Reply to Yes, tiny violin - did anyone else struggle first years of law partnership?

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Reply to "Yes, tiny violin - did anyone else struggle first years of law partnership?"

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[quote=Anonymous][quote=Anonymous]
Really? IME most law partners are married to SAHMs or their spouse is mommy/daddy-tracked so that at least one parent can be the primary parent. I honestly can't think of a single law partner whose spouse is in an equally or more demanding career. [/quote]

Yes, I'm a law firm partner at a large firm, and my spouse is a doctor who works two (somewhat short) days a week. It works amazingly well for us. I can't imagine two spouses with my schedule.

And yes, starting as a new partner can have financial struggles. In part, it sounds like the capital contribution (assuming it is capital contribution and not overhead!) is fairly early lump sum. At my firm, the capital contribution is roughly about 20% of a partner's budgeted annual compensation. If you are a bit under that, you may have paid it all this year. Or perhaps you pay the rest next year, and then your capital contribution is done and better cash flow.

What is more standard at my firm, to even things out, is new partners generally get a loan with 3 or 5 years interest-only payments, and then 5-year repayment after that. The upshot is that the buy-in cost is spread over several years, so there isn't a big cash flow hit early. That may be no small part in what is causing a cash crunch for you.

Separately, this may not be your issue, but many firms have a ~6 month hold back, to capitalize the firm (on lieu of taking on debt). With our firm, for example, partners don't receive current year distributions until Q3 tax payments are due. Q1 & Q2 distributions are the payment for the remainder of the prior calendar year. A new partner, however, doesn't get a distribution until about 9 months in.

Moral of the story, new partners generally do need to plan ahead here, as it can pose challenges. These are good challenges, ones most folks would be thrilled to have. But challenges nonetheless. [/quote]

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