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 (LLP). You and five of your close friends have 20-25 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 10-15 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 5-10 years.
Discuss the following in your first discussion post:
1. What are the Revised Uniform Partnership Act (RUPA) rules for how the partnership will be managed? (Remember that a court will apply the RUPA rules whenever the partners have not addressed the issue in the partnership agreement.)
2. Are these RUPA rules appropriate for your partnership? Why or why not?
3. How should the management section of your partnership agreement be written so as to fairly accommodate the interests of all partners?
Discuss the following in a later discussion posts:
1. What are the default rules of the RUPA regarding how the partners are compensated?
2. Are these rules appropriate for your partnership? Why or why not?
3. How should the compensation section of your partnership agreement be written so as to accommodate the interests of all the partners?