There are dozens of websites that offer legal document templates for low or no cost. The cost of a lawyer may tempt business owners to use these templates rather than hire legal counsel, especially when it comes to forming a simple business entity like a partnership.
Unfortunately, however, using a legal DIY template can pose several problems. Because Texas partnership agreements are important documents, business owners should treat them with care.
Finding and using a template online comes with a number of risks that could make doing so a costly mistake. For assistance, please don’t hesitate to contact us online or call our firm at (512) 410-0343.
Our Texas business lawyers will explain what you need to know about partnership agreements in Texas.
Types of Texas Partnerships
A partnership is one of the most basic types of business organizations.
All you need to form one is two or more people engaged in a for-profit business. Legally speaking, a Texas partnership agreement is not strictly required. However, having this governing document is the best way to avoid internal issues as the business grows.
There are several types of partnership, and each will require a slightly different partnership agreement.
Texas partnerships can be:
- General partnerships (GP),
- Limited partnerships (LP),
- Limited liability partnerships (LLP), and
- Limited liability limited partnerships (LLLP).
Each type of partnership has different advantages. Generally speaking, which type of partnership you form depends on the role that each partner has in the business. Massingill Attorneys & Counselors at Law can help you decide which type of partnership suits your business the most.
Problems with Using a Partnership Agreement Texas Template
As mentioned above, using a partnership agreement template is not without risk. If you’re considering using a template for your Texas partnership agreement, here are the issues you may run into and the reasons why we strongly suggest against them.
Partnership Agreements Are Not “One Size Fits All”
From one business to another, there are certain things that remain relatively similar. However, the governing documents for those businesses may be very different. This causes a problem when you consider that most DIY templates are designed to cover as many situations as possible. As a result, using a template partnership agreement likely means that you miss out on some of the fine tuning you may need.
For example, a “partnership agreement” template may have some parts that apply to both a general and limited partnership; but at the same time, that single agreement will not work particularly well as either a Texas limited partnership agreement or general partnership agreement. Texas business owners should therefore be wary of how broad the templates are.
You Won’t Know What’s Missing
If you’re using a DIY template, then you probably don’t have much experience with these agreements to begin with. If that’s the case, then it is important to recognize that even if you understand what is in the template, you may know what is not in it. In other words, there could be crucial provisions missing that you are unaware of.
This is one area where the benefit of an attorney cannot be overstated. By having an attorney draft your partnership agreement, you can rest assured that the agreement contains every part that it should.
You Don’t Know Who Drafted the Template
Even on websites that appear reputable, there is no guarantee that a lawyer or legal professional drafted the template. In fact, in many cases it is just as likely that someone drafted the partnership agreement Texas template while referencing another online template.
When that happens, misinformation or poor drafting can propagate from one template to the next if various sites all use each other as a source. Unfortunately, there’s simply no way to know for sure.
You Won’t Receive the Personalized Advice or Drafting a Lawyer Provides
When it comes to drafting a limited partnership agreement, Texas business attorneys do more than just write out the document for you. Remember that one of the reasons a lawyer is expensive is the knowledge and training they have.
Drafting any kind of business document, whether it’s a contract or a partnership agreement, is a complex process. Consequently, attorneys receive training to spot relevant issues and understand the complexity of a given legal situation. If your partnership is unique in some way or if you have specific ideas about the direction of the business, a lawyer is available to discuss those ideas with you in real time.
An attorney can provide you with a custom agreement tailored specifically to your needs. While you may save some money, you won’t have access to any of that added value by using a template.
You Might End Up Needing a Lawyer Anyway
There are two reasons why a business owner might end up hiring a lawyer after using a template.
First, businesses frequently need legal help with a variety of issues unrelated to their formation. For example, a partnership may need help negotiating a contract with another business. If you’ve already hired a lawyer to help you draft your Texas partnership agreement, then it will be that much easier if you need other legal help later on. As an added bonus, a lawyer who has been with you from the start will be more familiar with you, your business, and your goals. This can allow them to provide more efficient and effective service.
More significantly, you may end up hiring a lawyer because of issues with the partnership agreement template you used. If the agreement is drafted improperly, you may run into conflicts with your business partner down the line. Depending on what the problem is, you may end up paying more than if you simply hired an experienced Texas business lawyer in the first place.
Templates Are Less Flexible Than You Think
Partnership agreement templates look like a good option because of how easy they seem to be. After all, what is simpler than filling in the blanks? Unfortunately, if there are larger changes you want to make, doing so may render the whole thing unusable.
While this is not universally true, some template agreements may be drafted such that changing one provision has an effect on several others. Without legal training and experience, this can have dangerous consequences.
Do You Need a Texas Partnership Agreement?
Massingill Attorneys & Counselors at Law offers business law services to clients across the state of Texas. If you and your business partner are ready to take the next step with your business, don’t bother with a template; our attorneys will make sure you have a robust governing document to help your partnership succeed.