VIEWS: 1,482 PAGES: 17 CATEGORY: Creating a Partnership Agreement POSTED ON: 3/26/2010
This partnership agreement is an agreement between two or more attorneys to create a legal partnership between them. The legal partnership is governed by this partnership agreement and sets out the duties and the rights and responsibilities of each partner. It also provides provisions for the death of one of the partners, how decisions will be made and the financial contributions by each partner. This document should be used at the outset of an attorney partnership to set forth the duties and responsibilities of each attorney partner.
This partnership agreement is an agreement between two or more attorneys to create a legal partnership between them. The legal partnership is governed by this partnership agreement and sets out the duties and the rights and responsibilities of each partner. It also provides provisions for the death of one of the partners, how decisions will be made and the financial contributions by each partner. This document should be used at the outset of an attorney partnership to set forth the duties and responsibilities of each attorney partner. LAW PARTNERSHIP AGREEMENT This agreement (the “Agreement”) is made this ____day of ___ _____, 20___, by and between ______________________ (hereinafter referred to as the "Party One"), with a principal place of business at _____________________, and __________________________, (hereinafter referred to as the "Party Two"), with a principal place of business at _____________________________, collectively referred to as the “Partners.” [Instruction: Insert the last name of each party to this Agreement in place of “Party One” and “Party Two”, and add more parties if more than two partners] WHEREAS the Partners have decided to enter into a Partnership for the purpose of carrying on the business of a law partnership hereinafter set forth in this Agreement. AND WHEREAS the parties wish to establish and define their respective rights and obligations specifically with regards to: (a) the operation of the Partnership; (b) the death of one of the Partners; (c) disagreement among the Partners; (d) disability of one of the Partners; the rights and obligations of each party are heretofore set forth. NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual covenants and agreements herein contained, the parties hereto for themselves, their heirs, executors, administrators or assigns mutually declare, covenant and agree as follows: I. PARTNERSHIP 1.01 The Partnership described above is hereby established and constituted the _____ day of _____________, 20___. 1.02 The Partners hereby agree to become and remain partners in the business with such incidental operations as the maintenance of records and the purchase and disposition of property as may be necessary to the operation of the business and in such other businesses of a similar or related nature as may be approved by each and every partner. 1.03 The Partnership shall be carried on at the premises situated at _______________________ or such other place as the Partners shall from time to time mutually agree upon. © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 2 1.04 The name of the firm shall be _________________________ unless a change shall be agreed to by all Partners and shall be used exclusively by the Parties during the term of the Partnership and shall not be used by any of the Partners individually at any time without the consent of the other Partners. No Partner shall be entitled to use all or any part of the name in connection with a practice of law in the State of ____________________ unless a Partner whose surname forms part of the firm name ceases for any reason to be an active Partner in the firm, in which case he shall be entitled to practice under a name of which his own name forms part and, if he does so practice and there is no other Partner remaining in the firm subject to this Agreement whose name is the same as the Partner who had ceased to be an active Partner, such name shall be dropped from the firm name. Where the name of a retired or deceased Partner is continued as part of the firm name, the remaining Partners do hereby agree to indemnify and save the retired Partner or his estate from any liability resulting from any ostensible continuance in the Partnership that may be implied by the use of his name. 1.05 The first fiscal period of the Partnership shall terminate on the _____ ( ) day of ________________, 20__ and thereafter the fiscal year of the Partnership shall terminate on the ___ day of _____________ in each succeeding year. 1.06 The bank of the Partnership shall be _____________________, located at [Insert name of branch and address of bank] and any other such bank as all the Partners may from time to time agree upon in writing. All checks, drafts and other instruments and documents on behalf of the Partnership shall be signed by any one of the Partners provided that any instrument obligating the Partnership or another party on behalf of the Partnership, to pay an amount in excess of ____________ ($______) Dollars shall be signed by all of the Partners. All Partnership money shall, as and when received, be paid and deposited with the bank of the Partnership to the credit of the Partnership account. 1.07 All furniture, books, office and professional equipment purchased and used by and for the Partnership business and the benefit of the lease of the Partnership business and the goodwill of the Partnership business shall be assets of the Partnership business and shall belong to the Partners in the same proportions as are their entitlements to share in the capital of the Partnership from time to time as shown in the financial statements of the Partnership. 1.08 No Partner shall be entitled to interest on the amount of his or her capital in the Partnership business. 