Thanx for the info. I know what I'll be reading tonight.

the hard parts are not creating the enity, its determining if a partnership, corp c, corp s, llc etc is the right structure. then creating bylaws, or partnership agreement etc. in response to your needs. ie control, buy in, buyout, profit definition and distribution.

As to your original question there are as many structures as their are lawfirms. most are not patrnerships for liability reasons. professionsl corporations or professional llc s exist because i as a lawyer, or a doctor is not allowed to shield my incomptence by corporate strucrure, but i can and do shield my liability from my "partners liabliity by corporate structue. you may but probably don't want to be a partnership. if you are allowed to be a non professional corp llc etc its better but you may no be permitted. most law firms have not been partnerships per se for 20 years. partner now is more a title. as a partner ypou may have equity, may share profits etc. but it strikes me your issues are more related to your mtg banker rules. certainly read all you want for background do not attempt to do anything on your own. you can create an enity, but making one that satisfies REspa etc is not a diy project. good luck