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THINK ABOUT YOUR ASSETS � Don’t put any significant assets in your law firm. In fact, consider stripping out furniture, fixtures, equipment, even artwork, and leasing it back to your practice. � Your law firm shouldn’t own any real estate itself. Instead, consider putting important assets in separate limited liability companies and then leasing these assets back to the firm. This will protect them from both creditors of the firm and your general creditors. � Each business has separate and distinct liabilities; don’t let the liability of one take down the other. TREAT AS TWO BUSINESSES � Owning real estate and managing a law firm are two separate businesses and should be treated as such. � To avoid conflicts of interests between partners, you may want to consider offering partners the right to participate in both opportunities — but the economics may not be easy. You will need to value both businesses each time someone buys into the practice. � Determine your strategic objectives: diversification or focus. CONSIDER TAX IMPLICATIONS � In general, real estate activities will be passive investment activities for most participants. Determine the tax impact for the partners of having either passive income or passive loss flowing through to their individual returns. � Plan accordingly — make sure your position is fair and reasonable. Steven Thayer is a partner in Handler, Thayer & Duggan in Chicago. Contact him at [email protected] Related Article: Finding Office Space: To Buy, or Not to Buy

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