The following blog article was written for Webb Law Group, APC
Entering into a business relationship with someone can often be a fun and exciting experience. Partners can be great to work with and may offer new, innovative concepts to develop your projects and ideas into realities. Additionally, partnerships can be a great way for budding businesses and firms to share expenses related to starting an entrepreneurial journey. However, these very common types of business collaborations can lead to some sticky situations if things go awry.
Unfortunately, these types of relationships can become very uncomfortable, should a major partnership dispute arise. This is especially true if your business partner is a family member or long-time friend. Frequently, what was once a respectful, thriving relationship may turn sour. Sometimes, partnership disputes can become bitter, hate-fueled legal battles which may last for months or even years.
Fortunately, a partnership dispute can be avoided, or at the very least, handled with care. However, doing so requires a reasonable degree of patience, effort on the part of all parties, and a small investment of time and money. In this instance, the saying “an ounce of prevention is worth a pound of cure” comes to mind. Legal counsel is always recommended, even if things have yet to escalate.
The Benefits of Partnership Agreements
You can save yourself a lot of heartache and grief if you and your partner(s) develop a written agreement in advance. Planning for future issues to arise will make many partnership disputes relatively easy to talk out or arbitrate. However, sometimes the issues which arise may be vague or were not mentioned in the initial partnership agreement. In this instance, it may be time to seek counsel from a reputable attorney or law firm who specializes in California partnership disputes.
Preparation of a partnership agreement is not something to be taken lightly and should not be attempted without counsel. Duplication or moderation of an old agreement or attempts to rework a generic agreement found online may expose you to unwanted or uncomfortable situations in the future. It is highly recommended that an experienced attorney always assists in the preparation of your partnership or operating agreement. This will ensure that you start your business organization properly from the get-go.
A detailed and well-composed partnership agreement should include as much detail as possible and clearly define each topic covered. The more effort and thought you put into this creating a detailed document the easier things will be for everyone involved. Your partnership agreement should contain unambiguous details about topics including each partner’s role in the organization, procedural adoption protocol, who owns or controls which aspects and how much of the company’s resources, which partner has the authority to make decisions or investments on behalf of the company, and what the legal procedure will be should one party wish to dissolve the relationship; just to name a few.
Handling Partnership Disputes
Significant partnership disputes rarely arise in the first few years of business, though this scenario is, by no means, impossible. This is frequently the case, as most partnerships arise between mutual friends, family members, or between like-minded peers with similar values and visions. Frequently, many partners are so close that the thought of dissolving the relationship may never cross each person’s mind.
However, things don’t always work out the way that each party intends. Many variables can arise which begin to erode and deteriorate the relationship over time. As stated earlier, a partnership dispute is much easier for all parties to sort through and resolve if a previously-written agreement has already been established. Again, this should be done the help of an attorney or legal time who specializes in such matters. However, sometimes, things are not cut and dry. Nuance is always possible.
If your agreement failed to spell something out in black and white or you simply never had one, to begin with, you have three options. Should you and your partner(s) fail to come to an equitable conclusion on your own accord, you’ll need to seek counsel from a legal team like Webb Law Group, APC. At this point in the process, your remaining two options are alternative dispute resolution or proceeding to court.
Partnership Dispute Arbitration& Mediation
Frequently, your partnership dispute may be able to come to a resolution through the arbitration and mediation process. Mediation is a meeting facilitated by an experienced attorney, sometimes even a retired Judge, who helps guide the parties to a settlement. The mediator will not make any decisions for you about your dispute but will assist you and the other side as you work towards a deal that you both can agree on. The beauty of mediation is that the choice over the end result relies entirely with you, not with a judge, jury or arbitrator.
In arbitration, your attorney will present statements, arguments, and evidence before a designated arbitrator. This will take place in a confidential, low-key setting. Instead of the standard formalities, expenses, and drawn-out lengths of time which court cases can entail, arbitration offers each partner the chance to sit down with a neutral 3rd party and attempt to come to an agreement. Unlike court cases, all parties involved must agree to the terms of an agreement made in arbitration.
There are various benefits and drawbacks to arbitration. In theory, arbitration can result in substantial savings in time, money, and privacy. Consider that both the California state and federal courts are consistently backlogged with cases. With this in mind, arbitration may allow you to reach a resolution with expediency. However, on the flipside arbitrators are less bound to follow the rules and have little oversight. In arbitration, your appeal rights are very limited so if your case is decided incorrectly, you may be stuck with the poor result. We would suggest consulting with an experienced legal team to determine whether an arbitration agreement is right for you.
It May be Time to go to Court
Sometimes, such agreements cannot be mutually agreed upon. In cases of this nature, you should consult with your partnership dispute attorney to determine the best course of action. If you simply cannot resolve your issues in arbitration, you and your lawyer should begin preparation to file a partnership dispute case in court.
Finally, before any decisions are finalized, it is important to take into account how such a case may affect your business. Partnership disputes can cause serious disruption to your business’s operation. Frequently, if only 2 partners are involved in the dispute, both may be too busy with legal proceedings to run the business successfully. Additionally, court cases can take a heavy toll on your personal life, especially when they involve your means of income.
However, if all negotiation fails and court proves to be the only option, the steps leading up to your trial should never be undertaken on your own. Partnership dispute trials require the knowledge and talents of a skilled team of legal professionals. The lawyer you select should specialize in California partnership dispute law. Remember that any missteps you make beforehand could cost you dearly when your trail goes to court.
Are You In Need Of Legal Advice?
If you’re experiencing a partnership dispute in your business and you feel you’re unable to resolve it on your own, contact the professional team of lawyers at Webb Law Group, APC. Our team of attorneys can answer your questions about California partnership dispute law and let you know the best courses of action.
Having a reputable attorney by your side for matters of this nature will offer you the best possible chance of navigating the legal process. If you feel that you need legal representation, our team will be happy to review your legal needs and provide consultation and support where necessary. For questions, or to schedule a consultation, contact Webb Law Group today at 559-431-4888 (Fresno) or 619-399-7700 (San Diego).
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