October 30th, 2012 / Insight posted in

Alcohol problem causes concern

JJ writes: A partner in our business may have an alcohol problem, and possibly also a gambling habit — as a home-office based business, it is difficult to gather evidence. We are concerned that this could be a risk to the business and cause reputational damage. What steps should we take?

Situations like this give rise to potentially complicated legal issues, writes John Staniforth, a partner at Kingston Smith LLP, and legal advice should be sought at the outset. Assuming that you have a partnership agreement, that document should be consulted to assess what rights you have, such as suspension (which can be useful if you are investigating any allegations) or expulsion.

Problems with alcohol or gambling may not, even when they are serious, be grounds for action in themselves, particularly if the partner’s work is unaffected and his or her actions don’t affect others in the firm.

Therefore, you should concentrate on the effect that these issues are having on his or her performance. Poor performance is usually a ground for expulsion in professional services partnerships (check your agreement). Establishing poor performance is likely to be more straightforward than demonstrating that someone’s actions have damaged the reputation of the firm.

You will need to gather clear evidence of poor performance. This may take the form of examples of poor work and could be illustrated by client issues or comments coming out of performance reviews. The partnership agreement may also set out performance management provisions and these procedures should be followed.

Ultimately, the effect on the partner’s performance will need to be sufficiently material to justify whatever action is taken, and any procedures used to establish this should be fair and reasonable.