Phoenix Partnership Agreements Attorney

Arizona lawyer creates legal documents for business owners looking to collaborate

A partnership allows two or more people to engage in business together, but no one should take this step without a well-drafted partnership agreement. This contract should reflect the specific circumstances associated with the venture and include language that averts potential legal problems down the road. As an experienced Phoenix partnership agreement attorney, Donald Hudspeth can help you negotiate and enforce a contract that gives you the best chance to succeed. 

Essential terms every Arizona partnership agreement should include

Among the provisions that any Arizona partnership agreement should contain are those detailing: 

• How much capital each partner must contribute
• Each partner’s ownership interest
• How much profit and loss to allocate to each partner
• Each partner’s management authority and voting rights

As an accomplished Phoenix business lawyer, Donald Hudspeth can help you avoid common pitfalls in the development of a strong partnership agreement.

Choosing the right partnership structure in Phoenix

Partnerships may take the following forms, each with its own benefits and disadvantages: 

• General partnership, in which all of the partners co-manage the partnership and are personally liable for its debts and actions.

• Limited partnership, in which one or more general partners manage the partnership and are personally liable for its debts and actions, while the remainder, known as limited partners, have no management role and are only liable to the extent of their capital contributions.
• Limited liability partnership, in which the partners co-manage the partnership but are only liable for their own debts and misconduct.

If you intend to form a partnership, our firm can help you find which option best suits your situation and goals.

Allocating management authority and decision-making power

In defining the day-to-day management role of each partner, the partnership agreement should allow them to focus on their strengths, if possible. Critical functions that should be delineated in the document include finance, sales and operations. Minor decisions might be made by individual partners, but more critical ones might need to be made collectively, whether by a simple majority or a greater percentage of the partners. Finally, the agreement should have mechanisms in place to resolve internal disagreements without needing to go to court.

Profit distribution and financial protections for partners

When the partnership makes a profit, all or part of that profit may be distributed to the owners. Losses may require those same owners to contribute additional capital, although that may be avoided, in whole or in part, by creating a reserve fund into which some profits will be added on a regular basis or by reinvesting profits into the company. We can advise you on how to set up a financially sustainable means of handling profits and losses.

Exit strategies, buyouts and partnership dissolution

The agreement should address what happens when a partner dies, retires or voluntarily withdraws from the partnership, or all partners wish to dissolve it. In the former case, the agreement may have provisions allowing the surviving partners to purchase the ownership interest of the deceased, retiring or withdrawing partner. The amount paid will likely be the partner’s percentage of the total value of the partnership, so the agreement should also specify the valuation methods for calculating that amount. In the case of dissolution, the partners may opt for selling the business to a third party, dividing business assets between themselves, or some combination of the two.

Speak with a knowledgeable Arizona lawyer about your partnership agreement

At the Law Offices of Donald W. Hudspeth P.C., we draft, review, negotiate and enforce partnership agreements for Arizona clients. Please call our Phoenix office at 866-696-2033 or contact us online today.