Partnerships have often been compared to marriages since partners have the same fiduciary duties towards each other that spouses have. And like marriages, conflicts in the partnership relationship often center around issues of trust, control and finances.
At the Law Offices of Steven J. Horn we understand the complex relational dynamics involved in conflicts within business partnerships, whether the business is a professional practice, small manufacturing company, service company, retail store, family business, or other enterprise.
If your business partnership is currently involved in an internal conflict, our experienced business attorneys may be able to help solve your dispute through negotiation and mediation. When acceptable out-of-court solutions are not possible, we have the necessary experience and skills to succeed in litigation.
Sources Of Partnership Disputes
The sources of a partnership dispute are numerous. Some of the most common include the following:
- clashing personalities
- declining partnership revenues
- argument over direction of the business
- argument over profits
- poorly written partnership agreements
- dishonest partners in control of partnership assets
- partners who were wrongly ousted by partners in control
Often times the disputes which arise in a partnership can be traced to its formation, especially when there is a failure to properly plan the roles of the partners, the relationship between the partners, and the partnership operations. Sometimes friends or family members entering a partnership forego a written agreement altogether because they think this indicates distrust which might sour the relationship. However, in order to avoid many future disputes, it is critical to have a well-drafted partnership agreement. A variety of issues should be addressed, including:
- the particular commercial enterprise of the partnership
- the concerns and goals of each partner
- the procedure for addition of future partners
- the expected roles and duties of each partner
- the initial contribution of each partner
- subsequent contributions if partnership funds run short
- procedures for salaries, draws and profit distribution
- procedures when a member leaves the partnership
- control of partnership finances
- auditing and fraud prevention
- rules for trade secrets and covenants not to compete
- procedures and restrictions on transferring ownership interests to third parties
- procedures for partnership dissolution
Partnership Dispute Resolution
Even temporary disputes can have a costly effect on business operations. At the Law Offices of Steven J. Horn, we strive to resolve disputes through negotiation and mediation whenever possible. We prefer to get to the heart of the disagreement and determine what remedies may be available. However, if out-of-court settlement is not possible, our attorneys are prepared to fight for our client’s interests in court.
In situations where partners are unable to continue together in business, the best option may be to dissolve their business entity. This process is often complex and requires the assistance of an experienced attorney. There are two types of business dissolution:
- Voluntary dissolution: A partnership may be dissolved at any time with the agreement of the partners. Issues to be considered include notice to customers or clients, division of business assets, responsibility for on-going projects, assumption of liabilities, etc.
- Involuntary dissolution: A partner can file a lawsuit seeking dissolution when the partners are unable to agree. The court usually orders an accounting and division of assets and liabilities. If there is an issue of improper conduct by a partner, an independent receiver may be appointed to manage the business while the dissolution is pending.
California Partnership Dispute Attorney
While business owners may have a great relationship in the beginning of a business enterprise, disputes can sometimes arise that cannot be remedied by the partners. If your partnership is undergoing such difficulties, it is important to contact an attorney as soon as possible. At the Law Offices of Steven J. Horn, our experienced business attorneys can negotiate and find solutions to partnership disagreement, or can litigate those disagreements in court if necessary. Contact us today to protect your partnership rights.