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How should you handle a partnership dispute?

On Behalf of | Apr 18, 2024 | Business Law/Commercial Litigation

Partnerships are the backbone of many companies, but that doesn’t mean there won’t ever be a dispute between any particular set of partners in question. The same differences that brought partners together to build a company can also lead to disputes.

If you are either thinking about launching a new venture, or you’re already a partner in a thriving business, one of the most important things that you and the other partners can do is to have a solid partnership agreement in place – and current – at all times. This should outline all the terms that will govern the company and partnership. Having dispute resolution terms in the agreement is also critical.

Keep conflicts away from employees

It’s usually best to keep the dispute away from the company. Hearing partners argue may upset employees and clients. One way you can avoid this is by discussing the matter behind closed doors. Alternatively, you may consider having this discussion away from the company.

In the very limited instances in which discussing the matter of contention with an employee is necessary, you should provide only limited information based only on what they need to know. It may behoove you to have a confidentiality agreement in place to prevent the employee from speaking out about the conflict.

Pay attention to experience

In most cases, each partner has strengths that the other one doesn’t have. When a dispute occurs, it’s best to think about which partner has the experience in the area. If that partner isn’t you, that’s the time for you to listen to the other partner who has the experience. Turning to experts in the field of the dispute can be beneficial, but only if you and your partners are willing to listen to their advice.

Know where to draw the line

There are certain cases that require a bit more action than just trying to work things out between partners. This could involve going through alternative dispute resolution, such a mediation or arbitration, to come to a solution. In some cases, such as theft or other illegal activities, consulting with a legal representative to determine whether it is appropriate to take legal action in more decisive ways may be a good idea.

There are no one-size-fits-all approaches to preventing partnership disputes, nor do these solutions exist for those who need to address those that have arisen for a variety of circumstances. As such, seeking personalized legal guidance is usually wise.