When you and your partners founded your business, you all had the same goals for the company and agreed on how to make them happen. At least, this is the ideal. Maybe misunderstandings and disagreements have existed from Day One, or have arisen more recently. Either way, a partnership dispute could disrupt day-to-day operations, cause a major rift and lead to expensive litigation that threatens your business’ existence.
Fortunately, with the right strategy to resolve the conflict, a lawsuit might not be necessary. These include:
- A detailed partnership agreement. If your business is a true partnership, not an LLC or more formal entity, you generally are not required to file paperwork regarding your company’s structure and purpose. But having each partner’s rights and responsibilities written down clearly and in detail can help cool down a dispute before it flares up.
- ADR. Alternative dispute resolution methods like mediation and arbitration can save participants considerable time and money and give them greater control over the outcome. A holistic ADR practice like mediation can also help bring alienated partners closer together, which benefits the business long-term.
- Selling out. Another option is for the unhappy partner to withdraw and sell their share to the remaining partners or to a new party. Succession planning can detail how this would happen, but if that has not happened, negotiating the terms of the buyout will be necessary.
- Litigation. Although a lawsuit is the last resort for most business owners, it should always be a possibility. Litigation might be the only way to determine fault and resolve a serious conflict between business partners.
It is often possible to find a solution everyone can live with and continue the partnership. A consultation with a business litigation attorney can help you clarify your goals and needs.