Partnership Service
Partner Reconciliations. Every partner. Every number. Every month.
Partner compensation disputes are one of the most common and most damaging problems in law firm partnerships, and most of them stem from one source: nobody is tracking the numbers accurately. Ethnum reconciles every partner’s capital account, draw activity, origination credit, and profit allocation every month so every partner sees the same accurate picture, always.
What Ethnum delivers
What Is Partner Reconciliation?
The financial foundation every law firm partnership needs — and most don't have.
A partner reconciliation ties each partner’s individual financial position — their capital account balance, draw activity, origination credit, and allocated share of firm profits and losses — back to the firm’s overall books. Done correctly and monthly, it ensures that every distribution is accurate, every partner sees the same numbers, and year-end K-1 preparation has no surprises.
Most law firm partnerships operate without formal monthly partner reconciliation. Capital accounts are estimated. Origination credit is tracked informally. Distributions are processed based on memory and approximation rather than documented calculation. The result is an accumulation of small discrepancies that surface at exactly the worst possible time — during compensation discussions, partner transitions, or a dispute that could have been avoided entirely with accurate records.
Ethnum performs partner reconciliation for law firms of all structures — equity partnerships, two-tier partnerships, of counsel arrangements, and hybrid compensation models. We map every reconciliation to your partnership agreement, not to a generic template, and deliver a clear, partner financial summary to every partner by the 10th of each month.
Capital Accounts
Each partner's equity position reconciled and confirmed monthly
Origination Credit
Tracked per partner against agreed methodology — no guesswork
Draw & Distribution Tracking
Every draw and distribution reconciled to partnership agreement terms
Delivery Schedule
Partner financial summary delivered by the 10th, every month
Your Point of Contact
One dedicated accountant who knows your partnership structure inside out
What's Included
Every aspect of partner financials — tracked, reconciled, and reported every month.
Every item below is performed by your dedicated Ethnum accountant monthly, mapped directly to your firm’s partnership agreement — not to a generic law firm template that may not reflect how your firm actually works.
Monthly Capital Reconciliation
Each partner's capital account reconciled monthly — contributions, draws, allocated profits and losses, and closing balance — confirmed against the firm's overall financial records to the penny.
- Opening & closing partner capital balances
- Profit and loss allocation applied per partnership agreement
- Capital contributions and withdrawals posted correctly
Draw & Distribution Tracking
Every partner draw and firm distribution tracked and reconciled against the partnership agreement — ensuring that what each partner receives matches what the agreement says they are entitled to receive.
- Monthly draw activity recorded per partner
- Distribution calculations verified against partnership terms
- Advance draw and guaranteed payment tracking
Origination Credit Reporting
Origination credit calculated and reported per partner every month using your firm's agreed methodology — whether percentage-based, formula-driven, or a hybrid model — with a clear audit trail from matter to credit.
- Origination credit calculated per the partnership agreement
- Matter origination tracked by attorney
- Month-over-month origination comparison per partner
Profit Allocation Reconciliation
Firm profit and loss allocated to each partner per the partnership agreement — whether by equity percentage, points system, or productivity formula — reconciled monthly so year-end K-1 preparation holds no surprises.
- Profit allocation computed per agreed formula each month
- Loss allocations tracked correctly
- Cumulative year-to-date allocation running total maintained
Partner-Level Financial Summary
Each partner receives a clear monthly summary showing capital position, draw activity, origination credit, and allocated share of firm results.
- Individual summary report per partner, delivered monthly
- Year-to-date cumulative figures included on every report
- Plain-language format — no accounting jargon
Year-End K-1 Preparation Support
At year end, your CPA receives a complete partner financial package — including capital accounts, allocations, draw history, and origination credit — ready for K-1 preparation.
- Full-year capital account activity per partner
- Profit and loss allocation schedules for each partner
- Draw and distribution history formatted for K-1 preparation
HOW IT WORKS
From your partnership agreement to reconciliations every partner trusts.
The process starts with understanding your partnership structure. Everything we do from that point forward is mapped to your specific agreement — not to a generic template.
The Problem We Solve
What happens when partner financials are tracked informally — or not at all.
Compensation disputes without clear data
Without accurate reporting, compensation disputes become difficult to resolve.
- Ethnum’s monthly partner reconciliation keeps discussions based on verified numbers.
Origination credit tracked informally
Informal tracking often leads to disputes at year end.
- Ethnum tracks origination directly from matter-level data with clear allocation records.
Unreconciled capital accounts
Many firms operate with capital balances that were never properly reconciled.
- Ethnum reconciles partner capital accounts using actual financial records.
Year-end K-1s requiring major corrections
Poor allocation tracking often creates delays and corrections during K-1 preparation.
- Monthly reconciliation keeps K-1 preparation organized and accurate.
Monthly Partner Reconciliation Checklist
What Ethnum reconciles for every partner, every month
Capital accounts reconciled to firm books — every partner's equity position confirmed against the firm's financial records
Draws verified against partnership agreement — monthly draw activity reconciled to agreed compensation terms for each partner
Origination credit calculated and documented — credit traced to source matters and calculated per the firm's agreed methodology
Profit allocation applied per agreement — firm-level profit and loss allocated to each partner using the agreed formula or percentage
Year-to-date totals maintained — cumulative figures kept current so year-end reporting requires no reconstruction
Individual partner summary delivered — each partner receives their own financial summary by the 10th of every month
Before Ethnum: most new partnership clients have never had a formally reconciled capital account or documented origination credit calculation
~70%
Average Cost Savings vs. In-House
Controller-level partner financial management at 60–70% less than a full-time hire.
Who This Is For
Partner reconciliation for every kind of law firm partnership.
