Partnerships are the oldest form of business structure – they probably pre-date joint stock companies by hundreds of years. But that does not mean they are simple or even genteel places to run. There are myriad ways of organising a partnership, and plenty of ways they can go wrong. I have been aware of more ferocious fights among professional partners than in any company boardroom. But because of the private nature of such arrangements, these disputes rarely break cover.
Historically, partnerships were an income vehicle for the participants. In the good times earnings could be lucrative, but there was no opportunity to accumulate significant capital. The goodwill in the organisation was handed over to the next generation of partners, which ensured the business attracted the finest talent.
Typically, in accountancy or legal firms, the senior figures benefit from the sweat of their junior colleagues; but the implicit contract is that for those who work hard enough for long enough, eventually a partnership will beckon, and then the good times will roll.
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