The Automat Handshake

Thoughts on finding and becoming a great financial spouse

In 1965, four NYU Law classmates looked at office space on Lexington Avenue, stopped at a nearby Automat, talked over coffee about starting a law firm, and shook hands. That handshake was the entire partnership agreement of Wachtell, Lipton, Rosen & Katz, and it still is. Sixty-odd years on, the most profitable firm in America per partner has never had a written partnership agreement. The shop that documents everyone else’s most sensitive matters, paradoxically, runs itself on little more than trust.

One could view a law firm operating without a written agreement as hypocritical and unwise. I don’t. First, Wachtell prints money, and it’s one of the smartest collections of lawyers in the world; there’s a method to the madness. Second, after learning about their unique structure years ago, I instantly recognized the trust-based ethos from my lifelong study of Berkshire Hathaway. The same unstructured approach has worked startlingly well at Berkshire for just as long. That is no accident. Warren Buffett and Charlie Munger deliberately ran the company with no more process, procedure, or pomp than necessary.

What looks crazy at first often has something to teach. The most useful lesson I have taken from the Automat Handshake has nothing to do with law firms. It’s that finding a spouse who deserves your implicit trust may be the very best financial move one can make.

A seamless web of deserved trust

Berkshire has explained its governance approach extensively. Buffett decentralized nearly every aspect of Berkshire, except capital allocation, and issued as few edicts as he could get away with. According to him, the error is hiring people who need supervising, not failing to supervise them.

Charlie Munger said the highest form a civilization can reach is “a seamless web of deserved trust”: not much procedure, just totally reliable people correctly trusting one another. And Buffett has long maintained that integrity carries more weight than legal fine print. “You can’t make a good deal with a bad person,” he has quipped. The rule read backward is even more instructive: with the right person, you hardly need a deal at all. In one of the more colorful examples, he bought Nebraska Furniture Mart from Rose Blumkin on little more than a handshake and Mrs. B’s word. There was no audit, no inventory count, and no diligence to speak of. Watch the press conference sometime; the two of them are clearly enjoying the process as much as the proceeds.

Like Berkshire, Wachtell can run on a handshake because the partners chose one another so carefully, and have behaved so honorably since, that elaborate documentation—or any documentation—became unnecessary. Marty Lipton said as much himself. His February 1990 memo to the firm, “The Firm At Twenty-Five,” is a numbered list of thirty-five principles, and the twenty-third reads, in its entirety: “Firm is not a business; old fashioned professional partnership; no partnership agreement—only a handshake among friends.”

Once you understand the 60-page contract’s inherent limits (ironically, it helps to be a lawyer here since we know better than anyone that a contract does not stop bad behavior; it only gives you a remedy afterward), the only people you’ll want around are the ones whose behavior never makes it necessary. And now, being married almost a decade and reflecting on Charlie’s words regularly, I understand how lucky I got. I married exactly that person. I highly recommend finding someone similar.

There, but for the grace of God, go I

But I have bad news I’m a little sheepish admitting in an article that’s, between the lines, supposed to showcase my competence: I had no idea how to find that person. I had neither an analytical framework nor a formal checklist of must-haves or deal-breakers. Nothing beyond reading some books about Buffett and some basic horse sense spared me from a mediocre or bad financial spouse. I got lucky. My wife and I aren’t the same religion or, in many years, the same political party. She hates sports; I love them. She lives to eat; I eat to live. We had a few real incompatibilities on paper, but my gut told me my wife would be the one. I was right, and I’ve thoroughly enjoyed being right.

In retrospect, I can provide one lead. What has mattered most—and what I spotted early—is that we’ve always communicated openly. After almost ten years, our relationship has felt like one big, long, free-flowing conversation where we discuss everything important—coolly, rationally, and thoroughly. It’s a friendship and a partnership above all else. Yes, we fight; occasionally we have a big one. But fighting is never our first instinct. My wife deals with small problems before they become large ones, and no subject, money included, is too uncomfortable for her. I know with as much certainty as I know anything that this trait is worth more than any asset she could have brought to the marriage. Some people marry for money. I suggest marrying someone who can talk about it.

I was luckier than I was good, but I have a sneaking suspicion you’d rather be good than lucky. To do that, it helps to look closely at why finding a great financial spouse is so important, and what it takes to be that person yourself.

First, the stakes: why it’s so important to find such a person

Marriage is the biggest financial decision of your life, yet it’ll never feel like one. That’s precisely the danger. Tuxedos and gowns. An extravagant party with all your friends. Likely an exotic honeymoon to cap it off. Marriage is everything that signing for a new minivan under the harsh UV light of a cubicle at your local Toyota dealership—a financial transaction that I know from experience feels very financial, deep in your bones—is not.

Whatever your marriage is spiritually and romantically, it’s a contract. And one of your main jobs, if you’re doing it right, is screening for someone with whom a deal with only a few, loosely constructed terms will hold for sixty years. Someone, in other words, who deserves your implicit trust.

