a clean slate
For some architects who parachute from partnerships, dividing and conquering is the key to landing on their feet. Others prefer to walk away unencumbered. Maryann Thompson, AIA, of Cambridge, Mass., chose the latter strategy when she and her former spouse, Charles Rose, went their separate ways four years ago. Rather than dissolve the practice as a legal entity, Thompson signed over the corporation documents to her ex-partner, with the understanding that she could have free access to the firm's archives. Because she and Rose had both been principal in charge on every project, trying to divvy up project ownership and liability would have been too messy, she says. But doing away with the practice hadn't made sense to her either. “It felt too destructive to me to take that practice and say it's gone,” Thompson says. “I liked the idea of starting with a clean slate. I felt like I would be fine, and I have been.” She did, however, take three staff members and two local projects with her. Today, Maryann Thompson Architects, which focuses on sustainable design, has grown to 12 staff and 22 projects. “It's amazing how easy it was just to jump back up,” she says.
Easy, that is, except for one detail that often gets overlooked in separation agreements: how to credit past projects. “I didn't realize that in signing over the corporation documents, the attribution of projects could be changed retroactively,” Thompson says. She points out that when an existing corporation changes its name to reflect the new ownership, it is allowed, by law, to identify past projects by the firm's new name. This is an important issue, especially for a firm whose work is published frequently. “It should be agreed upon explicitly when a firm breaks up,” she says. “I do have an ethical right to call the projects by the former name of the firm. You think of architecture as an art form, and the author's name is historical fact. However, copyright laws don't consider architecture to be something that has a stable authorship.”
While architectural management courses failed to prepare her for that scenario, another lesson did translate: “Just as you learn that liability is decreased by a lot of communication with the client, I actually think that's true with a breakup,” Thompson says. “Openness and gratitude for the experience that you had together can help to keep things easy in terms of sharing photos and storage areas. You try to remember all of the good things and bring them into the present relationship.”leveraging relationships
Indeed, a civil breakup can lay the foundation for a new venture, as Doug Graybeal, AIA, discovered when he left Cottle Graybeal Yaw Architects, Aspen, Colo., last year to pursue an interest in green design. He credits an up-to-date separation agreement for making the parting virtually pain-free. (The contract had recently been adjusted to make it affordable for new partners to join and for the firm to buy out those who leave.) To avoid some tricky insurance issues, Graybeal left all the projects on the table but is being paid as a consultant to manage the work for which he was principal in charge. The agreement also gave him access to project files and promotional photography. “I'd put the relationship akin to a 25-year good marriage,” Graybeal says. “It's not a divorce but a separation of ways, with 110 percent support. I think it's so critical to keep professional relationships. There's more to it than money.”
“Take the high road,” Hugh Hochberg says. “If that means swallowing a little ego, so be it.” Likewise Chris Hays, who left William McDonough & Partners, gave several months' notice, and agreed to consult through the transition period with clients. He also complied with an unspoken agreement not to co-opt employees or clients. In return, the firm has been generous about recommending him for some smaller-scale projects that it's turned down.
In an ambitious startup, there's more at stake. Jeff Davis managed to meet the terms of his separation agreement while gearing up quickly for community planning projects. In addition to the 22 people he was allowed to pluck from the old office, Davis merged with a small landscape architecture firm that gained him a supporting cast of office manager, CAD operator, and operations manager. He also offered four of the talented younger architects equity in the new firm. “It was an opportunity for them to emerge from deep stratification in the old firm and be leaders in the new one,” he says, “and it proved to be a smart move.”
There are other ways to back up a practice while getting one's bearings, and there's something to be said for a calm, unhurried approach to starting over. Inspired by a friend who has successfully lived life on the edge, Bob White, AIA, left Scheurer Architects in Newport Beach, Calif., last year at age 39 to follow his dream of designing custom homes. Intimidated by the idea of plotting a long-term plan, he decided go away quietly for a while and focus on a couple of projects.
White works by himself in a small rented office on the main shopping street in Laguna Beach, taking on several multimillion-dollar coastal homes at a time. To get the projects through documentation phases, he collaborates with an architect friend who runs a larger office. “He's got the staff and technology for us to take on projects we want to do, and it's the key to my effort to keep my own quiet environment,” White says, adding: “I tend to be more casual. I wanted this to be a comfortable place for my clients to come to, where I could leave my door open and get the music going. But I also wanted to be downtown where there's activity and a buzz in the air. It turns out clients love coming here. They can do a little shopping here by my office, or we'll go to dinner or lunch.”
Rather than put his own moniker on the door, White named his new practice Forest Studio, after the street on which the office is located. He says it will allow the firm to grow in different ways. “If you know Laguna Beach, you know Forest Avenue,” White says. “I love the concept of my first space paying homage to my leap of faith. I said that wherever I end up in five or 10 years, I'll keep the name, and in my heart Forest Studio will always bounce me back to when I took the leap.”
cheryl weber is a contributing writer in severnapark, md.dotting the i's
When a partner leaves, the most contentious issue may be the potential loss of clients and employees. Paul Lurie, an attorney at Schiff Hardin, Chicago, and the author of Ownership Transition: Options and Strategies (published by the American Council of Engineering Companies), says noncompete laws vary by state. But generally it's illegal for a partner to solicit an existing client before he or she leaves the firm. On the other hand, if a client decides to terminate the contract with the former firm after the partner leaves, the partner isn't held liable for interfering with the contract. The same rule applies to employees, unless negotiations dictate otherwise.
Exiting partners also need to be clear about their liability for completed projects. Frank Musica, a risk management specialist at Victor O. Schinnerer & Co, Chevy Chase, Md., says that if the old firm continues its professional liability insurance, the departing partner is typically covered for everything he or she did while at the firm. But if the remaining partners discontinue their policy, the one who left is unsafe. They might, for example, buy a cheaper policy that doesn't provide retroactive coverage. Or, unbeknown to the ex-partner, they could let coverage lapse until they get the office going again.
“The exiting partner could purchase coverage for a new practice, but it probably won't reach back to what he did with the other firm,” Musica explains. In another scenario, if the partners are discontinuing the entity and going their separate ways, they often will pitch in to pay for a tail policy that covers claims on past work. Their new insurance will cover for new efforts, and the insurance they buy together will cover for old work.