Business partnerships are not unlike marriages in that disputes often arise when trust is broken, goals begin to diverge, or one member seeks to leave the partnership altogether. When your professional reputation and economic livelihood are at stake, resolving partner disputes quickly and effectively is essential.
Common Reasons for Business Partner Disputes
Regardless of the size and scope of your business venture, if you have a partner, you are likely to experience conflict at some point.
Partner disputes often involve:
- Business debt
- Control over the business
- Deceptive business practices
- Decline in revenue
- Future direction of the business
- Misappropriation of trade secrets
- Misuse of company funds
- Personality conflicts
- Poor management
Despite the many sources of conflict that can develop with any type of business, most partner disputes can be traced back to ineffective or poorly written partnership agreements. Whether verbal or written, these contracts created when the partnership was formed may not be stable enough to protect partners when something goes wrong.
Forming a Secure Partnership from the Start
Building a business is equally exciting and challenging. While you and your partner may be thinking big, it is essential that you draft a solid, well-defined partnership agreement that will protect both parties and your interests should you disagree down the road. Even if partners are friends, siblings, or even spouses, disagreements about each partner’s responsibilities can wreak havoc on a company. Similar to how a pre-nuptial agreement protects spouses in the event of divorce, your partnership agreement exists to protect partners and their business during times of conflict or separation.
Solid Partnership Agreements for Future Protection
Your partnership agreement addresses the unique obligations and goals of your business partnership, including:
- Protocols for adding new partners
- Defining specific roles and responsibilities of each partner
- The initial financial contributions of each partner
- Guidelines for salaries and profit distribution
- Trade secret and non-compete stipulations
- Procedures for dissolving or leaving the partnership
- Fraud prevention and auditing guidelines
Dissolving a Partnership
For some partners, there is no realistic way to continue working together. In that case, the best option may be to dissolve the partnership. Some partners chose to leave voluntarily. In other cases, one partner takes legal action to end the business relationship. Both are complex financial and legal processes that require an attorney’s assistance.
Unfortunately, like with so many of life’s undertakings, it is wise to expect the best and prepare for the worst. Because partnership agreements cover so many important aspects of your business and need to be comprehensive to be effective, you should always enlist the experience and guidance of trusted legal counsel.
Los Angeles Business Attorneys at Abir Cohen Treyzon Salo, LLP Successfully Resolve Partner Disputes
Disagreements among business partners are far from uncommon. When you are emotionally and financially invested in a venture’s success, partner disputes become can become personal. At Abir Cohen Treyzon Salo, LLP, our team of trial-tested Los Angeles business attorneys take the care and attention your partnership conflict deserves. We methodically review your situation to create a partnership agreement you can build upon or dispute an existing agreement when necessary. Call us at or contact us online to schedule a free consultation today. With offices located in San Diego and Los Angeles, California, we serve clients throughout the surrounding areas.