Business partners may clash in one or many different areas of their company. Whether it is about funding, negotiations, debt, compensation, operations, breach of fiduciary duties, exiting the business, or something else, all the parties involved will need to figure out how to resolve the disagreement(s).
That’s why you should have your own business partnership lawyers. At Copenhaver, Ellett & Derrico, we focus on making sure that you get the best representation possible when settling business disputes.
If you think you have been wronged by a business partner, contact Rick Derrico today. He has worked with countless clients who were facing similar situations as you. Call him today at (540) 655-1854 for more information about our services.
Forming a Business Partnership
To form a partnership, there must be more than one person who shares ownership. Whether you are talking about a garage-band startup or a large retail business, the duties, finances, and profits must be distributed based on what kind of a partnership you establish:
In this case, profits, liability, and management duties are divided equally among partners. Plus, the percentages assigned to each partner must be documented in the partnership agreement.
Also known as a partnership with limited liability, these are more complex and allow partners to have limited liability as well as limited input with management decisions. These limits depend on the extent of each partner’s investment percentage.
Partners can be recognized as an ongoing partnership if they continue the venture, but they must file as such. These are attractive to short-term investors who do not want to be involved in anything long-term.
Common Types of Disputes in Business
Considering how many moving parts there are in a business, disputes can arise over situations both small and large, including:
- Failure to honor fiduciary responsibilities
- Failure to comply with a contract
- Breaking contracts
- Writing/arbitrating unauthorized contracts
- Lone decision making
While most are reconcilable, others can lead to breaking partner agreements and someone being forced to leave the business. Regardless of what situation you find yourself in, there are ways to solve the disputes.
Solutions for Partnership Disputes
Most people immediately think of taking a partner to court if they encounter a serious business dispute. While this is an option, you are at the mercy of the judges and court system, which can result in your case being delayed or thrown out.
Luckily a series of methods known as Alternative Dispute Resolution (ADR) can be used. While they avoid a full-fledged trial, you will still want a good business attorney to speak on your behalf.
When an impartial, unbiased individual trained in dispute resolution (known as a “neutral”), assists in the determination, often without having the parties meet.
Here, your lawyer would gather all your information, make an appearance for you, and argue based on your position/wants.
A more structured process than conciliation, a mediation is when a neutral facilitates a meeting of the parties to reach a mutually acceptable solution to their dispute.
While you still must make an appearance, your lawyer can go back and forth with your partner’s lawyer during the negotiation, unlike in a court battle.
Early Neutral Evaluation
Here, parties present their case to a neutral, and the neutral provides a non-binding assessment of the likely court outcome. With an objective evaluation, the parties get a realistic view of the court outcome, which may lead to all parties settling.
Of course, your lawyer could tell you whether or not they believe that a court would rule differently based on the evidence gathered during the process.
In this formal process, a neutral hears arguments by the parties but does not facilitate negotiation between them. However, they have the authority to make a decision, and the parties decide whether the decision is binding or non-binding.
If these options fail, a dissolution of the partnership might be your best alternative. It can be difficult and costly depending on how the business is structured and what aspects of ownership your partner has.
Turn to an Experienced Roanoke Lawyer
Starting a business with one or more partners can be fun, but it can result in disputes arising. If you find yourself in a messy business dispute, contact Rick Derrico today.
He knows how to make sure that your best interests, and those of your business, are protected. Call him today at (540) 655-1854 for more information.