A recent Georgia Court of Appeals decision deals with the dissolution of a law firm organized as a limited liability partnership. In Smith v. Williams, one partner allegedly left without notice, taking case files with her. The other partner sued for dissolution of the partnership and breach of contract. As happens in many law firm dissolutions, the former partners were fighting over fees. One central issue was a factual dispute about the date the partnership terminated, which mattered for determining the assets (i.e., fees) to be split between the former partners.
The opinion references a partnership agreement, but does not discuss any specific terms. The discussion of the factual dispute suggests that the partnership agreement did not adequately address a potential dissolution and illustrates the need for well-drafted partnership agreements.
Partners can, and should, draft explicit provisions on how partner withdrawal is handled. Partners can agree on a process for withdrawal, including how clients are notified and how to to deal with fees on cases that go with one partner and stay with another. While such provisions won’t eliminate all possible disputes, they should help minimize them.