BB&K In The News

BB&K Attorney Patrick Monroe discusses in the Daily Journal the different partnerships attorneys may make in starting law firms.

Thinking about forming a law partnership? Two or more lawyers may join together to engage in the practice of law via a general partnership, a limited liability partnership or a professional corporation. Each entity has its own requirements, but generally they all present the same issues for lawyers to consider.

A general partnership is formed when two or more persons carry on as co-owners in a business for profits, whether or not the persons intended to form a partnership. California Corporations Code Section 16202(a). Accordingly, two or more lawyers may be deemed to have formed a partnership by their actions even if they never intended to. The first lesson in partnerships among lawyers is determining whether to form a partnership, then act accordingly.

Alternatively, lawyers may form a limited liability partnership or professional corporation in which case the laws surrounding formation are more formal and involve filings with the California secretary of state and the State Bar of California. Failure to comply with these requirements could render the entity invalid and subject its owners to personal liability.

Regardless of which entity a law partnership chooses, once two or more lawyers decide to form a partnership, they should commit their understanding to a written partnership agreement. Surprisingly, lawyers will all too often forego the written partnership agreement because they are "such good friends that nothing could divide them," or because they "will figure it out as they go." These excuses only cover up the real reason for not having a written agreement: People who are pursuing new ventures are optimistic and do not want to contemplate "what if' scenarios, such as disagreement, disability, death, divorce or more commonly a disproportionate contribution of time and effort to the partnership.

To read the full article in the Daily Journal, which ran Feb. 1, 2015, click here (subscription required).