Pruning Partnerships: Considerations for Law Firms
Amid the COVID-19 pandemic, one next step may be to remove partners who are "not paying their way."
May 08, 2020 at 04:00 AM
5 minute read
Professional practices, like many businesses, have reacted to the downturn caused by the coronavirus and national lockdown by seeking financial assistance, deferring tax and implementing cost-saving measures, such as furloughing employees. Many partners have accepted both a reduction in monthly drawings and suspended partner profit distributions.
Unless the economic impact of the pandemic crisis abates, further measures such as the claw-back of awarded but unpaid discretionary bonuses and de-equitization of equity partners will be imposed.
Poorly performing partners or those no longer perceived as a good fit are at greater risk because of the business impact of the crisis. The next logical and proactive step will be to remove partners who are "not paying their way."
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