Are you considering embarking on a career in business law and launching your own law firm? In a sector where competition is fierce, a well-drafted partnership agreement can make the difference between success and failure. A robust agreement not only defines the responsibilities and rights of each partner, but also lays the foundations for effective and lasting collaboration.

On this subject, our Global Managing Partner, Marc Gericó, offers an exclusive analysis in Cinco Días on the key elements to consider when putting a partnership agreement in place.

What do you think are the most important elements a partnership agreement should include when setting up a law firm?

An optimal partnership agreement is the cornerstone of a healthy and durable professional relationship. In the legal sector, where trust, reputation and meritocracy are vital, I consider five elements indispensable:

1. Clear roles and responsibilities
   It is essential to define who takes on which functions, especially in relation to leadership and strategic direction. In many law firms we see groups of lawyers come together with good rapport and rapid growth, but without appointing a managing partner or establishing a clear system of governance. That absence of leadership and decision-making can become a burden: the longer it lasts, the more entrenched internal dynamics become, and the harder they are to reverse. Without a reference figure, tensions arise, egos clash and the collective vision is lost, undermining the consolidation of a genuine business spirit.

2. Decision-making procedures
   It must be set out how strategic matters are approved (by unanimity, qualified majority, etc.) and who has executive authority on day-to-day issues. This avoids deadlock and allows the law firm to move forward with agility.

3. Admission and exit policies
   It is wise to regulate from the outset the conditions for admitting new partners, as well as scenarios for departure (retirement, voluntary withdrawal or conflict). In our experience, we have seen cases where a managing partner pushed for the integration of a new partner with an impressive CV from top law firms. The problem arose when their personality and cultural fit were not properly assessed. The result is almost always the same: as in their previous experiences, the person does not fit, generates friction and becomes a disappointment. Ultimately, the recruitment of the supposed “star” fails, everything has to be rolled back, and credibility is lost all round. Avoiding such situations requires more strategic vision and less dazzlement.

4. Profit-sharing arrangements
   Remuneration and distribution criteria must be transparent and aligned with effort, contribution and the firm’s objectives. A positive example from our experience: in a mid-sized law firm, the partners decided to modernise their offices and invest decisively in brand and infrastructure. Instead of external financing, they agreed — out of generosity and shared vision — to forgo a percentage of their profits temporarily to devote entirely to this investment, which they would recover gradually. Such decisions demonstrate entrepreneurial spirit, alignment and a long-term vision that goes beyond immediate profit.

5. Dispute resolution
   Anticipating disagreements is a mark of professionalism. Including mechanisms such as mediation or arbitration can prevent a personal crisis from damaging the common project.

In short, a strong partnership agreement not only prevents disputes, but also promotes the professionalisation of the firm, strengthens the business ethos and reinforces alignment among the members of the partnership. When these three pillars are in place, the firm does not merely grow: it consolidates with vision, cohesion and sustainability.

What are the most common mistakes when signing such an agreement?

From a business consultancy perspective, one of the most frequent mistakes in signing a partnership agreement is to think it is enough to draft a purely technical-legal document. But a good agreement goes much further: it must clearly reflect the culture, the shared vision and the potential growth or conflict scenarios that may arise in the natural evolution of a firm. From our experience, the five most common mistakes are as follows:

1. Avoiding uncomfortable conversations
   Many partners shy away from discussing sensitive topics such as power-sharing, a member’s exit, or conflict-resolution mechanisms. Avoidance, born of fear of straining relationships, creates ambiguity and future tension. One of the most frustrating issues — and rarely spelled out clearly — is the promise of annual turnover or the supposed client portfolio that a new partner will bring. In many cases these figures fail to materialise, nor is there a sustained effort to generate meetings, opportunities or business development to reach those goals. This produces profound disappointment and a breakdown of trust with those partners who are committed to the sustainability of the business.

2. Failing to define roles clearly
   The absence of a defined and consensual leadership role is a recurrent source of friction. We see firms where no one wants to take on the role of managing partner, or where there is ambiguity over who makes decisions. This lack of structure, in the medium term, generates operational blockages, internal tensions and ego clashes that stall the firm’s development.

3. Recruiting on CV alone, not on cultural fit
   This error is more common than it may seem. Bringing in partners for their technical profile or impressive background in large firms, without properly assessing whether their values, leadership style and vision align with the firm’s culture, is a high-risk gamble. We have seen it repeatedly: the “star hire” does not gel, creates internal frictions, destabilises the team and ultimately forces the reversal of the move, with obvious reputational and human costs.

4. Failing to link the agreement to the firm’s strategy
   The agreement is often treated as a static document, when in fact it should be aligned with the strategic vision: institutionalisation, growth, specialisation, international expansion, etc. If it is not tied to the firm’s direction, it loses force as a management tool. The agreement should reflect where the firm is headed, not just regulate the status quo.

5. Leaving the agreement in a drawer
   A good partnership agreement should be reviewed and updated when partners change, or when the business model or context shifts. Otherwise, it becomes a snapshot that no longer represents the firm or its growth ambitions.

In conclusion, the most common mistakes when signing a partnership agreement are not legal, but strategic. A good agreement not only structures the relationship between partners: it builds a solid foundation for sustainable growth, an entrepreneurial spirit and genuine alignment within the partnership.

You can read the full article in Cinco Días, here.