Staff Policies Improve, But Not Mentoring

Marc Rosenberg at cpatrendlines.com
Rosenberg

And mergers are getting tougher. Ouch!

By Marc Rosenberg, The Rosenberg Associates

Firms are continuing to step up their efforts to be more liberal and staff-friendly with their staff policies. More unlimited PTO polices including many variations of this, working remotely, staff setting their own hours, etc.

Unfortunately, I am not seeing any changes in the lip service most partners give to staff mentoring. Eighty percent of firms never make it to the second generation – many reasons for this but a big one is that the quality of partner mentoring sucks.
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Common Approaches to Partner Agreement Provisions

Woman winking and holding thumb upFrom retirees to part timers.

By Marc Rosenberg
The Rosenberg Practice Management Library

Here are some best practices for partner agreement issues:

MORE: 15 Partner Agreement Weaknesses and Omissions | When Solos Bring in Partners | 10 Merger Hiccups for Partners | Mandatory Retirement: Pros and Cons (And Is It Legal?) | Deciding How to Allocate Partner Income
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When Solos Bring in Partners

Two businessmen shaking hands across desk and documents in office7 must-haves.

By Marc Rosenberg
The Rosenberg Practice Management Library

Many major CPA firm transactions – partner agreements, mergers, the first retirement of a partner and bringing in a new partner – have one thing in common: Firms have very little if any experience with them.

MORE: 8 Key Items for Partner Agreements | 12 Basics of Partner Agreements | Partner Agreement Issues Affecting Women | Quick Tip: Partners Investing in Clients | Non-Equity Partners: Why Have Them? | Why You Might Want an Executive Committee | Buyout When a Partner Dies | Why and How New Partners Buy In
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In many cases, it’s the first time they have ever contemplated this move. But bringing in a new partner cannot be done in isolation. All of the following are needed:

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8 Key Items for Partner Agreements

Forethought now can save headaches later.

By Marc Rosenberg
The Rosenberg Practice Management Library

A partner agreement can cover a lot of ground.

MORE: 12 Basics of Partner Agreements | 10 Merger Hiccups for Partners | Mandatory Retirement: Pros and Cons (And Is It Legal?) | Deciding How to Allocate Partner Income | Making Partner: Today’s 15 Essential Skills and Traits | How to Specify Managing Partner Duties | Ownership Percentage and Capital Accounts | 5 Key Reasons to Have a Partner Agreement
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In this post, we'll cover eight miscellaneous provisions you might include: READ MORE →

12 Basics of Partner Agreements

These are non-negotiable for new partners.

By Marc Rosenberg
The Rosenberg Practice Management Library

When any business transaction takes place, both parties to the agreement must agree, preferably in writing, to the terms of the arrangement. Bringing in a new partner is no exception.

MORE: 10 Merger Hiccups for Partners | 14 Partner Agreement Issues in Mergers | Partner Duties, Prohibitions and Grounds for Expulsion | Principals Who Aren’t CPAs | Why Non-Compete and Non-Solicitation Covenants Matter
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The document confirming this arrangement is the partner agreement. Everyone has trepidations about signing a long document filled with legalese. The prospective new partner has probably never seen such a document before and is certainly not familiar with its standard provisions.
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10 Merger Hiccups for Partners

Number 10Don't let the big event mess up your partner agreement.

By Marc Rosenberg

Clearly, in a merger, many issues must be agreed upon between the two firms.

MORE: 14 Partner Agreement Issues in Mergers | Partner Agreement Issues Affecting Women | Quick Tip: Partners Investing in Clients | Non-Equity Partners: Why Have Them? | Why You Might Want an Executive Committee | Buyout When a Partner Dies | Why and How New Partners Buy In | A Crash Course in Partner Retirement/Buyout Plans
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Merger agreement issues that may affect the buyer’s partner agreement include these:
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14 Partner Agreement Issues in Mergers

Two businessmen holding giant puzzle pieces in silhouette against a sunriseMake sure you're looking at the big picture.

By Marc Rosenberg

This post applies only to transactions that are true mergers, which require the sellers to sign the buyer’s partner agreement.

MORE: Partner Agreement Issues Affecting Women | Mandatory Retirement: Pros and Cons (And Is It Legal?) | Deciding How to Allocate Partner Income | Making Partner: Today’s 15 Essential Skills and Traits | How to Specify Managing Partner Duties | When Votes Must Be Taken, What Are the Options? | A Crash Course in Partner Retirement/Buyout Plans | Protect Your Business with a Solid Partner Agreement

In a sale, the owner(s) of the seller don’t sign the buyer’s partner agreement because they won’t become owners of the buyers.
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Partner Agreement Issues Affecting Women

Two businesswomen sitting at table and talking in office courtyardThe biggest issue? How part-time partners are treated.

