Guide To Business Partnership Roles

Partnership roles are the specific duties, responsibilities and expectations assigned to each partner of a business. Partners detail this information in a formal partnership agreement that they develop together. Without this agreement, your business organization defaults to your state’s business law.

This posting aims to introduce some recommended methodologies that a firm can use to define the roles and responsibilities it needs its partners to fulfill before defining what the firm expects of them. Both partners must be clear about how they will fulfill their respective responsibilities as owners, managers, and producers. The importance of helping partners develop their management and leadership skills has finally been acknowledged by law firms. This recognition is patchy and inconsistent, and there is frequently a disconnect between what law firms claim to value in their partners in terms of competencies and characteristics and what they actually reward (often by primarily or exclusively recognizing and rewarding billing efforts). There is also a hesitant but growing understanding that skills and competencies can be developed across the management and leadership spectrum, from a foundational state to an advanced state of leadership.

When considering management and leadership abilities, lawyers initially confuse two different concepts. Many law firms have a propensity to conflate management abilities with the environment in which those abilities are used. Law firms frequently examine the various management functions within their organization and set expectations for the behaviors, metrics, objectives, and results they would like to see in those vitally important performance areas. Consequently, businesses may discuss skills for managing people or developing businesses. In reality, “people development” or “business development” refer to situations or contexts where certain skills are required rather than specific skills themselves The underlying competencies and traits required to achieve the firm’s objectives and outcomes in the major performance areas then tend to be rather ill-defined and ambiguous. This makes it even more crucial for each partner to develop a thorough understanding of the qualities that are necessary for them to achieve the firm’s goals.

At the risk of stating the obvious, there is a global trend toward businesses that try to be well-coordinated rather than just unorganized groups of people. More and more business partners are starting to collaborate closely in teams. We are observing the emergence of a one-firm strategy where methodologies and processes are consistently used and accepted in relation to clients’ matters. To some extent these trends are client driven. Customers want businesses to provide a consistent service, not a patchy one. Clients frequently express dissatisfaction with the fact that the level of service they receive can vary greatly from partner to partner, practice area to practice area, and office to office. Even clients have expressed displeasure over the inconsistent document styles (including fonts, prefixes, numbering, and file names) in some businesses across departments and offices. Therefore, it is essential that businesses be run as businesses with systems and procedures that are well thought out. Wherever possible, businesses need to find ways to streamline their services. Customers typically do not want to pay to have the wheel redone. They would rather see the firm use its experience gained from prior similar engagements to handle their case in a way that is both efficient and affordable.

More businesses than ever are adopting sounder management practices to ensure consistency of service and to run the firm as a business. This means four things. Any partnership must first take the time to decide on management roles, choose the right people, and then allow those people to continue managing. Second, partners must recognize that they cannot participate in every decision. This brings up the third point, which is that partners do need to be supportive of their management and should try to avoid challenging and undermining decision-making whenever possible. Partners must be willing to accept responsibility and work together, which is slightly different from blind acceptance, so this does not imply blind acceptance. They are ultimately responsible for their own autonomy in areas where they must maintain independence, so they must be held accountable for their actions and decisions. In addition, partners must be eager to learn leadership skills and open to collaborating with those in positions of authority. In other words, backbench partners—if I may use that term—should behave as friends and colleagues rather than as sheep.

Partners in all law firms around the world are required to put in a lot of time. In addition to time spent on client work, partners are budgeted to spend 300 to 500 hours annually on marketing and business development, along with other non-chargeable time depending on the size of the team and the type of client. Additionally, non-chargeable efforts must be made to manage client relationships, the team, and human resources, as well as the partners’ contributions to the institution that is the firm. Due to this, many businesses require partners to spend (and record) a minimum of 2300 hours annually on the partnership’s business. Even in the context of a sizable client portfolio, it should be possible to complete the non-chargeable activities within this timeframe.

In general, as the firm grows, partners will gradually need to take on the role of manager of others as their primary responsibility; they will need to spend less time on files and matters and more time on things like delegation and supervision. They will also need to develop their capability and competence in four or five important areas.

These six categories roughly align with The Balanced Scorecard (suggested by Balanced Scorecard authors Kaplan and Norton)[1] and the concepts of Intellectual Capital that I have discussed in other articles. The Balanced Scorecard is a method for coordinating daily operations with a company’s long-term strategy. Its goal is to integrate vision and strategy into all of the organization’s actions. This is accomplished by considering desired outcomes from particular angles. I have suggested three ways to alter the fundamental model for law firms. First, I have adjusted the model to reflect the idea that elements of intellectual capital, rather than tangible assets, are the main constituent assets of law firms. Second, I created the Balanced Scorecard methodology to fit the context in which lawyers advance their careers through client service, work processing, and financial gain. Third, I revised the Scorecard to reflect the context and strategic goals of the majority of law firms.