1.09 All expenses and outgoings of the Partnership including interest on loans by Partners to the Partnership shall be payable, in the first place out of the profits, secondly out of the capital of the Partnership, and thirdly, in the case of any deficiency, by the Partners in the proportions in which they are entitled to share in the residual profits of the business. Each partner must pay separately such expenses as are required to earn its share of Partnership income which are not expenses of the Partnership. 1.10 Each Partner shall devote their full time and attention to the affairs of the Partnership until such times all of the Partners agree, in writing, to make a modified arrangement. © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 3 1.11 The Partners agree to manage the affairs of the Partnership on an equal basis with the division of the responsibilities as described in Schedule "A" to this Agreement and may make further division of responsibilities as may be required and agreed upon from time to time being further described in additional Schedules to this Agreement. 1.12 The profits and losses of the Partnership shall be determined on a basis consistent with GAAP (generally accepted accounting principles). To the extent possible, a modified accrual basis shall be used. Such profits or losses shall be determined on an annual basis by the Partnership's auditors, after consultation with any Partner who wishes to consult with them, as soon as possible after the end of each fiscal year. After a determination of the annual profits, such profits (or losses) shall be distributed forthwith among the Partners according to their respective interests in the Partnership after taking into account any drawings or distributions of profit which have been made to the Partners during the financial year. 1.13 During the financial year, the Partnership's bookkeeper shall prepare, as soon as possible after the end of each month, a statement of profits or losses for the portion of the fiscal year then ended and distributions shall be made to the Partners according to their respective interests in the Partnership after deducting a reserve of ________________ of profits and after taking into account any drawings or previous distributions of profit which have been made to the Partners during that financial year. In the event that there is a loss during any month, such loss, to the extent not covered by the reserve above-mentioned, shall be covered by bank borrowings by the Partnership but no further distribution of profit shall take place until all such bank borrowings have been repaid. 1.14 The entitlement of a Partner to share in the profits of the Partnership under clauses 1.13 and 1.14 above shall terminate on the last day of the month preceding the month in which the Partner retires, dies, withdraws, is expelled or ceases to be a Partner for any other reason. 1.15 No Partner shall be admitted into the Partnership except at the start of a financial year. (or) 1.15 A new Partner may be admitted to the Partnership at any time during the financial year. 1.16 Each of the Partners shall, at all times, duly and punctually pay and discharge his separate debts, liabilities, obligations, duties and agreements, whether present or future and keep indemnified and save harmless the Partnership property and the other Partner(s) and his estate and affects from all actions, proceedings, costs, claims and demands of every nature or kind whatsoever. 1.17 During the continuance of the Partnership business, no Partner shall do or permit to be done the following without first obtaining the written consent of all other parties hereto: © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 4 A. Lend money on behalf of the Partnership; B. Deliver on credit goods belonging to the Partnership or otherwise give credit on behalf of the Partnership except in the ordinary course of business; C. Pledge the credit of the Partnership in excess of the sum of ____________________; D. Borrow money on behalf of the Partnership or give any security over Partnership property in respect of obligations of any kind; E. Release, except where the debt has been paid in full, any debt owing to the Partnership; F. Compromise any claim vested in the Partnership; G. Enter into any bond, become bail, security or surety for any person or otherwise enter into any obligation whereby the Partnership property may become liable to be seized, attached or taken in execution; H. Enter into any contract on behalf of the Partnership for the purchase of any real or personal property exceeding in value the sum of _________________; I. Hire or dismiss any employee or agent of the Partnership; and J. Assign, mortgage, charge or sell his share or interest or any part thereof in the Partnership or Partnership assets. 1.18 Work in Progress A. Work in Progress at a given time means work done by the firm, for which time records have been kept and sent to the bookkeeper, for matters which are intended to be billed but have not yet been billed to the clients. B. The value of the work in progress for any particular matter at any particular time is deemed to be one-half of the number of unbilled hours of each who has sent in time records on the matter, multiplied by the hourly rate of the involved. The bookkeeper shall determine the value of the work in progress as soon as possible after the end of each month. (The discounted value of 50% is used because work in progress is not as valuable as an account receivable. The discounted value will depend on the situation.) C. No Partner has any vested interest in the work in progress. © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 5 D. Upon the death of any Partner or upon his withdrawal at retirement age, upon his withdrawal due to incapacity for reasons of health or upon his withdrawal for any reason which a majority of the remaining partners agree is appropriate for such compensation, the firm shall pay to such Partner, or his estate, an amount equal to his Partnership interest multiplied by the value of the work in progress at the end of the month preceding his death or withdrawal. Such amount shall be paid to such Partner out of the receipts of the firm (and shall be deducted in determining profits) at the rate of ________ (___%) percent of the amount so payable each month for the ________ months following the date of calculation and the remaining _________ (____%) percent shall be paid in the ___th month after such date. E. Upon admission to the Partnership, a new Partner shall pay to the Partnership an amount equal to his Partnership interest multiplied by the value of the work in progress, which payment shall be divided amount the other Partners in proportion to their interests. 