The Andres Lopez Law Firm

How will you resolve partnership disputes?

If you own a business with a partner, you will likely disagree because you chose a partner that both supports and challenges you. At one point, you probably valued their input more than anyone else’s, but over time relationships can fracture and crumble and your business might suffer as a result.

Do you know what your contract states?

Oftentimes, the resolution to your dispute is in a forgotten clause in your contract. Many people leave these contracts in the back of a file cabinet to gather dust until something drastic occurs. It may benefit you to review your contract at the start of a new year or when you feel a disagreement brewing. You may find any of the following:

  • A mandatory mediation or arbitration clause: You may be obligated to pursue legal negotiation sooner than you think.
  • A review process: Your contract may recommend a process for reviewing and bringing up your concerns in a specific order to maintain a working business relationship during negotiations.
  • Defined roles, powers and capital contributions: If your role has changed over time, review your original agreement and consider writing a new agreement to settle your disagreements.

The last is especially important to verify if either of you have the power to influence another person’s position. Do both of you have the power to remove the other person? What could happen if they begin this process before you do? What steps do you have to take before you can exercise that authority?

These issues may be as uncomfortable as if you were considering to file for divorce, which in a way you could be. There is a personal limit to your patience, but if there is a chance to salvage your business relationship, you should enter negotiations with the solution, not the termination, in mind.

When should you consider legal help?

If day-to-day business operations are affected by your disagreements, it may be time to involve a third party. However, the longer your dispute carries on, the more it will impact your business. A few hours with a mediator, arbitrator or attorney could save you thousands of dollars later.

This discussion should happen outside of regular business hours and should focused on potential solutions instead of the dispute itself. If personality differences make a calm discussion impossible, make a clear list of what you would and would not be willing to accept during negotiations and bring this to a third party. Bringing in another person to help can create neutral grounds that can help foster positive thinking and productive resolutions.

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