Practices operating without a valid partnership agreement in place are a disaster waiting to happen, explains Nicola Draper of Draper Hinks.
It is estimated that only 30% of accountancy firms have a legally binding partnership agreement – a shocking number when one considers the risks to the firm of not having one.
When a partner announces their intention to retire or leave, the first course of action should be to refer to the partnership agreement. A good partnership agreement will also ensure that other partners have a carefully structured plan to follow if one partner becomes seriously ill or dies. It will secure everyone’s legal positions and ensure the continuity of the firm.
While it’s advisable for accountants to draw up partnership agre...