1.19 Partnership Interests A. The Partnership interest of any Partner at any time shall be his number of Partnership points divided by the total number of Partnership points of all the Partners. The initial parties to this Agreement shall have the number of Partnership points set out against their names on the Schedule attached hereto. B. A new Partner may be admitted at the start of any Partnership year with the concurrence of the Partners holding seventy five (75%) percent of the total Partnership interests. C. Upon admission, the new Partner will be assigned a number of Partnership points, which points will not be subtracted from the points of the other Partners but will increase the total number of Partnership points. The number of points so assigned must be concurred by Partners holding seventy five (75%) of the total Partnership interest before his admission. D. At the end of every Partnership year, the Partnership points of every Partner who is a Partner in that year shall be adjusted, taking into account the following factors: (i) the number of billable hours worked by the Partner in the year; (ii) the average hourly rate at which work by the Partner has been billed during the year; (iii) the total billings to clients of which the Partner is in charge; (iv) the total billings to new clients introduced during the year by the Partner; © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 6 (v) the number of hours spent on firm matters that were not billable; and (vi) the number of hours spent on professional liaison, teaching and other matters. E. The product obtained by multiplying the number of billable hours worked by each Partner in the year multiplied by the average hourly rate at which work done by such Partner has been billed during the year shall be calculated as the Partner's direct business contribution. Added to the direct business contribution shall be the number of hours, not to exceed two hundred (200) in any given year, spent on firm matters, multiplied by the Partner's average hourly rate at which work by the Partner has been billed during the year. This amount, when added to the Partner's direct business contribution, shall be the Partner's basic base. F. In determining the Partnership points for a new Partnership year, the Partner's basic base, divided by the basic base of all Partners shall be multiplied by seventy (70%) percent of the total Partnership points for the preceding year and the result will be in the Partner's base Partnership points for the new Partnership year. The total number of Partnership points, excluding those of newly admitted Partners, shall not be increased at the start of a new Partnership year. G. The Partners shall determine the Partnership points to be awarded to each Partner for the next year on the basis of the factors specified above but in no event shall a Partner receive less points than his base Partnership points nor shall he receive less points than would be necessary to ensure that his split of total profits will be more than the remuneration of the highest paid associate of the firm who is not a Partner. The final determination of Partnership points for any year shall be agreed upon by Partners holding at least seventy five (75%) percent of the Partnership interest in the ending year, the new suggested division of points having been prepared by a committee consisting of at least Partners of which one shall be under the age of fifty (50) years and one shall be under the age of forty (40) years. 1.20 If a Partner withdraws from the firm, all files and engagements on which he was working shall be and continue to be the property of the firm unless in any case the client shall specifically request a transfer of the matter from the firm to the withdrawing Partner, in which case all work in progress with respect to the firm at the date of the transfer shall be payable to the firm in the same manner and in accordance with the same professional principles that would apply in the event of a transfer of a file or engagement to any other lawyer. 1.21 If a Partner engages in activities not strictly on account of the firm but related to firm business or the practice of, all remuneration received as a result of such activity shall be paid to the firm. Without limiting the generality of the foregoing, directors fees, fees received as executor or trustee, teaching honoraria, books, royalties and honoraria for speaking engagements shall be paid by the Partners to the firm. © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 7 1.22 Each new Partner admitted to the firm shall sign a copy of this Agreement on the Schedule attached and by so doing shall agree to be bound by all the terms of this Agreement. 1.23 Each Partner shall keep accurate records of time spent on each file or engagement on which he is working and shall submit such time records to the bookkeeper at least once every two weeks. 1.24 Every Partner shall have access to all of the books and records of the Partnership but shall treat the information contained therein as confidential. 