tag:blogger.com,1999:blog-22277549.post116097629222783346..comments2023-08-25T03:39:09.015-04:00Comments on Inside the Firm of the Future: Dilution By Consensus of the Clueless - The Partnership DilemmaChristopher Marstonhttp://www.blogger.com/profile/11091974667607891404noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-22277549.post-1161574169026195832006-10-22T23:29:00.000-04:002006-10-22T23:29:00.000-04:00Hi Jim,Thanks for the comment. I completely agree...Hi Jim,<BR/><BR/>Thanks for the comment. I completely agree with you that the greatest problem is a Peter Principal problem -- one of a lack of separation of ownership and control. Fixing the problem is one of the things we are built on at Exemplar. <BR/><BR/>At Exemplar we have separated the bundle of rights that typically accompany partnership: 1) Profit Sharing, 2) Equity, and 3) Power. In our firm, having one does not guarantee that you have another. By making this separation, we are able to put the right people with the right skills in the right place to make the business as strong as it can be. This makes the organization more profitable for everyone. As far as separating equity and profit sharing, this was also a key decision. Think of traditional partnerships and how easily they dissolve. Most partners don't care about whether the organization lives on beyond their employment with the firm . . . they just want their money while they are there. Why? Because law firms do not have investor partners that have an interest in the continuing viability of the organization holding the partners accountable for making sound long-term financial decisions. So, if the partners who hold equity do not care about the long-term, they do not deserve to be shareholders. By separating equity and profit share, we are able to give partners the same profit sharing as they would if they were equity holders. Then, we can use the equity class to reward certain partners that demonstrate an interest and ability to care for the long-term interests of the firm. This way, we allow a partnership to function more like a corporation, with the appropriate checks, balances, and accountability.Christopher Marstonhttps://www.blogger.com/profile/11091974667607891404noreply@blogger.comtag:blogger.com,1999:blog-22277549.post-1161222538731035692006-10-18T21:48:00.000-04:002006-10-18T21:48:00.000-04:00Chris, I am not sure of Exemplar's precise structu...Chris, I am not sure of Exemplar's precise structure. <BR/><BR/>One of the problems that I have found in partnerships is lack of separation of role and return in terms of ownership and function/activity.Do you make this separation?Jim Belshawhttps://www.blogger.com/profile/10075614280789984767noreply@blogger.com