In the lifecycle of a working relationship, partnership disputes can arise at any time and be minor or very serious and even disruptive. Business owners must understand that while there are several benefits to forming a partnership, there can also be unique hurdles that come with running a business with one or more people including various disputes over one issue or another.
Knowing that disagreements over anything from the division of partnership assets, breaches of fiduciary duties, finances, or anything else involved in a working relationship and in the operation of a business can arise, having a sound partnership agreement in place that addresses the ways to navigate and dispel controversy is essential.
If you are a business owner in California, preparation is key when entering into a partnership and being successful. As such, it is critical to clearly define your business goals, the roles and responsibilities of each partner, how finances are handled, the amount of liability everyone has, as well as the way to approach and resolve a dispute early on. This keeps everyone aware of the process and how things work as well as allows all parties to understand where they stand which can itself, limit the chances of a legal dispute coming about.
Still, even with a proactive and transparent approach to running a business at the initial stages of a business partnership, disputes can come about at any point. For this reason, having a partnership agreement in writing can make a big difference in resolving issues with less stress and interruptions to business operations. The California partnership dispute attorney at Leiva Law Firm can help you assemble an effective and comprehensive agreement to guide you during more volatile times.
Dispute Resolution Tips for Business Partnerships
The first thing that individuals in a business partnership should do is put together a sound partnership agreement that covers the following:
- The rights and responsibilities of each partner
- Capital contributions
- The procedure for the exit of a partner
- What to do when a partnership dissolves
- Management structure
- Partner retirement, resignation, or dismissal procedures
- Restrictive covenants
- Financing and profit sharing
- Dispute resolution options
A partnership agreement should be reviewed regularly to ensure that it is up to date on the status of the partnership. Having a partnership agreement in place can set expectations and also policies for fostering positive relationships and when problems come about, de-escalation strategies to handle them.
Another consideration for handling partnership disputes is to get to the root cause of what is causing the disagreement. Often, identifying where the conflict has originated can more effectively address the dispute and lessen the risk of it becoming more pronounced and contentious which can adversely affect the business.
When partnership disputes do get to the point of legal proceedings being a real possibility on the horizon, alternative dispute resolution methods should be explored such as mediation, arbitration, and strategic negotiations.
Speak to an Attorney at Leiva Law Firm Today
There are severe implications that can result to the health of a business when partnership disputes are not addressed and are not handled decisively. To schedule a free consultation to learn more about partnership agreements or for help with a partnership dispute, please call Leiva Law Firm today at (818) 519-4465.
