Asked and Answered
By John W. Olmstead, MBA, Ph.D, CMC
Q. I am a senior associate in an eight-attorney elder law firm in Miami. There is one owner (founder) and seven associates including myself. The owner has approached me with a proposal to over time buy out his interests. I am the only senior associate in the firm and the only associate that he has approached concerning selling his interests. Specifically his proposal is as follows:
- Pay him $825,000 for the practice over five years.
- After five years I will own 100% of the shares.
- My compensation arrangement will remain the same (salary plus formula percentage incentive bonus based upon my responsible attorney collections) until I have acquired 100 percent interest of the firm.
- The owner wants to work in the firm indefinitely after his interest are acquired as an employee or Of Counsel.
I don't know how to respond to this proposal and would appreciate your thoughts? Is it fair? Does it make sense?
A. It makes sense for him. Seriously, you are going to need much more information than this proposal.To get started you need to ask for and review the following: