Site MapHelpFeedbackOperation of Partnerships and Related Forms
Operation of Partnerships and Related Forms


After many years working with a large consulting partnership, you and several of your business associates and friends decide to form your own consulting business as a limited liability partnership. You and five of your close friends have 20 to 25 years' experience in the consulting field. Each of you plans to contribute capital of $400,000 to the business. Each of you has a strong national reputation and expects to attract most of the firm's clients, at least in the first few years. You six partners will manage only a few of the firm's consulting engagements, but you six will bring to the firm clients generating $40,000,000 of annual revenue for the firm. Each of you also has experience managing consulting businesses, including expertise in personnel, financial, and marketing matters.

In addition, 15 other partners with 10 to 15 years' experience will join the new firm. Each of these 15 partners will contribute capital of $200,000. They are expected to bring few clients to the firm at this time, but they are expected to service the firm's clients and to bring in new clients as their reputations and skills expand and as the six older partners retire. Chiefly, these 15 partners will take charge of consulting engagements. They will directly supervise the firm's 50 associate consultants. The associate consultants will not be partners when the partnership is formed, but are expected to be offered partnership status within 5 to 10 years.

  • What are the default rules regarding how the partnership will be managed?
  • Why are those default rules inappropriate for this partnership?
  • Write the management section of the partnership agreement. Accommodate the interests of all partners.
  • What are the default rules regarding how the partners are compensated?
  • Why are those default rules inappropriate for this partnership?
  • Write the compensation section of the partnership agreement. Accommodate the interests of all partners.








To learn more about the book this website supports, please visit its Information Center.
(c)2007 McGraw-Hill Higher Education
Any use is subject to the Terms of Use and Privacy Notice.
McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.


Business LawOnline Learning Center

Home > Chapter 38