"'I can trust you, if you can trust me,' and the partnership came into being."

- David Herbert Donald, Lincoln, 100 (1995)

This special edition of our column is prompted by the annual ascension in January of many lawyers to partnership. "Making partner" is an important career milestone and tradition. Kudos are merited, and this rite of passage should be enjoyed and celebrated.

In today's profit driven, bottom line, overly harsh world, the historical analysis of the virtue of partnerships, set forth below, may seem out of place and even quaint. It is submitted that, to the contrary, reviewing some partnership foundations may prove not only instructive to the nature of partnerships today but somewhat inspiring to today's law firm partners, new and old. Regardless, the lessons are certainly worth retelling.

Lawyers have been forming partnerships as long as two or more lawyers have chosen to work together.

As stated by Justice Joseph Story in 1861:

A partner, indeed, virtually embraces the character both of a principal and of an agent. So far as he acts for himself and his own interest in the common concerns of the partnership, he may properly be deemed a principal; and so far as he acts for his partners, he may as properly be deemed an agent. The principal distinction between him and a mere agent is, that he has a community of interest with the other partners in the whole property and business responsibilities of the partnership; whereas an agent, as such, has no interest in either.

Story, Commentaries on the Law of Partnership, at 1 (1861) (emphasis added).

So, for Justice Story, the partnership is marked by a "community of interest with the other partners." This means that "all must contribute something; and thus join together either money, or goods, or other property, or labor, or skill …" Id. at 18.

A partnership, at least at its ideal, therefore, is an organization based upon the community in the partnership of "one for all and all for one." Moreover, those interests, at common law, are governed by various duties, including the fiduciary duty among partners.

Fiduciary duty was most famously and likely best described, almost 100 years ago, by Justice Benjamin Cardozo in the famed decision of Meinhard v. Salmon. 249 N.Y. 458 (1928).

In Meinhard, Justice Cardozo held: "Many forms of conduct permissible in a workaday world for those acting at arm's lengths, are forbidden to those bound by fiduciary ties. A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior. As to this there has developed a tradition that is unbending and inveterate." Id. at 464 (emphasis added). For those of you wondering, "punctilio" means "strictness or exactness in the observance of formalities …" The Random College Dictionary (1975).

Those strict and exact partnership fiduciary duties, therefore, require not merely commercially permissible conduct, but the absolutely highest level of duty and loyalty among partners. And as Justice Cardozo held, that "tradition is unbending and inveterate."

Applying these lofty standards in a modern law firm partnership (large or small) may seem daunting and even impractical.

Not to fear and quite conversely, some poignant illustrations of fiduciary duty, amicable partnership relations, and long and enduring partnerships can be seen in the law partnerships of one our greatest presidents (and lawyers), Abraham Lincoln, and these lessons can, indeed, be transferred to today's law practice.

Lincoln received his law license in Spring 1837 and was offered a partnership by John Todd Stuart, who was one of Springfield Illinois's most successful lawyers. The partnership prospered but when Stuart was elected to a second term in Congress the senior and junior partners dissolved their law practice. They did so amicably. Ronald C. White, A. Lincoln, 94.

Lincoln then became law partners with the most respected jurist in Springfield, Stephen T. Logan. Lincoln and Logan were adversaries in three cases in Illinois Supreme Court prior to their partnership and the more junior Lincoln won all three. Logan served as much more of a mentor to Lincoln then did Stuart. As Ronald C. White describes: "[Logan] taught Lincoln that he should know his adversary's case as well as his own so that he was never surprised by the argument of an opponent. He impressed upon Lincoln that it was crucial to understand both logic and the passion of those who stood on the other side of the courtroom." White at 95.

In 1844, the partnership ended so that Logan could become partners with his son. Again, the partners parted and ended on friendly terms. Id. at 127.

