Provided by: Jennifer Kirschenbaum, Esq.
March 17, 2022
My associate wants to be a partner, but I do not want to have to answer to my associate or open my books. Thoughts?
Appreciate your advice.
And therein lies the rub... You want to keep your associate, you do not want to start over, but you do not want a partner with opinions and a vote. So many of your colleagues are in the same boat. And, so many of your colleagues, and possibly yourself, have been in this spot as an associate. At some point employer and employee must have the "talk", which is when the associate stays or goes.
Before commencing a discussion with an associate on ownership, make sure you understand what ownership means. Is ownership offering a minority interest so the associate can, once owning, share in profits? Is ownership being bought out of a majority interest, and therefore, control should shift as well? Does ownership buy access to records (in most cases, the answer to this is yes)?
The above should be worked out before an offering is made, even where the offer is contingent on accepting further terms. In many cases the answers to these questions will actually deter an owner from issuance, which is fine. We can always craft an incentive bonus plan.