How to Resolve Partnership Disputes

Partnership Dispute Lawyer

Finding Effective Solutions to Business Partnership Disputes

It is almost inevitable that, at some point in a business partnership, disputes will occur between partners. When disputes arise, how they are handled can make all the difference in what happens to a business. There are several different methods for seeking to resolve partnership disputes. If done carefully and properly, dispute resolution can protect each partner’s interests without hurting the daily operations of the business or impacting its long-term success.

Business partnership disputes are often expensive and time-consuming. An experienced partnership dispute lawyer can help you find the most effective method of resolving your dispute, while safeguarding your financial and legal interests and reducing detrimental effects on your business.

Methods for Resolving Partnership Disputes

Some business owners imagine that the only way to protect their interests is to file a lawsuit against their partners. But in actuality, litigation should be a last resort. Litigation is very expensive and contentious and can have a negative effect on the profitability of a business and, potentially, even the company’s brand reputation since lawsuits are a matter of public record.

This works to the detriment of all partners. So how can a business owner resolve a partnership dispute without filing a lawsuit? Alternative dispute resolution can allow partners to resolve their differences in a more cost-effective and less adversarial way that gives them more control over the outcome.

Private Mediation or Arbitration

If you are involved in a dispute with your business partner, consider hiring a private mediator or arbitrator to guide you toward a resolution. This individual serves as a neutral third party to help partners explore their options. The mediator or arbitrator does not have the authority to make legally binding decisions. Private mediation or arbitration, however, helps the partners to understand possible solutions to their conflict that they might not have thought of themselves. This process allows the partners to take part in a solution in which they have a say, rather than letting a judge make a decision for them.

Court-Ordered Mediation or Arbitration

Business disputes that result in the filing of lawsuits may be subject to court-ordered mediation or arbitration. This is an increasingly popular tool in American courts. In this case, a judge will order the parties to undergo arbitration or mediation with a person assigned by the court, and only after this process has been attempted will the court schedule the dispute for trial. This clears court dockets by increasing the chances of settlement. In many cases, mediators or arbitrators will have the authority to enter settlements as binding court orders. In other cases, arbitrators have the authority to hear disputes and make decisions, which are entered as court orders. The decision can be appealed to the court. Both systems are faster and cheaper than formal litigation.

Civil Litigation

If these alternative dispute resolution methods do not lead to satisfactory outcomes, business partners may decide to file a lawsuit and have their conflicts resolved by a judge or jury. While this may be the only method left of resolving the dispute, it often takes several months to simply schedule a trial date—months during which the profitability and assets of a business can be significantly impaired. And if you hope to remain partners in the business, litigation can potentially make it impossible for that to happen because of resentments that may linger once the case is over.

If you are involved in a conflict with a business partner, it is to your benefit to get the help of a lawyer for business partnership disputes as soon as possible. The earlier you address the dispute, the better chance you have of resolving it in a way that does not harm your business.

What If Partners Can No Longer Work Together?

If partners can no longer work together, some options for resolving what has become an untenable situation include:

• Dissolution of the company. Dissolution may be voluntary if partners agree on it, or judicial, meaning decided by a judge, when partners can’t agree.
• One partner’s buying the other partner out. If partners agree on the buyout, a valuation of the business will need to be performed and the terms of the buy-out negotiated.
• Selling the business. If neither partner wants to keep the business, selling to new owners may be an option.

If you have a partnership agreement in place, what happens to the business if one or more partners want out may be dictated by the terms in the contract.

Avoid Disputes In the First Place with a Business Partnership Agreement

When you are first forming your business partnership, it is important to put a partnership agreement in place. A partnership agreement outlines the way the business will be operated and the roles and responsibilities of each partner. It can contain as much detail as necessary based on business objectives. Some of the main terms that partnership agreements typically contain are:

• How much ownership each partner has in the business
• How profits and losses will be divided
• How business decisions will be made
• How long the partnership will last
• What each partner’s expectations are for the business
• And, as noted above, what will happen if a partner or both partners want out of the business, or if one of the partners dies.

Partnership agreements may also stipulate the method for resolving business partnership disputes, such as through arbitration or mediation.

Contact an Experienced Lawyer for Business Partnership Disputes

Experienced partnership dispute lawyer Andrew Weisblatt understands the types of issues that can lead to partnership conflicts. He has helped business owners resolve legal conflicts quickly and effectively for 25 years. The Weisblatt Law Firm offers dispute resolution services for partnerships, boards of directors, shareholders, and all other business relationships. Additionally, if you are just entering into a partnership, our knowledgeable business attorney can draft a partnership agreement that may help keep partnership disputes from arising in the first place.

Call (713) 666-1981 or contact us online to schedule your free phone consultation today. We will ensure that you have access to the best dispute resolution tools for your business interests.