Reading The Fine Print

As a lifelong New Yorker and sports fan you can imagine I’ve been privy to some headline-capturing controversies. But perhaps none quite on the quantum scale as last week’s announcement that the Jets had acquired Tim Tebow from the Denver Broncos, thus igniting a season ticket-holder’s fantasy quarterback controversy with the team’s incumbent signal-caller Mark Sanchez.


Despite all the assurances from the coaching staff and Tebow himself that he knows his will be a backup role, the 24-year-old Floridian, who makes up for shortcomings in areas such as passing skill with unbridled drive and determination, isn’t coming to the Big Apple to carry a clipboard.


But what I find incredulous about this high-profile vignette, is that Jets’ management, somehow failed to notice or didn’t bother to read the fine print of Tebow’s agreement which mandates  that any team trading for him must pay Denver roughly $5 million in advance salaries for 2012-2014. That clause promoted other teams to – pardon the deliberate pun – pass on the deal. Apparently they had better legal proofreaders.


Now imagine exhibiting the same carelessness when reviewing partnership agreements. And while I’m on the subject, have you reviewed your firms’ agreement lately?


Do yourself a favor and dust it off.


Does it need updating since it was written up? Has the firm’s structure changed and does the pact contain the requisite number of key provisions?


How about mandatory retirement? A cap on retirement benefits? Is there a provision for resolution of disputes? Percentages for sharing profits and losses? Procedures for partner death or incapacitation? Guaranteed payments for capital contributions?


If you’re like many CPA practices, circumstances may have changed dramatically over time and you and your partners may have been so preoccupied with clients, new business developments and even the still-uncertain economy, they may not have noticed.


The agreement is often referred to as the Holy Grail of an accounting firm, yet inexplicably many firms rarely refer to it or worse, neglect it when it’s overdue for an update. It usually takes six months to update one, and that tends to usher in procrastination.


With 75 percent of the membership of the AICPA eligible to retire by 2020, it might not be a bad idea to give the agreement a look-see and start planning for the future now.


Ask the Jets what happens when you don’t read the fine print too closely.