Admitting a New Partner to Your Law Firm? Here’s What You Should Discuss First
Admitting a new partner into your law firm isn’t just a legal formality—it’s a strategic business decision. Whether the candidate is an internal rising star or an external lateral hire, this move reshapes the firm’s future. As advisors to law firms, we guide partners through this process to avoid financial missteps, cultural mismatches, and governance gaps.
Download the Partner Admission Checklist for internal planning sessions.
6 New Partner Considerations
Here’s what we recommend every firm discuss before making it official.
1. What’s the Business Case?
Start by asking the most basic question: Why this partner, and why now? Are you planning for succession, expanding into a new practice area, or simply recognizing strong performance?
A clear business case helps ensure alignment among existing partners. It also sets expectations with the incoming partner and supports better financial forecasting.
2. Equity or Non-Equity?
Not all partners are created equal. Will this new partner have an equity stake? If so, how will their buy-in be structured—cash, financed over time, or sweat equity?
If it’s a non-equity role, define what that means in terms of voting rights, compensation, and responsibilities. Misunderstandings here can lead to tension down the road.
3. How Will Compensation Work?
Compensation structures for partners vary widely—from eat-what-you-kill to lockstep models to hybrids. It’s important to revisit the firm's formula to make sure it still fits with the firm’s culture and growth goals.
A business advisor can model scenarios to assess the financial impact of various compensation approaches, especially when revenue and overhead are expected to shift.
4. What About Liability and Risk?
New partners can bring new clients—but also new risks. Does your firm’s malpractice coverage need to be updated? Are there any existing conflicts of interest? How will the new partner share in the liability?
This is also a good time to review your firm’s operating agreement and partnership structure to ensure protections are in place for everyone.
5. What Are the Exit Terms?
No one wants to think about the end when you’re just beginning—but clearly defined departure terms avoid future disputes. Outline conditions for voluntary withdrawal, forced exits, retirement, and death or disability.
Clarity here reduces friction later and protects the firm’s long-term interests.
6. How Will You Onboard the New Partner?
Onboarding a partner is more than setting up an office and email address. It’s about integrating someone into your leadership team. Define how you’ll introduce the partner to clients, involve them in key decisions, and support their transition.
The stronger the onboarding, the faster the return on your investment.
Evaluate the Impact of Partner Admissions
Adding a new partner is a growth moment—but also a risk if not handled with care. At LMJ CPAs, we work closely with law firms to evaluate the financial and operational impacts of partner admissions. If your firm is considering expanding its partnership, let’s talk about how to get the details right—before signing on the dotted line.