If your firm has two or more partners with capital accounts, draws, or origination credit — this service is built for you. It scales from two-partner boutiques to multi-office firms with complex compensation structures.
Multi-Partner Firms
Three or more partners with distinct capital accounts, origination credit arrangements, and draw schedules. We reconcile every partner's individual position monthly and give managing partners a consolidated view of the full partnership picture.
Two-Partner Practices
Even a two-partner firm benefits enormously from formal monthly reconciliation. Clean records prevent the informal assumptions that accumulate into serious disagreements — and make the eventual transition or buyout far simpler.
Firms Adding a New Partner
Bringing in a new equity partner requires clean baseline capital accounts, a documented buyout or buy-in calculation, and a formal reconciliation structure going forward. Ethnum establishes the foundation before the new partner joins.
Firms After a Partner Departure
When a partner exits — voluntarily or otherwise — their capital account needs to be formally reconciled, their origination credit accurately calculated to departure date, and their final distribution correctly documented. We handle the full departure reconciliation.
Complex Compensation Firms
Points-based systems, productivity formulas, hybrid equity and non-equity tiers, of counsel arrangements — we map to your actual compensation structure, however complex, and reconcile consistently against it every month.
Firms Preparing for M&A
If your firm is exploring a merger, lateral hire, or acquisition, clean and formally reconciled partner financials are among the first things any counterparty will review. Ethnum gets your records into the state they need to be in.
Why This Matters
Partner disputes are a leading cause of law firm dissolution — and most are preventable.
10th
Partner reports delivered every month — never late, never estimated
100%
Partnership agreement alignment — every reconciliation mapped to your terms
~70%
Cost savings vs. a comparable in-house controller managing partner financials
48h
Onboarding — from agreement to first reconciliation in progress
What monthly partner reconciliation prevents:
- Origination credit disputes — every dollar of credit traced monthly to source matters and calculated per the agreed methodology, leaving no room for end-of-year reinterpretation
- Capital account confusion — every partner's equity position formally reconciled against the firm's books so there is never a question about what their stake is worth
- Draw overpayments and shortfalls — every draw verified against the partnership agreement before it is processed, catching discrepancies in the month they occur rather than at year end
- K-1 surprises — year-end tax allocations match the monthly records partners have been seeing all year, eliminating the shock of an unexpected tax liability
- Buyout and transition complexity — when a partner exits or a merger occurs, formally reconciled capital accounts make the transaction calculation straightforward rather than contentious
- The trust deficit that builds from financial opacity — when every partner sees the same verified numbers every month, the conversations shift from questioning the data to discussing what to do with it
Your Monthly Deliverables
What lands in your inbox by the 10th of every month.
Three deliverables, fixed schedule, no chasing. Every partner receives their individual summary. Managing partners receive the consolidated firm view. Your CPA receives the year-end package at the end of every year.
- Delivered by the 10th — Per Partner
Individual Partner Financial Summary
Each partner receives a clear monthly summary of capital position, draws, origination credit, and allocated profit share.
- Opening and closing capital account balance
- Draw activity and distribution detail for the month
- Origination credit calculated and attributed by matter
- Delivered by the 10th — Firm-Wide
Partnership Reconciliation
Managing partners receive a consolidated view of partner capital, draws, origination credit, and profit allocations across the firm.
- All partner capital accounts consolidated and compared
- Total firm draw and distribution activity for the period
- Origination credit summary across all partners
- Annually — Year-End
K-1 Preparation Package
At year end, your CPA receives a complete partner package with capital activity, allocations, draw history, and origination schedules — ready for K-1 preparation.
- Full-year capital account activity per partner
- K-1-ready profit & loss allocations
- Complete draw and distribution history per partner
Works With Your Stack
We work inside the software you already have.
No migration, no disruption. We connect directly to your existing practice management and accounting platforms to pull the matter-level and financial data we need — you don’t need to export, organize, or reformat anything before we start.
What Attorneys Say
From partners who finally have numbers they all agree on.
Common Questions
Partner reconciliation — answered plainly.
A partner reconciliation ties each partner's individual financial position — capital account balance, draw activity, origination credit, and allocated profit share — back to the firm's overall books. Done correctly and monthly, it ensures every distribution is accurate, every partner sees the same numbers, and year-end K-1 preparation holds no surprises.
Monthly reconciliation is strongly recommended. It catches discrepancies early, supports timely draw processing, and ensures every partner has an accurate view of their financial position throughout the year — rather than discovering errors at year end when they are far harder and more expensive to resolve.
Ethnum reconciles each partner's capital account, tracks all draws and distributions against the partnership agreement, calculates and reports origination credit by partner, allocates profits and losses per the firm's agreed methodology, and delivers a partner-level financial summary by the 10th of every month. Year-end K-1 preparation support is also included.
Yes — significantly. Most law firm partner disputes about compensation, distributions, and origination credit stem directly from a lack of transparent, consistent financial reporting. When every partner can see the same accurate data every month, disagreements about what the numbers say are replaced by conversations about what to do with them.
Yes. Ethnum builds partner reconciliation reports that reflect each firm's specific partnership structure — including equity partners with capital accounts, non-equity partners on compensation arrangements, of counsel relationships, and associates on performance-based bonuses. We map to your partnership agreement, not to a one-size-fits-all template.
Pricing depends on the number of partners, the complexity of the partnership agreement, and whether partner reconciliation is bundled with ongoing bookkeeping or financial reporting. Most two-to-five partner firm engagements range from $500–$1,400/month — typically 60–70% less than a comparable in-house controller. Schedule a call for a firm-specific quote.
Ready for partner financials every partner actually trusts?
Schedule a free 20-minute discovery call. We’ll review your current partner tracking setup, identify every gap, and show you exactly what Ethnum’s monthly reconciliation will look like for your firm — with no obligation.