Part 2 of a two-part series.

Putting together a well-drafted partner agreement before forming a team with other advisors is a long and detailed process — or at least it should be. Making sure that all the i’s are dotted and t’s crossed can help you and your partner avoid headaches when the unexpected occurs.

“It just helps to avoid disagreements and problems down the line so you have a clear base of understanding,” says April-Lynn Levitt, a coach with the Personal Coach in Calgary. You can’t anticipate every future problem but talking about issues in advance can help you prepare for most situations, she says.

As with all documents that create relationships that can give rise to enforceable obligations and liabilities, a lawyer should be consulted before finalizing the agreement.

Here are some key points to keep in mind when creating a partnership agreement:

Have a back-up plan
Make sure your agreement outlines what will occur in a variety of situations — even the bad ones.

Advisors often overlook the importance of including a contingency plan in their partner agreements, says Levitt. Discuss with your partner and document what will happen if someone decides to leave the team. This section should include what happens in the case of the disability or death of a team member.

Keep client information confidential
Include a section that deals with your team’s rules with respect to client confidentiality.

Be clear about client lists and information and what each partner is entitled to in terms of confidential client information should the partnership dissolve, says Levitt. These terms may require the client’s express permission, which should be documented.

Otherwise, if an advisor leaves, taking clients with them, you could end up with fewer clients and no recourse, she says.

Protect your intellectual property
Use the partner agreement to protect your intellectual property.

If you or your partner create a specific process for handling clients or a system for running daily operations, be clear about who owns it, says Levitt. For example, if the team dissolves, are any team members allowed to copy and use that process or system for their own, separate practice? Consider using trademark or copyright law to protect business processes or methods that you consider to be proprietary.

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