How One Bad Lease Clause Can Quietly Reduce Partner Distributions

In a firm where every dollar counts, partner distributions are watched closely. Budgets are scrutinized, capital expenses are timed strategically, and leadership keeps a close eye on any line item that could tip the balance. Yet one of the most overlooked risks to partner profit is often hidden in plain sight: the equipment lease agreement.

A single clause can quietly erode cash flow and reduce expected distributions. It might not raise a red flag at signing, but over time, its impact becomes clear: unnecessary payments, unexpected extensions, and fees that never should have been approved in the first place.

The Silent Cost of Poorly Structured Leases

Some lease terms create problems from day one. Others only become costly without the right guidance.

Watch for:

• Evergreen clauses with automatic renewals

• Rigid return windows and vague notice periods

• Residual payments that extend past the equipment value

• False floors that inflate monthly costs (never used by CoreTech)

Even Fair Market Value leases can help or hurt, depending on how they’re structured. With a strategic partner, they offer flexibility. Without one, they add risk.

Poorly built leases may look fine upfront, but they often lead to reduced flexibility and lower profitability over time.

The Impact on Firm Financials

When equipment payments extend longer than intended, or when outdated hardware continues to rack up fees, the firm isn’t just wasting money; it’s missing out on opportunities. Funds that could have gone toward distributions, talent investments, or technology upgrades are redirected to cover costs that could have been avoided with better contract terms.

This issue isn’t about spending less. It’s about spending smarter.

Lease Reviews Deserve the Same Scrutiny as Client Contracts

Firms review client agreements with care. Terms are vetted, risk is weighed, and every clause is considered for downstream impact. That same mindset should be applied to internal contracts, especially those that affect profitability over multiple years.

Taking the time to understand, negotiate, and manage lease clauses gives firms control over costs, visibility into timelines, and protection against surprises. It’s not legal review, it’s financial due diligence.

How CoreTech Can Help

CoreTech helps law firms avoid costly lease structures by building transparency into every contract. We review current agreements, identify risks, and ensure new leases are designed to protect cash flow and support long-term goals. From evergreen clauses to end-of-term planning, we help firms eliminate quiet profit leaks before they grow.

Contact CoreTech Leasing at info@coretechleasing.com to review your lease terms with a partner who puts your financial outcomes first.