Most people know the pitfalls of a bad financial marriage. At least from the male perspective, there’s the spendthrift wife who makes Imelda Marcos look like a Puritan. (Women, I assume, have their own version: a boat or a buddy’s app that is definitely going to work this time.) Then there’s divorce: the most reliable destroyer of household wealth around. A bear market can take your portfolio down 30 percent. But historically, it will recover within a few years. Divorce takes 50 percent and adds a second rent.

Whatever ideal life you were building for yourself—perhaps the early exit or the in-house job at half the pay—is gone, and you generally find yourself rebuilding in your forties or your fifties. Making matters worse, there are thorny, lawyer-specific issues to manage, like a capital account you can’t touch until you leave your firm or a partnership interest whose goodwill your spouse’s expert values one way and yours another. Divorce is one of the few places where being a lawyer who owns a piece of the business works against you.

The advantages of a great financial marriage are subtler and undervalued. Personally, I see them most clearly by examining how well two ordinary people would perform in a three-legged race against a superhuman talent tied to someone who, putting it mildly, is not bringing their ‘A’ game.

Running that three-legged race with a bad financial partner—someone with an irresistible impulse to flee the course, mid-race, to buy scratch-off tickets at the nearest liquor store, or worse, with someone who simply refuses to run at all—is how you get golf cart financial horsepower out of a Porsche engine. Case in point: neither my wife nor I is fast. As a little leaguer, I was often told I rounded first base like there was a refrigerator on my back. But tie Usain Bolt to the lotto ticket junkie, and I still like our chances. After all, we’re the only ones moving in the right direction, however slowly we plod to the finish line. Substitute “eighth-year associate” for Bolt and “kept spouse” for the lotto junkie, and the illustration stops being silly. Maybe it becomes a little too real.

To be sure, no one can predict the future. Plenty of people did everything right and still spent years bickering over money before divorcing. Others stumbled backward into the best thing that ever happened to them. I certainly can’t offer you bulletproof marriage advice. I only encourage you to think hard about the financial stakes.

A word on prenups

By now, most lawyers reading this have thought about prenuptial agreements. I have nothing against them. But a prenup is defensive: it sets the terms of a marriage that has already failed, and it does so at the one moment when neither party wants to argue about anything. Sign one if you like; it’s certainly the most prudent, safest thing for an advisor to recommend. It will sit in a drawer unread if you chose well, and it will be the first exhibit if you didn’t. Either way, the document won’t make someone the kind of partner Wachtell or Berkshire would take.

Being this person

The better plan is to make a prenup irrelevant by finding a good spouse. Munger said you do that by deserving one. A be-good-and-deserve-good mentality is the same rationality—so simple to preach and so hard to practice—that made Buffett, Munger, and so many Berkshire shareholders so rich. Of course, it is hard to attract someone who lives by values you don’t, and illogical to expect their admiration. Nevertheless, people try every day.   

Deserving behavior in a financial context is not complicated. Yet forthrightness—about what you make, what you owe, and what you spent on the thing you didn’t mention—is woefully absent from some marriages. So are agency and self-education. A marriage in which one person handles the money and the other buries their head in the sand is a fiduciary relationship, not a partnership. Communication is another one you’d think need not be called out, but a partner who tells you about the $4,000 problem this week is worth many multiples of the one who tells you about the $40,000 version next year. Finally, boring, favorable consistency—being the same person in 2030 that you are in 2026 and were in 2022 with respect to money—is critical. Trust isn’t built with grand gestures. It’s built by behaving well for years on financial matters too small to litigate.

Striving to deserve a wonderful partner pays dividends beyond marriage, too. Munger and Buffett have credited much of their success in marriages, friendships, and business to choosing the right partners. “Tell me who your heroes are,” Buffett has said, “and I’ll tell you who you’ll turn out to be.” And Munger didn’t limit himself to the living. He was fond of making friends with those he called “the eminent dead.” He studied the lives and ideas of history’s greatest thinkers to internalize their wisdom. To his great enjoyment, edification, and financial gain, he treated them almost like personal mentors.

The bottom line

Warren Buffett has said the most important decision you will ever make is who you marry. It’s more important than any job, any investment, or any house. I agree, and would add two addenda:

First, it is also the most dangerous financial decision precisely because it will never feel like one. It will feel like the opposite of finance, and that’s good; you’re doing marriage wrong if it feels like drafting loan covenants. But this is exactly why financial thinking has to start before the wedding, not after.

Second, a great partner will enliven and enrich most aspects of your life; marriage is just one piece—but the most important piece, to be sure—of a larger mosaic. Deserving that partner takes work, but it’s well worth it. Choose well enough, and you will spend the next sixty years barely referring to the terms of your agreement.

Four guys in an Automat managed it. So can you.