1.25 The firm will provide, without charging any fee for services except for actual disbursements made, to any Partner, spouse, lineal descendent of such Partner, the following services: A. B. C. 1.26 Meetings of Partners A. There shall be regular meetings of the Partners on the _________ morning/evening of each month starting at ___________. The quorum for a meeting of the Partners shall be a majority in number of the Partners, representing in person or by proxy, at least sixty (60%) percent of the Partnership interests. B. The Chairman of the Partners meeting shall be the Partner at the meeting who has the largest Partnership interest. C. A Partner who cannot attend a Partnership meeting may appoint another Partner as his proxy for the purpose of voting at the meeting but such proxy shall be in writing and lodged with the Chairman at the meeting. D. The agenda for the Partnership meeting shall be prepared by the secretary of the Partner with the greatest Partnership interest who shall place on each agenda all matters desired to be discussed by any Partner, in the order such matters are received by the secretary up to forty eight (48) hours before the meeting. Such agenda shall be circulated to all Partners at least twenty four (24) hours before the meeting. E. Any Partner may call a meeting of Partners by giving to the secretary of the Partner with the greatest Partnership interest a written notice, in which event a Partnership meeting shall be held within seventy (72) hours of the receipt of such notice. Meetings of Partners may be held without notice or agenda if all the Partners are present. © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 8 F. The Chairman shall go through the agenda in order therein set out unless he believes that a matter deserves special attention in which case he shall ask the meeting to advance the order for such matter. G. Except as otherwise provided, all matters shall be decided by an affirmative vote of Partners holding a majority of the Partnership interests. H. Votes shall be by show of hands. The Secretary of the meeting, who shall be the Partner present with the smallest Partnership interest, shall be responsible for counting the vote. The Secretary of the meeting shall take minutes and cause to be circulated, a transcript of such minutes to all Partners within forty eight (48) hours after the meeting. I. A decision made by the meeting shall be binding on all Partners. 1.27 Miscellaneous A. In the event of a dispute between any of the Partners as to the interpretation of this Agreement or as to any matter not covered by this Agreement, the Partners agree to first attempt to settle such dispute among themselves but, in the event such settlement cannot be reached, the Partners agree to choose a lawyer not connected with the firm but having at least twenty (25) years experience in the practice of law in the State of __________________, whose decision on the point shall be conclusive. If no settlement can be agreed upon, the Treasurer of the professional governing body shall be asked to settle the matter. B. This Agreement may be amended only after the amendment has been put on the agenda of a regular meeting of Parties and debated at such meeting. In addition, any amendment must be approved in writing by Partners holding at least _________________ (____%) percent of the Partnership interests. 2.00 DEATH 2.01 This Agreement shall be supported by the following policies of insurance on the lives of the Parties to this Agreement: A. The _______________________ Company, Policy No. _______________ for ______________ on the life of _____________________ owned by _________________; B. The _______________________ Company, Policy No. _______________ for ______________ on the life of _____________________ owned by _________________; © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 9 C. The _______________________ Company, Policy No. _______________ for ______________ on the life of _____________________ owned by _________________; D. Any additional life insurance policies purchased to support this Agreement shall be listed on Schedule "C" attached. 2.02 Each party shall pay the premiums on all policies of insurance owned by him in support of this Agreement and, upon request by the life insured, shall exhibit cancelled checks as evidence of payment of premiums. The life insurance company is hereby authorized and directed to supply the life insured, upon his request, with information respecting the status of any policy on his life. (Note: It is not necessary to have the premiums paid by each party to the Partnership Agreement. The premiums may be the responsibility of the Partnership itself.) On receipt of due notice of the death of the deceased: A. The survivor shall forthwith collect the proceeds of the above described policies and any additional policies on the life of the said deceased in support of this Agreement and shall hold the dispose of the proceeds as hereinafter provided. B. The survivor shall pay to the personal representatives of the deceased the insurance proceeds necessary to purchase the deceased's Partnership interest which is subject to sale and purchase under the terms of this Agreement. The survivor shall be credited with the amount of the payment arising from the policies on the life of the deceased in support of this Agreement at the time such payment is made and such payment shall be regarded as a payment by the survivor on account or in full as the case may be. 2.03 If the proceeds of the policies of insurance so paid be less than the purchase price, the survivor will pay to the personal representatives of the deceased the balance of the purchase price of the partnership interest which he is purchasing in cash or in lieu thereof at his option may make, execute and deliver to the said personal representatives of the deceased a promissory note equal in principal amount to the unpaid balance of the aforesaid purchase price, which note shall be payable in equal annual installments over a period of ten years from its date with interest at the rate of __________ (___%) percent per annum payable annually. Note: If the proceeds of insurance are greater than the purchase price the excess will be a non-taxable benefit to the survivor. Upon occasion it is specified that the minimum purchase price shall be equal to the amount of the insurance proceeds. If this is specified and the amount of insurance is greater than the "Fair Market Value" an additional capital gain would ensue. 