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|Friday, September 01, 2006|
Sarah joined her firm shortly after graduating from law school. Her commitment to the company generates a good income and has enabled her to develop her practice specialty. She and her husband have been married for two years and last year became first-time homeowners.
Sarah was elated to learn she was being considered for partnership at her company. She needed a loan for the partnership investment and looked to her bank branch for financing. The banker took some basic information and gave Sarah three options: a home equity line of credit, mortgage refinancing or a personal loan. Given that the couple’s recent home purchase required 95% financing, there was little home equity as yet. Sarah had roughly $100,000 in student loans still outstanding. The amount of the personal loan being offered was only half the figure she needed for the partnership investment. Her excitement over partnership turned to apprehension. She needed guidance.
Sarah’s situation is not unique: Motivated professionals who aspire to firm partnership may also face competing demands on their finances. One of these demands is the rising cost of higher education, which leaves many professionals with a big debt and long-term repayments. Add to this the cost of financing a partner investment, and it may seem overwhelming. But up-front financial and career planning can make considering that partnership opportunity less daunting if you keep three things in consideration:
Professional development: Many firms encourage their associates to become involved with networking opportunities and to expand their circle of influence and general business knowledge. In addition, most professions require continuing education in order to maintain credentials or license. Associates who successfully balance workload, continuing education and networking are typically the first to be offered partnership.
Planning ahead for the financial obligation: For young professionals, repaying student loans is often top-of-mind, given the national average for aggregate student loans after four years of college is $42,000, according to SallieMae. Graduate students specializing in a professional service can hold an average of $70,000-$120,000 in student debt.
Though firms vary, the opportunity for ownership often comes after seven to 10 years of experience. This is an age that can coincide with the expense of a new family or household and at a time when candidates have significant earnings potential, yet still a modest net worth.
At a mid-sized firm, expect the financial commitment to range between $20,000-$35,000 for equity partner. Begin planning with a financial partner at least two to three years before pursuing partnership. This smoothes the way for the firm’s partnership review or application process.
Developing relationships with key advisers: Request advice from a mentor or firm partner and indicate the goal of future ownership. A firm’s managing partner might request a financial plan. Consider using an existing firm partner or an informed outside adviser to gain more information about a financial plan and to assist in developing a strong case for partnership acquisition.
The best source of financing is likely to be the one who has working knowledge of the firm. Knowing the firm’s level of income, ability to make partner distributions and, most importantly, to what degree the partnership investment will change your new income makes it far easier to structure the right financing for those considering a partnership opportunity.
Thursday, June 26, 2014
Wednesday, August 06, 2014
BY LINDA BAKER | OB EDITOR
Portland startup Green Endeavor strikes gold, inking a partnership with Underwriters Laboratories, an Illinois-based consulting and certification company with offices in 46 countries.
Tuesday, August 19, 2014
BY TOM COX | OB BLOGGER
Tom Cox interviews Steve Balzac, author of "Organizational Psychology for Managers."
Monday, July 14, 2014
BY VIVIAN MCINERNY | OB BLOGGER
Some people think Amazon’s winking eye logo is starting to look like a hoodwink.
Thursday, July 03, 2014
BY TED AUSTIN & MIKE BAELE | GUEST CONTRIBUTORS
The Office of Economic Analysis announced that Oregon is currently enjoying the strongest job growth since 2006. While this resurgence has been welcome, the lingering effects of the 2008 “Great Recession” continues to affect Oregon businesses, especially with regard to estate planning and business succession.
Wednesday, July 09, 2014
BY LINDA BAKER | OB EDITOR
Scott Kveton, the CEO of Urban Airship is taking a leave of absence from the company. As the story continues to unfold, here’s our perspective on a few of the key players.
Tuesday, July 01, 2014
BY HANNAH WALLACE | OB BLOGGER
Demand for organic food continues to soar: Last year, sales of organic food rose to $32.3 billion — up 10% from 2012. In Oregon, organic produce wholesaler Organically Grown Co. has been championing organic growing methods for four decades.
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Vigilant enters a New Year with a new president.
How George Fox has become one of Oregon's largest private universities.
Forest Grove sees growth in the burgeoning food and beverage scene.
Fifty-one Lane Powell lawyers were recently selected by their peers for inclusion in The Best Lawyers in America® (Best Lawyers) 2015; of those selected, 23 lawyers are from the Firm’s office in Portland, Oregon.
Barran Liebman is proud to announce that Andrew Schpak, a Partner of the firm, has been named Chair of the American Bar Association’s Young Lawyers Division for the 2014-2015 bar year.
Vanessa Sturgeon and Miller Nash LLP were selected as leaders in encouraging female advancement.