Denver Bar Association
July 2005
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Purse String Partners: Sharing Expenses Can Minimize Risks When Hiring Help

by Margaret Graham Tebo
©2004 ABA Journal, Vol. 90, August 2004


Reprinted by Permission.

Patrick Begos knew it was time to think about getting some help at his solo law firm when he began to dread new cases.

"I knew it was a bad situation to not want new work," says Begos, who practices commercial litigation and insurance defense in Westport, Conn.

At first, he hired a part-timer fresh from the bar exam whose admission to practice was still pending. He soon found that the would-be lawyer needed quite a bit of
guidance and training to translate law school learning into
law practice. Still, he knew that hiring an associate with more experience would mean paying a higher salary.

"They say that to be considered a success, associates have to bring in revenues of about three times their salary," Begos says. "One-third goes to overhead such as additional office space, one-third to their salary and the other third to profit to make the risk and oversight worthwhile."

Begos began to worry that the cyclical nature of law practice could mean he would have trouble paying the
associate during slow periods when there wasn’t enough work for both of them. He knew the dangers of carrying too much overhead; it was one of the reasons for the break-up of a firm for which he had previously worked.

Then he hit on an idea. He was sharing an office suite
in Westport, and he got to know another lawyer who moved into the same suite. Eventually, the two decided to become partners. Each lawyer would keep his own practice intact,
but they would share some overhead expenses, including
the associate’s paycheck.

They have since added two more partners, one in Westport and another in Bronxville, N.Y., giving the tiny firm offices in two states. The four partners still share just one associate and a couple of paralegals.




David Abeshouse found himself in a similar situation at his practice in Uniondale, N.Y., on Long Island. Like Begos, Abeshouse sometimes found he had more work than he could do at his commercial litigation practice. He had a referral arrangement with a longtime friend from his big-firm days.

"I’d send him my healthcare law cases, which he specializes in, and he’d send me all his conflict work," says Abeshouse.

Still, sometimes the workload was more than he wanted. Friends and relatives began asking him why he didn’t hire an associate. But Abeshouse knew that the costs of hiring were considerable. He was concerned that if he took on an associate, he would be doomed to failure.

He decided to take the plunge and get help, but he was able to temper the risk by sharing the financial burden with his referral buddy. They formed a loose partnership and now both contribute to the associate’s salary.

MAINTAINING THE SOLO
MINDSET

Abeshouse and Begos acknowledge that many solos balk at the idea of having partners because they like the idea of being solo cowboys.

Begos says that solos who are thinking about hiring should look at three key areas: whether they currently have more work than they can comfortably handle, whether they would like to have more time for rainmaking and client development, and whether they have sufficient cash flow to support an associate during the training curve and the down times.

Still, both Begos and Abeshouse say that for them, partnering with other lawyers — even informally — to share the risk of an associate was the best solution. As long as there is a written agreement about how the employee’s time and costs will be divided, it is a highly viable arrangement, both say.

"Like anything else, it’s a compromise," says Abeshouse. "But we’ve managed to structure ourselves so the partners have a lot of autonomy but get to spread the risks."


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