While a successful and profitable business can foreclose the possibility of certain disputes related to financial stress, disputes can arise in any business. When a business is profitable, a partner or shareholder’s ideas regarding the direction of the company and potential for expansion may begin to diverge. Conversely, partners in a struggling business may begin to blame each other for the company’s difficulties. They may allege that a partner or officer failed to perform or otherwise failed to live up to his or her obligations.
If you are facing a partnership dispute or another internal conflict in your organization, the potential for protracted and momentum-sapping litigation exists. Attorney William Heyman and the lawyers of the Heyman Law Office have handled partnership disputes and other business disputes. To schedule a confidential consultation with Mr. Heyman, please call the Heyman Law Office at (410) 305-9287 today.
Partnership Disputes Often Arise Due to a Lack of a Sufficient Partnership Agreement
While partnerships can often be highly personal relationships, they are also business and financial relationships. As such, it is essential for the partners to set forth the “ground rules” for the partnership in a partnership agreement. A written partnership agreement should, at minimum, define the following items:
- Each partner’s role in the company.
- Which partner has control over day-to-day
- The breakdown of ownership.
- Contributions of capital each partner have made or will make.
- The method of compensation, if any, for capital contributions.
- Contingency planning for changes in the organization including when a partner can withdraw.
- The processes and procedures the organization will utilize to make major business decisions.
- Compensation for each partner.
The above covers many of the potential grounds for disputes that can arise over the course of a business and partnership relationship. However, even when a partnership agreement exists, problems and dispute can still arise. Nevertheless, a well-drafted agreement is integral to resolving the dispute in a favorable fashion.
What to Do When a Potential Dispute Arises?
When a partnership dispute or the grounds for a dispute arise, it is typically wise to beginning performing one’s due diligence. While few people relish the idea of a dispute and intra-organizational conflict, failing to ensure that one’s own house is in order and waiting until a lawsuit is filed is rarely an optimal way to address this type of concern.
For instance, if one partner was responsible for the organization’s books and finances, it is likely that the other partner or partners may make allegations concerning fraud, defalcation, theft, or breach of financial or fiduciary duties. As such, it is essential for a full review of the records to be conducted in the early stages of the process. While your situation is likely to differ in facts and details, the need to prepare remains constant for all partnership dispute situations. Thus, the most important step an individual facing a partnership dispute can take is to seek legal advice.
Partnership Dispute Litigation May Be Avoided through Mediation or Arbitration
Due to the often-longstanding personal relationships that can accompany the partnership relationship, disputes of this type are often ripe for alternative dispute resolutions like mediation and arbitration. Attempting to mediate a dispute can often resolve difficulties and result in a plan where the business partner’s concerns addressed without engaging in protracted litigation. In some scenarios, this may involve one partner’s exit from the business while in others situations the arrangement may still be able to move forward with some changes or caveats. In any case, engaging in alternative dispute resolution proceedings is often a mechanism through which these disputes can be worked out.
If dispute resolution is unsuccessful, it is highly probable that the matter will be litigated. Meeting the challenge of a litigated partnership dispute typically requires the guidance of an experienced and strategic attorney.
Get The Help of a Baltimore Partnership Dispute Litigation Attorney With 20 Years of Experience
For more than 20 years, attorney William Heyman has handled an array of business and commercial litigation including partnership disputes. Mr. Heyman understands that businesses require strategic legal guidance and responsive client service in matters of this type. At the Baltimore-based Heyman Law Office, Mr. Heyman provides a client-focused approach to the law. To schedule a confidential consultation, call (410) 305-9287 or contact the firm online.