3.00 WITHDRAWAL AND DISSOLUTION 3.01 Subject to the provisions herein contained, the Partnership may be terminated without notice and on retirement of all Partners, death of all Partners, insolvency, or loss of professional license of all Partners. © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 10 . 3.02 In the event of a Partner becoming bankrupt, he shall be deemed to have withdrawn from the Partnership at the end of the month next proceeding the date when he was declared or declared himself bankrupt, in which event no payment shall be made to him except for a return of his interest in the capital of the firm. 3.03 In the event that a Partner is incapacitated by reasons of health so that he has been unable to work for periods aggregating six (6) months in an eighteen (18) month period, the incapacitated Partner shall be deemed to have withdrawn from the Partnership at the end of the month preceding the end of such six (6) months. Upon such withdrawal, the firm shall pay to the Partner, in addition to payment for work in progress, an amount equal to one-half of the amount that would be payable to such Partner had he died on such date. The payment under this clause is in addition to the payment required to be made to the incapacitated Partner for his interest in the capital of the firm. 3.04 This Agreement shall be supported by the following policy of group disability insurance from: A. the ______________________ insurance company, Policy Number __________________ for _____________ (___%) percent of the regular remuneration received by each of the following Partners: (i) (ii) (iii) B. Any additional Partners covered by the above group disability insurance plan shall be listed on Schedule "B" attached. C. The premiums on the above-noted policy of group disability insurance shall be paid out of the Partnership profits. The life insurance company is hereby authorized and directed to supply the group member, upon whose request, with information respecting the status of the group policy in support of this Agreement. 3.05 A Partner may be required to withdraw from the firm at the end of any Partnership year but only if all of the Partners agree. In the event of the required withdrawal of a Partner, the firm shall pay the Partner an amount equal to the amount the Partner would be paid under paragraph 3 of this part if the Partner had become incapacitated but no payment shall be made for work in progress. Such former Partner will be entitled to receive payment for his interest in the capital of the firm in addition to the payment under this clause. 3.06 A Partner may withdraw from the Partnership before age sixty five (65) only at the end of a Partnership year, except in the case of the consent of the majority in number of the other Partners, in which event he may withdraw at any time. A Partner who withdraws © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 11 voluntarily shall be paid an amount by the firm equal to the amount he would be paid if he were expelled. A payment under this clause shall be in addition to any payment required to be made for the withdrawing Partner's interest in the capital of the firm. 3.07 A Partner shall withdraw at the end of the Partnership year in which his sixty fifth (65th) birthday occurs. Providing such Partner agrees, in writing, not to continue to practice law in the State of ________________ except as an employee of the Partnership (for which employment he shall be separately remunerated at the rate to be agreed upon annually by a majority of the Partners), such Partner or his estate shall be paid by the firm, in addition to any payment for work in progress: A. an annual amount equal to one-fifth of his average share of the Partnership profits during the last three (3) years in which he was a Partner, to be payable monthly for a minimum of three (3) years, until the death of the Partner; or B. at the election of the Partner, the amount he would have been paid by the firm if he had died before reaching the age of 65 years, such amount to be paid in equal monthly installments over a period of two years. All such payments shall be considered as income to the payee and shall be deducted in calculating Partnership profits. 3.08 The firm shall be dissolved only if all the Partners agree or, if there be then more than five Partners, eighty (80%) in number of the Partners agree. 3.09 Upon dissolution, no Partner has the right to use any part of the firm name unless such part is his own surname or the surname of another living person with whom he forms a new partnership. 3.10 Upon dissolution, the work in progress shall be divided as to each client by the Partner then in charge of such client but, the event of any dispute as to any file, seventy five (75%) percent in number of the other Partners may overrule the decision of the Partner in charge of the client if the client agrees with the result of such overruling. IN WITNESS WHEREOF the Parties hereto have hereunto set their hands and seals this ________ day of _________, 2________. SIGNED, SEALED AND DELIVERED ) in the presence of ) ) ) ) ) _________________________________ ) (Name) ) © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 12 ) ) _________________________________ ) (Name) ) ) ) _________________________________ ) (Name) ) © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 13 SCHEDULE “A” © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 14 SCHEDULE “B” © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 15 SCHEDULE “C” © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 16
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