The pluses and minuses of partnership

I had the pleasure of meeting many distinguished members of Maryland’s legal community last night at The Daily Record’s 2012 Leadership in Law event. This included a number of partners from firms such as Venable and Zuckerman  Spaeder.

So when I read a column this morning in the National Law Journal on the possible pitfalls of becoming a partner it seemed especially timely.

“Obtaining partnership can be a significant achievement and offer a lawyer substantial rewards, but it may also involve substantial risk,”  writes Michael Downey, a partner at Armstrong Teasdale in St. Louis. “Due care should be exercised to ensure a proffered partnership position is indeed a prize, not a trap.”

Downey says that becoming an equity partner involves assuming several types of increased risk. He says a new partner may be expected to “contribute capital, to pay money into the firm or leave money in the firm for it to use — or lose.” Second, a new partner may “assume greater responsibility for the firm’s debts and liabilities.”

Third, Downey says a new partner may “relinquish predictability in compensation.” He says that partners often receive a “comparatively smaller monthly payment or draw, and may not learn or receive their full annual compensation until profits and losses are determined at the end of the firm’s fiscal year.”

To minimize these risks, Downey said attorneys  contemplating becoming a partner should be mindful of the risks, review the firm’s governance documents, conduct due diligence about the firm, get third-party information about and evaluations of the firm and think about perhaps joining as a non-equity position or as of counsel.

Maryland attorneys: what do you think? What have your experiences been?