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Business Partnership Disputes

Mark was an entrepreneur for many years before entering the world of law so he really understands the mindset and the specific needs of a business owner. And while it must seem a bit unreal when talking about a lawyer, he is one of the most honest people I have met and with an immense amount of integrity. He is very even tempered and tries to take the most rational steps when dealing with any issue—regardless of how upset I might be

Jennifer Z.

Business Partnership Disputes

A business partnership dispute is a disagreement between or among the partners in a business. Unfortunately, business disputes between partners are common, particularly when you’re in a 50-50 partnership and one partner decides to act as if they own 100%. Business disputes also frequently occur between majority and minority partners when the minority partner believes the majority partner is operating the business in ways harming their interests.

What Are Common Business Partnership Disputes?

Partnerships are like a marriage, and partnership disputes often share the same conflicts in a marriage – money, decision-making, and job functions. Common business partnership disputes include:

  • management and direction of the business,
  • issues with the distribution of profits and losses,
  • allocation of decision-making authority,
  • conflicts of interest,
  • disagreements over the terms of the partnership agreement,
  • admission or removal of partners, and
  • disputes over the dissolution or sale of the partnership.

Additionally, there may be disputes between partners or between the partnership and third parties over issues such as breach of contract, fraud, and other misconduct.

How Can Business Partnership Disputes Be Resolved Amicably?

Some business partners can negotiate acceptable resolutions on their own. If you are attempting to resolve a business partnership dispute yourself, it’s important to know what your legal options are. Not as a hammer to try to force the other side to agree with your position, but so you know what the alternatives are if you can’t come to an amicable agreement. Take the time to read your partnership, shareholder or operating agreement before trying to work things out. You’ll have a better understanding of your rights and obligations and may find options for less formal resolution such as a mandatory mediation provision.

When Is Mediation An Option To Resolve Partnership Disputes?

Mediation may be an option if you and your business partner cannot resolve the dispute yourselves. Mediation can be informal or with attorneys representing both partners. Mediation is a process in which a neutral third party helps two parties reach an agreement. It’s typically less expensive and time-consuming than going to court. It can be helpful if you want to maintain a good relationship with your business partner.

Some partnership agreements include mediation provisions. In these cases, you can request mediation based on the agreement. In cases where the partnership agreement does not require mediation, you’ll have to agree to participate voluntarily.

If Mediation Isn’t an Option, Should You Pursue A Lawsuit?

Suppose mediation isn’t possible or doesn’t work out. In that case, you may need to take legal action by filing a lawsuit against your business partner. This should be seen as a last resort, as lawsuits can be expensive and time-consuming. They can also damage your relationship with your business partner beyond repair. If you decide to take legal action, it’s important to consult with an attorney beforehand to understand your options and rights.

Business partner disputes can be challenging to deal with, but it’s essential to take the time to evaluate your options before taking action.

If you are dealing with a business partnership dispute in Orange County, Los Angeles County, San Diego County, or Palm Springs, we can help. Call us today for an initial consultation so you can better understand all of your rights and options. Call now; the initial consultation is FREE.

Resolving Business Disputes on a Contingency Basis

It is possible that we can litigate your business partnership dispute case on a contingency basis, rather than on a pay-as-you go hourly basis.  Probably because of the dispute and possibly for other reasons, your money may be tied up temporarily.  We understand that, which is why we may be able to work you in such a way that you only pay a percentage of the settlement or judgment if and when we win your case and you collect your award.  You can find out more about the contingency business litigation option here.