Some businesses prefer to use a T to represent their balanced scorecard or Critical Areas of Performance. The vertical portion of the T represents the breadth of the attorney’s technical knowledge. The horizontal bar depicts the professional’s overall contribution in both management and ownership. The newly promoted partner, for example, should demonstrate strong and deep technical expertise but may not have developed broader management expertise; his or her T will more resemble an “I” or a hammerhead. The horizontal bar will grow as the partner matures until it reaches a proportion that is balanced. The management skills on the horizontal bar may also predominate to the virtual exclusion of the vertical “technical skills” part of the bar, perhaps in the case of a managing partner. Therefore, former managing partners and senior partners must face the challenging task of improving their technical skills or risk leaving the company.

However, the story is not over once a Balanced Scorecard has been created. The Balanced Scorecard aids in defining the contributions that the company needs to develop internally in terms of skills, competencies, and generally. However, it is also crucial to outline the various roles and responsibilities that partners, from the senior partner on down, may have within organizations. A strategy mapping process in this situation will assist the company in identifying the areas where partners should contribute to advancing the firm’s goals and objectives. The strategy map presented here is based on the Balanced Scorecard’s four perspectives, but it is further divided into twelve areas where any company must determine who is responsible for what. While each partner has an interest in each of the twelve areas, some partners may have specific duties that need to be defined. There is only enough room in this essay to consider, for illustration, the two levels at the bottom of the map.

One area where all partners are accountable is for the firm’s skill and capability development Depending on the size and type of the firm, the managing partner, the human resources partner, the practice group heads, and the professional management staff may be responsible for the firm’s alignment and mix, which includes how many lawyers are required, the ratios of support staff to lawyers and non-partners to partners, and recruitment.

When considering the company as an institution, the managing partner may have the primary responsibility for the firm’s competitive positioning, which is a strategic issue to which all partners may contribute. The creation of the firm’s business model may be a board issue or one that practice group leaders must address in relation to their individual practice areas. All partners should participate in the monitoring and support of a firm’s culture’s positive aspects, but – once more – the managing partner may have primary duties. Partners must agree on matters relating to the development of the firm’s disciplines, structures, decision-making, and profit-sharing, but the firm’s leaders must push these issues forward.

The Managing Partner frequently has a variety of executive powers to enable him or her to lead, manage, and maintain overall control of the firm on an operational basis and to achieve the Firm’s Objectives in order to fulfill his or her responsibility to the Partnership for the effective management of the Firm. Although some businesses prefer not to define these duties too precisely, they frequently include the following duties.

What is the role of partnership manager in building a partnership?

What to include in a partnership agreement

A comprehensive partnership agreement offers structures for handling problems that might occur in typical circumstances. When creating your partnership agreement, you should take the following into account:

What are partnership roles?

The specific obligations, responsibilities, and expectations placed on each business partner are known as partnership roles. This information is included in a formal partnership agreement that the partners create together. Without this agreement, the business law of your state governs your organization.

Benefits of assigning partnership roles

By defining partnership roles, each partner is informed about their expected contributions. It can also assist partners in concentrating on particular business aspects. Assigning partnership roles can create an accountability system where each partner is accountable for improving a vital aspect of the business. At the beginning of your business, partnership roles may also assist you in creating an organizational chart that will make managing expansion easier.

How to assign roles within a partnership

Here are the steps to determining partnership roles:

1. Determine each partners liability

Defining each partner’s level of financial, legal, and negligence liability is the first step in dividing up partnership responsibilities. There are three main types of partnerships:

You can determine how many partner roles to create by outlining this data. If you require more roles than you and your original partner or partners can carry out, this is a sign that you should look for additional partners to join your business.

2. Write a list of your business management needs

You can get a general idea of the tasks you need to assign by outlining your needs for business management. Think about the services your company offers, your mission statement, and both short- and long-term objectives. As your business grows, these may become full departments. Some common management needs include:

3. Create job descriptions of each management need

By creating job descriptions for each of them, you can gain a detailed understanding of what each management need entails. You can think about all facets of the role by using the job descriptions, which include:

If and when your business expands, the job descriptions may also be helpful in determining the types of employees these initial jobs may supervise. If a potential new partner for your company is interested, you can also use these descriptions.

4. Assign tasks

You can investigate each partner’s strengths and competencies after outlining each job description. Personality traits, prior experience, and interests can all be taken into account during this process. You can designate a partner to hire a person or team to manage this work if none of the partners has the necessary training or experience to perform the role personally. The partner would supervise the division to make sure the group is achieving the objectives stated in each description.

5. Formalize the roles in writing

The roles in a partnership agreement will then be formalized in the following step with the aid of an accomplished lawyer. These records aid in confirming the legitimacy of the tasks assigned, the dispute resolution procedure, and the decision-making framework. Partnership agreements also outline each partners liability and financial contributions. A written partnership agreement makes it easier to communicate, set deadlines, and organize meetings.

6. Have regular meetings

Meet with your partners on a regular basis to discuss how each is handling their goals and responsibilities, including any teams or employees they may be in charge of. You can meet in person, over conference calls, or through video conferencing software depending on your needs and your partners’ locations. Regular meetings can also help partners strategize for the entire company and help partners understand how their roles affect other areas of the business. These meetings can also assist you in deciding whether or not the partnership roles need to be reorganized.

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