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Partnership: Disputes and Resolutions

A partnership is created when two or more people go into business together. Preferably, the arrangement is created formally and legally under the guidance of a small business litigation lawyer in the form of a general or limited partnership or perhaps a limited liability company. Sometimes, however, a partnership is created without a clear understanding of the rights and responsibilities of each party.

What Types of Partnership Disputes Arise?

Not unlike a marriage, typical disputes center on trust, control, and money. Even where a formal agreement has been entered into, problems are common. For example, if you are a minority partner and are denied access to the financial records of the business, how can you know if you are receiving your rightful portion of the profits? What if you see the books but then see that the majority partner is receiving what you believe to be an exorbitant salary?

Trust issues can be as blatant as suspecting one partner may be directing company business to himself as an individual or engaging in a competing activity, or it can come in more subtle concerns, such as poor management or questionable decision making. In either case, company profits are an issue.

What Types of Resolutions are Available?

Initially, the vast majority of those involved in partnership disputes wish to resolve the issues and remain in business. This requires, however, a thorough investigation of the business: all facets must be made fully available and subsequently objectively evaluated. No return to business as usual can occur absent such an undertaking. If an informal resolution can thereafter not be reached, litigation or an alternative dispute resolution may be necessary.

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