We intend October’s “Question of the Month” to squarely address an issue laden with financial and emotional repercussions. But we have surpassing confidence that Adam Smith, Esq.’s intrepid readers are up to it.
Without further ado, then:
[poll id= “10”]
If CEOs of top companies can be suddenly removed (Uber, GE, Ford, Equifax, Wells Fargo come to mind recently), equity partners can be subject to that outcome too. Removal is needed as any part of a company’s/firm’s toolkit.
While some of the CEO removals are egregious circumstances (Uber, Equifax, Wells Fargo), some of the removals are tied into the executives’ performance/upcoming strategies (GE, Ford). Equity partners can be subject to the same scrutiny and standards, which may require removal if they don’t meet those goals.
Sometimes isn’t it bracing to look at examples outside of Law Land? Of course this needs to be an available tool, so the interesting question to me is whence the resistance to it?
Questions, really; sorry not a lawyer. 1) Does the partnership agreement allow for this? 2) Does the manner of loss allow for some measure of “due process” with respect to the decision? Even in the commercial systems where most of us are “employed at will” that is (a) specified and (b) subject to due process within a system known to all. Thanks for clarification.
Mark:
Not wrong-headed questions in the least, and thanks as always for contributing. Re (1) most partnership agreements call for some partnership vote (simple majority? super-majority?) on expulsion of a partner from the firm, but those provisions are more and more being diluted and/or repealed; and re (2) I think the “due process” accorded the expuls-ee (?) is informal but along the lines of ample notice, communication, opportunity to cure, and then if all else fails more communication to the firm at large.