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By R. Jayabalan
COMMISSION PARTNER, SALARIED PARTNER AND ‘PARTNER’ IN LAW FIRMS.
Law firms often appoint their young lawyers as ‘salaried partner’ or ‘commission partner’ but their name appears as ‘partner’ in the letterhead, firm profiles and namecard. This may be for marketing purposes e.g to secure panel work, or to commit young lawyers to stay with the firm.
What is the legal liability of such salaried partner or commission partner? When a client suffers loss due to fraud or negligence of the firm, is the salaried partner jointly and severally liable with other partners?
The High Court here addressed this very issue. Upon examining the Partnership Act, it was held that ‘partnership’ under the Act means sharing profit and loss of the business. Since the commission partner here was only paid a share of the fees collected by him and no share in the profit and loss of the firm, he is not a ‘partner’ under the Act and the ‘jointly and severally liable’ principle that binds partners as liable to third parties do not apply.
In short, perhaps, a salaried partner or commission partner is nothing more than a glorified LA!
This should be a relief to young lawyers who become salaried partner or commission partner at firms without full understanding of such designation.
R. Jayabalan
MESSRS R. JAYABALAN
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