This past week I was working on a prenuptial agreement, and also talking with a client about a new business venture she is considering pursuing with a partner. In both cases there is a lot of excitement about the partnership and the future. There are also many questions about money, responsibilities, long term commitment and uncertainty about what the future will hold. In those circumstances it is tempting to focus on the many small immediate tasks at hand, like buying a wedding dress, picking out the menu and determining the guest list, or, in the case of the business venture, building a business plan, raising capital, and setting up an office. All those tasks do need to be completed, so it seems like the rational thing to focus on them. It also can be more fun than sitting down and talking about the terms of the partnership.
Talking about a partnership in the beginning is also challenging because, realistically, you are just getting to know each other. Even if you have been friends, colleagues or romantic partners for many years, embarking on an official partnership is different. Very often there is a tendency to avoid the topic of what the terms of the partnership are, and decide to think about it later when you have spent a little time together. However, once a partnership starts, it is really hard to change the dynamic down the line. Inertia and habit are very powerful forces.
One way to avoid getting into a partnership you think is unfair or frustrating is to sit down and create a written agreement in the very beginning, even though you know you may need to revisit the terms at a later date. Agreements could include a prenuptial agreement, operating agreement or a more informal contract. One friend’s husband, before they were married, presented her with a list of his 8 non-negotiable priorities. She was shocked at the time, as she herself had not considering creating such a list, but it allowed for significant clarity. His key concerns were where they would live and the religious education of their (yet to be born) children. Those are two big issues that are better addressed before marriage. She responded by creating her own list (upon reflection she discovered she too had key priorities) and they have been happily married for almost ten years and now have two children. That early conversation about priorities allowed my friend and her husband to organize their life accordingly, and being clear from the start minimized conflict.
Unfortunately it is too easy to recall situations where a lack of communication and agreement led to divorce or partnership breakdown, so I won’t focus on that here. Certainly it is for the best to negotiate an agreement early on, and, as the saying goes, begin as you mean to go on, but it is never too late to clarify a partnership and make an agreement. Creating new operating agreements, drafting postnuptial agreements or just an informal written agreement can take some of the tension out of partnerships that are suffering from conflict or confusion due to lack of communication and clarity. These conversations may be hard, and drafting documents can be time consuming, but putting the effort up front will be beneficial for everyone involved. I like to think of it as having a map. Occasionally it is fun to just wander, but most of us like to know where we are going and roughly what the trip will be like. Driving in a car with no map, not even Waze, might lead to a fun unexpected adventure, but almost all of us would prefer to have a map. Partnership agreements can serve as that map.