Best Practice: Capital accounts for new law firm partners
Asked and Answered
By John W. Olmstead, MBA, Ph.D, CMC
Q. Our firm was started 20 years ago by four partners. We now have the original four partners as well as six associate attorneys. Originally, each of the four partners contributed $25,000 to their capital accounts. We are considering extending partnership to a couple of the associates. We have talked with other law firms and some require buy-ins (capital contributions) and others do not. What are your thoughts?
A. My first question is whether you are planning on creating a non-equity partnership tier. If so, then the associates would initially be brought into that tier first.
