plus seven things that partners are entitled to … and 12 that they’re not.
by marc rosenberg
how to bring in new partners
there are a number of realities that go along with being a partner in an accounting firm.
you’re an owner. as such, you get paid based on the firm’s earnings, not as an employee.
more: seventeen basic expectations of partners | the four essentials for every new partner | five people to keep out of partnership | nine ways to woo a prospective partner | tell potential partners what it takes
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you pay for your ownership. new owners in any business must pay money to acquire their ownership. at cpa firms, this is called a new partner buy-in. because cpa firms have a substantial street value, it’s reasonable that new partners should be required to purchase their interest in the firm.
as a partner, you get a vote. big deal! most firms don’t take formal votes. instead, they discuss an issue, determine a consensus and act on the decision. if partners really want their “votes” to count, it’s up to each of them to articulate their position on issues at hand and try to influence other partners to see things their way. so a vote is really more of a right to attend partner meetings and influence decisions.
who owns clients and staff? hint: it’s not individual partners. it’s the firm. this means that a partner who decides to leave the firm and join another cannot take clients and staff. of course, there is no law that says clients and staff cannot join the departed partner. but there is an enforceable partner agreement (80-90 percent of all firms have such an agreement) that prevents departed partners from taking clients and staff and requires them to pay liquidated damages to the firm.
partner buyout obligation. by accepting a firm’s offer to become an equity partner, a new partner becomes obligated to join with other partners, both present and future, to buy out the interest of departed partners. the flip side of this is that new partners will get a buyout when they retire.
what partners are and are not entitled to
partners are entitled to
- attend partner meetings and retreats
- have their capital returned upon leaving the firm
- make decisions on client engagements
- receive regular communications from management regarding what is going on in the firm
- vote on matters specified in the firm’s partner agreement
- be paid based on performance
- have their interest in the firm bought out as stipulated in the partner agreement
partners are not entitled to
- pull rank
- be given a lifetime waiver on performance feedback
- do whatever they want to do, whenever they want to
- participate in managing the firm; that’s management’s job
- get paid a lot of money without earning it
- do lower-level staff or admin work and be paid partner-level compensation for it
- do what’s best for themselves to the detriment of the firm
- be lone rangers (act alone; nobody knows where they are)
- abuse staff or behave disrespectfully toward them
- take clients if they leave the firm to practice elsewhere
- retain clients if they fail to service them properly
- be unaccountable for their performance and behavior
partner (equity or non-equity) job description
general
- a partner is first and foremost a leader in the firm. partners always set an example for others to follow because the firm is evaluated by its partners’ conduct.
- partners have three primary duties: bring in business, completely satisfy clients’ needs and help staff learn and grow.
- partners are “impact players” who make clear and measurable contributions to the firm’s growth and profitability.
- technical skills are a given. they are the ante to get into the game.
- partners make decisions that are aligned with the firm’s strategic plan and vision.
specific duties
- bring in business. contribute to business development and marketing in some way; develop and cultivate referral sources. include other firm members on sales calls. understand that, when it comes to business development, you can’t not try.
- train and mentor staff so they can advance.
- be constantly alert to opportunities to hire talent.
- manage client relationships and engagements effectively; be attentive to their needs; establish strong client loyalty to maximize retention. take clients upscale.
- serve as clients’ primary business advisor.
- establish other firm members as key touch points with larger clients so that if the partner suddenly leaves the firm, the clients will stay.
- develop and lead strong teams.
- become the firm’s go-to person for something.
- be a good corporate citizen. obey policies and procedures, even if the partner disagrees with them. treat people respectfully. respond timely to voice mails, emails, etc.
- live and breathe the firm’s core values, every day.
- push down work to the staff wherever possible; do only partner-level work. understand that a partner should be working on the business, not in it.
- keep the staff busy. never lose sight of this critical partner duty; never assume other partners are handling this.
- bill and collect promptly and aggressively.
- ensure that client engagement letters and all other required agreements and correspondence with clients are executed for each engagement.
- take on minimal, and preferably no, admin duties (i.e., duties that can be delegated to admin staff).
- be fiscally responsible 24/7; never be off duty.