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3 ways to handle a contentious partnership dispute

On Behalf of | Sep 28, 2021 | Business Partnerships |

When you form a business partnership with someone, you likely anticipate profits, not hardship. However, even successful businesses can get dragged down by partnership disputes between the people who own the company.

Partners often disagree about financial matters, how to distribute the workload or the future direction of the company that they own together. Your partner should be a resource that helps you manage your business, but they can become a major hurdle to your business success.

When you start butting heads instead of cooperating, it may be hard for you to continue running the company. Even worse, your conflict may affect the performance of other employees or endanger the business. How can you potentially resolve a major dispute with your business partner?

Defer to your partnership contract

Ideally, you and your business partner will have addressed disputes and business management practices in your partnership agreement. Reviewing your contract could give you information about how to resolve the dispute.

You may already have agreed to a specific kind of conflict resolution. Your agreement may also provide you with guidance about more aggressive solutions, like the terms necessary if you want to buy out your partner to put an end to your dispute.

Explore alternative dispute resolution

You don’t necessarily have to go to court if you disagree about your responsibilities or the future direction of your business. When you have a major issue that you can’t resolve on your own, sitting down with a mediator or arbitrator could help you resolve the matter.

A neutral professional could help you come up with creative solutions that resolve your current dispute and will hopefully reduce the likelihood of a future conflict. 

Consider whether the dispute means the end of the partnership

In extreme cases, such as embezzlement or some kind of personal betrayal, you may not be able to compromise or continue working together.

You may need to plan for one partner to buy the other out or for both partners to cooperate in the dissolution of the business. Sometimes, you may have to go to court to manage the process of ending the business, ending the partnership or buying out a partner.

Planning ahead before you approach your partner can make it easier for you to resolve a major partnership dispute.

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Arthur R. Lehman, L.L.C.
60 East 42nd Street
Suite 4600
New York, NY 10165

Phone: 212-697-2715
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