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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If you are a partner you have an ownership stake, so if you need to fund an expansion or a settlement the money comes from the partners. Basically it means you have skin in the game. I am not sure if lawyers have a specific way of doing it but if it were a regular company the buy in would be rational to the amount of the company they own. The ‘buy in’ is the money you use to stake your ownership, and it is the money you use to make improvements and investments. Say you get bought out after you did an initial buy in and made subsequent buy ins, you would have to be paid out your original amount + all other buy when the company is sold. This is a great way to make $$$, but it is risky.
If you give up your ownership stake (so an ex-partner) then you have no claim anymore. I am not sure the episode of suits you are talking about but if the partners still own part of the firm, then this literally cannot be concealed from them, it would constitute fraud.
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