We work with a lot of partners to develop a lot of businesses, and unfortunately, that means we’ve see a lot of business fights. And they’re never pretty. At some point, perhaps, you didn’t write the perfect partnership agreement. Perhaps, it didn’t have the flexibility that it needed to evolve over time. Perhaps, maybe you did build a really good partnership agreement and even built in the possibility of disagreements or other things that might come up in the life of the business, but you and your partner have just went in different directions.
We’ve talked before about how businesses go in different directions and how life evolves. When we work with partnerships, we often want them to recognize the fact that yes, things may change. Businesses may go in different directions, but what’s key is to understand that even if the partnership does not continue – if things get so different that the partnership is not a desirable economic union, we want to protect the value. We want to make sure the owners can walk away with the money, make sure they get what’s fair and right. So how do we deal with a disagreement with your partner?
#1 Try to keep it professional and civil. Try to have a real discussion with your partner. Many people skip this step. They just don’t sit down and talk about it.
That is a first step you should try to do.
#2 Use a mediator or other neutral third-party. Perhaps, your partnership agreement or other document provides that you should have mediation or arbitration. If not, see if you can invoke this mechanism. You can certainly agree with your partner to go to mediation, and then have a third-party try to discuss things with you. If there’s hope for resolution, you should try to discuss it, and if you can’t discuss among yourselves, consider bringing in a third-party who may bring some reality to the situation. Mediators aren’t guaranteed to have an outcome for you. They don’t have the authority to force an outcome, but they could sometimes facilitate discussion and get things moving in the right direction.
#3 Don’t take matters into your own hands. Just because you’re in a disagreement with your partner, it’s not a time to start taking business opportunities, or stealing assets of the business, or doing other things. Courts do not take these actions lightly, and I would never recommend that a partner start operating their business separate from their partner. During this time, you need to face reality and work through the situation.
#4 If all else fails, bring in an attorney or other person, to bring some leverage to the situation. Now, you want to make sure you get somebody with the right personality. You don’t want to bring in somebody that’s too heavy handed and is going to push too hard. There’s a touch of balance here. Don’t hire somebody who constantly goes to court. Court can be very costly. However, there’s nothing wrong with going to court if that’s what’s absolutely necessary.
However, avoiding court should be the goal of all parties because the only people that really win in a heavily litigated partnership dispute are the lawyers. It is better to find a lawyer that’s willing to take a little bit from a lot of clients and settle matters rather than finding somebody who wants to push everything to trial because trials are very costly, time-consuming, and rarely have a good outcome for any party.
What’s been your experience? Have you been in a dispute with your partner? What would you do if you got in a fight with your partner? Share with us in the comments below and join the discussion.
This posting is intended to be a tool to familiarize readers with some of the issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity. Freeimages.com/Andy Steel.
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R. Shawn McBride — R. Shawn McBride is the Managing Member of The R. Shawn McBride Law Firm, PLLC. Shawn works successful, private business owners in their growth and missions to make a company that stands the test of time. You can reach R. Shawn McBride at email@example.com or (214) 418-0258.
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