Been watching suits lately and I’ve gotten to the point in season 6 where they use the buy in fund to finance a settlement, and overall I’m confused as to the idea of what a buy in is. They also mention concealing it from the partners who have left the firm, because if they found out the ex-partners would come gunning for their money. So, what is a buy in, and how does it work if you leave a firm after you’ve paid the buy in? Are you entitled to the money, or does it stay with the firm?
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I will fully admit that I haven’t watched much of Suits, and while I am a lawyer, I am not a corporate lawyer (which is what the Suits people are). But I know enough to be dangerous.
As other people have mentioned, a buy-in is similar to buying stock in a normal company. However, most people who make partner do not have that kind of money to buy in immediately; instead, it is withheld from their paychecks over time, like a sort of no-interest loan. If you eventually leave, you do get that money back, though again it’s often over time, to avoid taking out a huge chunk of the firm’s money right away and to avoid a run on the firm’s finances.
Since I haven’t really seen Suits, I’m not sure if by “using the buy-in fund to finance a settlement,” they mean using it as liquid cash for a case they’re personally involved in as a company, or if they’re somehow spotting the money for a client dealing with a settlement. Either way, the problem is that you’re basically taking cash directly out of the firm’s long-term pool. People who are getting money slowly over time after leaving may demand all their money now, in case the company goes under and can’t pay *anyone*, exactly like a bank run with people pulling their money out now to avoid losing it.
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