Lincoln almost immediately thereafter formed a law partnership with William Herndon. Herndon was younger and much less known than Lincoln and the creation of his partnership with William Herndon has been described as follows:

Lincoln took a new partner. One fall morning in 1844 he came dashing up the stairs to the third floor of the Tinsley Building, where he found William H. Herndon busily studying. "Billy," he asked breathlessly, "do you want to enter into a partnership with me in the law business?" Herndon managed to stammer, "Mr. Lincoln this is something unexpected by me—it us an undeserved honor; and yet I say I will gladly and thankfully accept the kind generous offer." Sensing that the young man was flustered with gratitude, Lincoln remarked easily, "Billy, I can trust you, if you can trust me," and the partnership came into being.

David Herbert Donald, Lincoln, 100 (1995) (emphasis added).

In addition, despite Lincoln's seniority and renown as an attorney, he and Billy Herndon shared the partnership income equally. "After the first few months the partners kept no systematic accounts, simply dividing equally the fees they received. As Lincoln [stated]: Billy and I never had the scratch of a pen between us; we jest divide as we go along." Donald at 104.

Moreover, despite Lincoln's political career and ultimate election to the presidency, the partnership of Lincoln and Herndon lasted for 21 years until Lincoln's assassination on April 15, 1865.

Upon Lincoln's election as President he left Springfield. As described by Ronald C. White: "[Lincoln and Herndon] reminisced about old times and conferred about unfinished legal business, Lincoln requested that the sign board on its rusty hinges at the floor of the stairway should remain. "Let it hang undisturbed … . If I live I'm coming back some time, and then we'll go right on practicing law as if nothing had happened." White at 365. Lincoln, of course, never returned to the firm.

Lincoln's overall economic philosophy is also in accord with his conduct as a law partner and is, therefore, worth some study. As Lincoln stated: "The prudent, penniless beginner in the world, labors for wages awhile, saves a surplus with which to buy tools or land, for himself; then labors on his own account another while, and at length hires another new beginner to help him. This, say its advocates, is free labor—the just and generous, and prosperous system, which opens the way for all—gives hope to all, and energy, and progress, and improvement of condition to all." Harold Holzer and Norton Garfinkle, A Just and Generous Nation, Epigraph, Abraham Lincoln, speech in Milwaukee, Sept. 30, 1859.

For Lincoln, the United States was a "just and generous" nation that provided opportunity for all. His professional experience as a lawyer was in accord with this conviction, as it first afforded him opportunity, as a junior partner to Stuart and Logan, and then allowed him to offer opportunity to Herndon when it was Lincoln's chance to be the senior partner.

The lessons from Justice Story and Abraham Lincoln, therefore, can indeed be applied to today's modern, complex law firm partnership:

• At its essence a partnership is still "a community of interest with the other partners." In a law firm that means both efforts, and varying levels of skills and responsibilities are shared for the good of clients and the firm. The creation of this "community" is essential to a law firm's success.
• Fiduciary duties ensure that those contributions are shared with the utmost loyalty. That duty requires candor among partners in both the professional and commercial aspects of their relationships.
• Trust, and not only a well written partnership agreement or a sophisticated compensation system, is the glue that binds partners to one another ("Billy, I can trust you, if you can trust me.").
• Mentoring by senior partners to junior is essential to a partnership's success.
• Amicable relationships, even in departures from a law firm, are a benefit to the community of lawyers and clients.
• A law firm should also, ideally, be a "just and generous" institution, providing opportunity for new lawyers to grow into the ranks of the partnership and the profession, so as to better serve their firm and their clients, and to enable the firm to build upon itself from and for the benefit of all its partners.

Conclusion

As 2019 comes to a close, we wanted to thank the readers of this column for your very kind and encouraging words. We hope this year's columns have been helpful and even somewhat enjoyable. Their writing remains a privilege. Thank you all very much!

Arthur J. Ciampi is the coauthor of the treatise 'Law Firm Partnership Agreements' and is the managing member of Ciampi LLC. Maria Ciampi, of counsel to the firm, assisted in the preparation of this article.