"It will be of little avail if the laws be so voluminous that they cannot be read or so incoherent that they cannot be understood." - James Madison
What is a “Partnership Constitution”?
One of the advisors we interviewed for our white paper commented that he realized post-merger that a lot of discussions he had had with his potential partner during their transition period had not been captured in writing: big ideas, small ideas, as well as the vision of what the firm’s culture would be. A lot of important decisions were addressed in the firm’s Operating Agreement, of course. But some of the ideas that emerged during their lengthy pre-merger discussions went undocumented.
The Partnership Constitution picks up where the operating agreement leaves off, to capture what you agree will be your partnership’s way of doing things including decision making, partnership roles, and conflict resolution. It goes beyond a mission statement or a vision statement because it gets very specific about how the partners will work together and what they expect of each other. You may discuss that no partner “needs to be in the office all the time” but as part of that you need to discuss and clarify what that actually means to all the partners in practice. We have helped draft partnership constitutions that referenced the “how family members who work in the business will be handled” that was important to each partner, as well as another which required a minimum amount of vacation time.
What are the benefits of having a Partnership Constitution?
- Clearly sets out the expectations, roles, and responsibilities all the partners have agreed to in writing
- It can prevent misunderstandings and clarify hazy recollections
- Sets you up to be proactive about conflict
- Can be amended when the partners realize that something is not working.
- Having a written record improves accountability.
- Captures decisions that are critical to the organization but are not part of the Operating Agreement.
How Do I Create One?
Start by individually identifying what your main interests are: what are the benefits you hope to get out of the partnership and what are you willing to compromise on? What strengths do your partners bring to the table? What are your alternatives to this partnership? What are theirs? Then, come together for a frank conversation to establish the shared vision of this partnership.
For our clients, the partnership constitution is the written record of what has been uncovered and agreed to in our merger facilitation process. All prospective partners go through a personality assessment that uncovers their behaviors, values and what motivates them. The Partnership Constitution gives the partners a language they can use with each other. We have a checklist that ensures that the largest issues are raised, and then is supplemented by the specific issues raised during the facilitated conversations with the participation of all the partners.