By Marc Rosenberg

Yes. Yes.  I understand that the title of this post may be offensive to both men (why do we need special rules for women?) and women (why do we need to be singled out – isn’t it a given in the 21st century that women and men should be treated equally?).

MORE: Mandatory Retirement: Pros and Cons (And Is It Legal?) | Partner Duties, Prohibitions and Grounds for Expulsion | Principals Who Aren’t CPAs | Why Non-Compete and Non-Solicitation Covenants Matter | Handling Pay During the Disability of a Partner | Why Voting Isn’t Such a Big Deal
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The good news is that I don’t see many partner agreements that blatantly discriminate against women.
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Mandatory Retirement: Pros and Cons (And Is It Legal?)

It depends.

By Marc Rosenberg

Of all the issues involved in CPA firm governance, mandatory retirement is one of the most hotly contested and debatable provisions in a partner agreement.

MORE: Partner Duties, Prohibitions and Grounds for Expulsion | Quick Tip: Partners Investing in Clients | Why You Might Want an Executive Committee | Buyout When a Partner Dies | Why and How New Partners Buy In | A Crash Course in Partner Retirement/Buyout Plans
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First, let’s clarify what we mean by “mandatory retirement.”
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Partner Duties When Things Go Really Bad: Prohibitions and Grounds for Expulsion

Midsection of businessman moving out with cardboard box from officeWhat does "all of their time and attention" mean?

By Marc Rosenberg

I’ve read hundreds of partner agreements over 20 years and I am unable to meaningfully distinguish between the following:

  • Partner duties (what partners must do to keep their jobs)
  • Partner prohibitions (what partners cannot do)
  • Grounds for expulsion (what actions partners may do that are serious enough to cause their dismissal from the firm)

MORE: Quick Tip: Partners Investing in Clients | Deciding How to Allocate Partner Income | Making Partner: Today’s 15 Essential Skills and Traits | How to Specify Managing Partner Duties | When Votes Must Be Taken, What Are the Options?
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I’ve seen countless different ways that these items are presented in partner agreements. For years I’ve asked these questions:
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Quick Tip: Partners Investing in Clients

BONUS: Sample agreement language.

By Marc Rosenberg

During my career, I’ve seen partners come to blows over this.

MORE: Deciding How to Allocate Partner Income | Principals Who Aren’t CPAs | Why Non-Compete and Non-Solicitation Covenants Matter | Handling Pay During the Disability of a Partner | Why Voting Isn’t Such a Big Deal | What’s in a (Firm) Name? | Protect Your Business with a Solid Partner Agreement
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One partner has a non-attest client who offers an opportunity to invest in the client’s business. A very common example is a client who is a real estate syndicator. This can often be quite lucrative for the partner.
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Deciding How to Allocate Partner Income

Gavel resting on $100 bills8 aspects that might fall to your compensation committee.

By Marc Rosenberg

CPA firms have a habit of making frequent changes – some major and some minor – to their system and methodology of allocating partner income, just as a baseball team tweaks its roster of players during a long, grueling season.

MORE: Principals Who Aren’t CPAs | Non-Equity Partners: Why Have Them? | Why You Might Want an Executive Committee | Buyout When a Partner Dies | Why and How New Partners Buy In
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Because of this, firms are advised to keep the wording on partner compensation in their partner agreements as general as possible. This avoids the need to change the agreement every time the income allocation system is modified.
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Principals Who Aren’t CPAs

Businesspeople having a meeting over coffee sitting together at a table discussing a document, young man and two middle-aged women present8 points worth noting.

By Marc Rosenberg

For 20 years or more, the CPA profession has been expanding services beyond traditional audit, accounting and tax, supplementing its portfolio with a wide variety of consulting services. Indeed, in recognition of this, most CPA firms’ logo states something to the effect of “CPAs and Consultants.”

MORE: Non-Equity Partners: Why Have Them? | Making Partner: Today’s 15 Essential Skills and Traits | How to Specify Managing Partner Duties | When Votes Must Be Taken, What Are the Options? | Ownership Percentage and Capital Accounts
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Some firms have CPAs on board who provide consulting services. Other firms hire outside, non-CPA consultants in areas such as technology, wealth management, M&A and health care.
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