Avoid and Resolve Partnership Disputes

Going into business with a partner can be a great way to work. Two heads are often better than one. It is also usually more fun to work with a friend. These types of collaborations are common in many businesses, particularly professional services firms and start-ups.

Unfortunately, disputes can arise in these situations. They can even arise with the person – such as a long-time friend – whom you know very well and trust. A partnership dispute can become one of the bitterest disputes you will ever experience.

Fortunately, a partnership dispute can be avoided. However, it requires a reasonable degree of effort up front, a small investment of time and money, and patience throughout the process. There are five things you can do to avoid a partnership dispute, potentially resolve one, and, above all, prevent from having your partnership irrevocably damaged

Partnership disputes distract business owners from the central focus of their company: profitable operations

The prompt and efficient resolution of a partnership dispute will be based upon several factors. 

These include:
• The Quality and Thoroughness of Corporate Documents and Operating Agreements
• The Value of Each Partner to the Business
• The Personalities of The Partners
• The Effectiveness of Legal Counsel

THE BIG ISSUES Partnership disputes

Certain issues are so critical that if not dealt with or resolved adequately they can lead to the break-up of the firm. Although other issues can be this serious, I find that the major ones are:

1. Retirement (buyout) provisions and/or amounts;

2. Compensation system and/or amounts;

3. Separation (split-up) involving parties that continue to practice; and,