The Law Firm Partnership Agreement that FailedBy Nina Kaufman, Esq.
I recently had an “OMG. Are you kidding me?!?!” moment when I came across NYT reporter John Eligon’s article on a law firm breakup, “For the Lords of Divorce, A Breakup.”
The principals of Sheresky, Aronson, Mayefsky & Sloan were no babes in the woods, wet behind the ears, green, unsophisticated, inexperienced, naive [insert synonym of your choice for “shoulda known better”] innocents.
- They were lawyers.
- They were divorce lawyers (who have more experience than other lawyers in the “no promise lasts forever” department).
- They were divorce lawyers who had handled hot, high-profile, and/or bitter breakups of celebrities and muckety-mucks (and, as a firm, was highly regarded as a boutique matrimonial practice).
They had no written partnership agreement.
Are ya kidding me?
The senior partner, Sherefsky, filed a $26 million lawsuit in New York Supreme Court, alleging breach of contract and fraud. Being senior, he expected to have some form of retirement buyout, or transition program, and believed he had worked that out with his partners. The other partners claim that he received his just due already — an extra $100,000 per year on top of his share of the profits. Sherefsky claims that that was merely to pay his mortgage; it wasn’t a buyout. And that he learned the firm had been dissolved when he saw the firm’s letterhead without his name on it.
And now for the $64,000 question (or, in this case, the $26 million one): how will they prove it? Any of it? All they have is a “he said/she said” kind of situation.
So I’ll take a moment to say, “I told you so.” It’s easy to overlook the need for a partnership agreement when everything is going smoothly and everyone is all smiles and handshakes. You really need it when things are not going well and tough times hit. Or, when things are going gangbusters and your partners are getting greedy. How do you know exactly when that’ll happen? You don’t.