Despite having built a successful business together, business owners and partners will disagree – partnership disputes are inevitable.
Left unresolved, a partnership dispute can lead to lost profits and an implosion of the business. They can destroy friendships and families. They can destroy morale, reduce productivity, and cause employee attrition.
Meanwhile, lawyers generally focus on legal arguments based in Partnership Law. Accordingly, they cite fiduciary duties and obligations that business partners have to fellow partners and to the business itself. They dissect the partnership agreement and consult statutory requirements. They try to define your rights. Quite often, they make the conflict worse. After all, lawyers are not experts in conflict resolution.
Partnerships are very personal, intimate relationships. When a partnership dispute arises, emotions run high. Focusing on legal arguments while ignoring emotional factors rarely leads to a resolution. Similarly, while legal arguments might surface who is “right”, they sometimes fail to surface what is “best” for the individual partners and for the business.
Common Partnership Disputes
• Someone does less than their fair share.
• A partner oversteps their bounds/authority.
• They misappropriate company assets.
• You both have different visions for the company.
• Someone is diverting assets that belong to the company.
• They are misappropriating business opportunities that belong to the company.
• They are secretly competing with the company.
• You have different opinions about an employee.
• They aren’t doing their job.
• Someone takes too much vacation.
• You don’t trust them.
• They don’t show respect.
• Someone has an unhealthy addiction.
• You need more life balance.
• They rely on you too much.
• Customers don’t like them.
• They never admit that they are wrong.
• They threaten you.
Resolving Business Partnership Disputes
Consensus has extensive experience resolving partnership disputes without going to court.
When emotions are running high, it is hard to think objectively and communicate effectively. The blood is pulled away from the rational-thinking and reasoning part of our brain toward the emotional part of the brain. It is this inability to be optimally “sharp” when emotional that prevents lawyers from representing themselves in legal matters.
Accordingly, partnership disputes are ripe for mediation. With partnership mediation, we act as a neutral third-party that works hand in hand with the partners (and your lawyers) to surface all of the underlying issues. We then help structure an agreement that appeal to both sides.
We also address the emotions on both sides, and facilitate constructive communication. We help the partners identify solutions that meet all parties’ interests, and that position the business and the partnership for future success.
We also work with the partners to help them develop the skills needed to avoid future partnership disputes, as well as valuable skills for addressing disputes before they get out of hand.
At your discretion, we coordinate with your attorneys throughout the mediation process to ensure that the legal aspects of the partnership agreement are being honored by the settlement agreement.
Mediation is a voluntary process. Yet, it often is the most efficient and effective way of resolving a partnership dispute, and is cheaper and quicker than litigating matters in court.
Avoiding Partnership Disputes
The first step to avoiding an intractable partnership dispute is to choose the right partner. Communication is key. It is the catalyst for conflict resolution. From a legal perspective, we advise having a comprehensive partnership agreement in place. Even family members and close friends should have a written partnership agreement or operating agreement. It is not a sign of distrust. Instead, it is a tool for written communication and for avoiding misunderstanding.
But, that isn’t enough. Regardless of how adept your lawyer is at preparing a comprehensive agreement, partnership disputes are bound to arise, and some will not be governed by the partnership agreement. Others, while covered by the agreement, could be worsened if the partnership agreement is enforced.
Effective communication is needed to navigate and resolve those business disputes. Partners should work on and develop their communication skills during good times and before crises arise. These skills can be developed by reading and practicing, through communication skills training, and/or through coaching.
Please feel free to contact us at anytime. We work internationally. We look forward to helping you resolve your business partnership disputes.