We have a consulting firm that is a partnership of three people and one of them is not pulling their weight in terms of getting more business and creating the revenue streams for our practice. Have any of you run into this? How did you handle this type of situation?

Did you have an exit clause in your partnership agreement?

Just went through this. We wanted one guy off payroll until he found billable work. There were 5 of us, 2 on one side, 2 on the other side. The middle guy would not vote either way. After a 5 hour meeting, blood was spilled but nothing was resolved. The 2 of us with the revenue left and started another company. The "dead weight" left behind is dying now. So, IMO, it's an all-hands, honest assessment and you don't pay if they are not contributing. And you should have an agreement in place that spells this out.

Unfortunately we did not so any suggestions like bubbatex will be helpful

I think you should sit him down and try to buy him out. A fair way to do that is to set a price for the business based on revenues and calculate there share of the revenue and then set a unit price i.e. 25 cents per dollar revenue but give every partner the right to buy the others share so it will be a fair price