Exiting partners from partnerships or LLPs is not always entirely straightforward.
The circumstances may vary considerably – from partners being forced out against their will to them wishing to leave as soon as possible to pursue other activities.
The starting point is always the partnership or LLP agreement (assuming there is one). Relevant clauses may include those relating to:
- notice periods
- conflicts of interest
- conduct and performance
- ill health
- garden leave
- post-termination restrictions
- profit share
- payments of outstanding profit share
- repayment of capital
- tax reserves
It is also worth noting that partners/LLP members have additional statutory rights, such as in relation to unlawful discrimination and whistleblowing.
Where possible, it is almost always preferable for partners to leave on good terms the firm. However, disputes can arise.
We use our experience of dealing with a wide variety of partnership exit situations to partnerships and LLPs to a sensible outcome, which enables the firm to protect its business and interests. Where a sensible outcome is not achievable, we are fully prepared to litigate if necessary.
Our work for partnerships and LLPs in this area includes:
- Advising on internal issues, including with regard to allegations of misconduct and underperformance
- Advising firms where partners are preparing to leave and join a competitor or set up in competition
- Advising on the enforceability and/or applicability of post-termination restrictions
- Advising on retirement issues
- Advising on and negotiating the financial and other terms of departure
- Where necessary, defending claims under the partnership/LLP agreement and/or statutory rights
- Settling disputes through negotiation and/or mediation