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, How to Resolve Partnership Disputes

Partnership disputes within a company can be messy and time-consuming. An employment lawyer California can help you handle conflicts effectively. Legal counsel can assist you in finding a solution that meets your needs and ideally keeps the company functioning. 

Partnership disputes can be frustrating, but they’re very common in business. If you’re dealing with a business dispute, several options range from legal solutions to out-of-court options. 

Create a Partnership Agreement

Creating a partnership agreement ahead of time can make it much easier to settle disputes when they arise. These agreements guide and structure your business partnership to avoid conflicts and disagreements arising between partners.

Here you can establish shares, business roles, and more. You’ll also clearly outline each person’s areas of authority and plan out the decision-making process. If you have a straightforward procedure for making decisions, you can avoid future arguments.

Partnership Resolve Disputes

You can also include a segment on how to resolve disputes. Some businesses may prefer to take any disputes to court immediately. Others may want to attempt to work things out outside of court.

When creating a business contract, it’s important to get legal input from a professional who can ensure that the agreement is enforceable and legally sound.

Refer to Your Buyout Agreement

When you established your partnership, you may have created a buyout agreement that dictates the terms one partner can buy out another. This allows you to force a partner out of your business if they aren’t contributing positively but refuse to leave the partnership otherwise.

If you don’t currently have one, you can draft one with help from a legal expert. A buyout agreement provides a plan of action for when an owner leaves. It covers the valuation of ownership interest, payment terms, and what counts as withdrawal from the business.

Withdrawal events include bankruptcy or debt, death or disability, retirement, outside offers, and even termination.

If you don’t have a buyout agreement, you may end up having to go to court to settle these issues. Some states will automatically dissolve the company if an owner leaves the business. 

By creating a buyout agreement, you’ll have a plan in place in case any of these events come to pass. Planning for unexpected events will help your business thrive and last through hardships.

Plan Out Your Shared Workload

Another way you can prevent disputes is by discussing expectations around your work and each person’s role in the company. By specifying each person’s roles and responsibilities, you can avoid communication breakdowns and arguments. 

You can determine how to make final decisions, how to make monetary contributions, and more. One person will typically make final decisions regarding different issues, such as the partnership funds.

Transparency with bookkeeping can prevent arguments and keep both of you informed of income and expenditures so you can make intelligent and logical business decisions. However, one person should have the role of making final financial decisions. 

When each person has a designated role and there’s no confusion about who should be doing what, each person can focus on being productive and doing excellent work. This paves the way for you to work together rather than working against each other.

Discuss the Dispute Formally

If your dispute is affecting the business and you can’t find a solution, it may be time to discuss it formally, either through legal negotiation or mediation. Either option can help you communicate effectively and without getting bogged down by the personal aspects of your relationship. 

An attorney can step in as a mediator to help settle arguments as quickly as possible. Mediation usually involves compromise, so be prepared to prioritize some issues and let others go. 

Negotiation guided by an attorney is an alternative to litigation, and it can provide faster, more favorable results. It’s more affordable than going to court, and you may be surprised at how helpful it is to have a professional representing your interests. 

If you want to avoid going to court and dissolving the partnership, these alternative dispute resolution options are worth the effort. They can save time and money, as well as provide you with options for keeping the company intact.

Hire an Attorney 

If your dispute doesn’t seem to be headed towards any kind of resolution, the best thing you can do is hire an attorney. An experienced business lawyer can help you sort out complicated legal matters and understand your rights within the business, as well as your partner’s rights.

A legal professional can help you strategize and determine the best outcome. If dissolution of the partnership isn’t an option or a desired outcome, an attorney can offer alternatives such as a buyout or even court action. 

When your business partner is negatively affecting your business by harming your reputation, luring customers away, or even stealing, court action is the best option to stop that behavior. An injunction can limit your partner’s ability to damage the company and protect the business.

If dissolution seems like the only option, your attorney can look for alternatives. If it’s truly the only way forward, you’ll have a legal expert guiding the partnership’s dissolution, liquidation, and termination.

Hire the Help of Experienced Business Lawyers

LibertyBell Law Group P.C. can help you handle partnership disputes of any size. We can help negotiate your current partnership, dissolve a partnership that isn’t working, and much more. Our team offers fast responses to your legal concerns, and we’re available to answer questions 24 hours a day.

Contact us to schedule a free consultation with an experienced attorney!

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