Law Firms Take Notice: When Is Someone a Partner and Not Just an Employee?

A Delaware Supreme Court Opinion Offers Useful Guidance — Even Though It Decided a Different Question

When does someone cross the line from employee to partner? In businesses where equity negotiations stretch over years, Delaware courts look beyond labels. They examine whether the parties objectively agreed on the essential terms of a partnership — and whether their conduct matched that conclusion.

The Delaware Supreme Court’s decision in Handler v. Centerview Partners Holdings LP, 2026 WL 758428 (Del. Mar. 18, 2026), did not directly resolve the employee-versus-partner question. The issue before the Court was narrower: whether collateral estoppel barred an employee’s compensation claims based on observations made during an earlier partnership-standing trial. The Court held it did not and reversed.

But the opinion’s recounting of the underlying dispute — drawn from Vice Chancellor Glasscock’s Standing Opinion — illustrates the factors Delaware courts weigh when determining whether a partnership was formed.

Handler joined Centerview in 2008 under an employment letter providing formula-based compensation. The parties spent years negotiating his possible partnership in Centerview Partners Holdings LP (“Topco”). They met on November 8, 2012, but left with conflicting views. Handler claimed an oral partnership agreement; the founders maintained they had only modified his compensation. Applying an objective contract-formation test, Vice Chancellor Glasscock held no partnership was formed, pointing to:

• Post-meeting emails indicating neither Handler nor his colleague believed a partnership existed.

• Material terms that remained under negotiation for years.

• Compensation that stayed at the founders’ discretion, inconsistent with the alleged partnership.

• Absence of loss-sharing and governance rights.

• Handler’s own third-party communications reflecting no partnership had been reached.

Handler did not appeal. He appealed the subsequent dismissal of his employee-compensation counterclaims on collateral estoppel grounds. Justice Valihura reversed, holding that the standing opinion decided only whether Handler was a partner — observations about employee compensation terms were not essential to that judgment and could not foreclose his claims.

Although the holding concerns collateral estoppel, the opinion is worth reading for a second reason. The partnership analysis offers practitioners a concrete illustration of what Delaware courts find lacking when an employee claims to have become a partner through informal negotiations.

Read the full opinion (PDF)

This post is not legal advice and is merely offered for informational purposes. Consult an attorney for a recommendation appropriate for your specific circumstances.