Partnership / Shareholder Dispute Attorneys

Partnership disputes: Causes and remedies

Partnership disputes can stem from various sources, such as disagreements over a business’s strategic or financial direction, disagreements over a business’ personnel, or real or perceived breaches of the partnership agreement.  

The impact of these disputes can range from minor inconveniences to significant issues that threaten the stability and future of the business. Understanding the common causes of partnership disputes and knowing how to effectively resolve conflicts when they arise is crucial for maintaining healthy business relationships and ensuring a business’ longevity.

Causes of partnership disputes

One of the primary causes of partnership disputes is a difference in vision for the business’ future. When partners have opposing views about a business’s direction, it can lead to friction and conflict.

Compounding this issue is miscommunication, which can escalate disagreements and hinder efforts to find common ground. To prevent such disputes, it’s essential to align the company’s goals, strategies, and operations. Ideally, these terms are in the partnership agreement or the business plan.

Financial disagreements are another common trigger for partnership disputes. This can include conflicts over budget allocations, investment decisions or the distribution of profits and losses.

Breaches of the partnership agreement can significantly erode trust between partners and lead to disputes. This may include oversight or intentional actions that should be handled immediately.

Resolving disputes when they occur

When partnership disputes occur, it’s essential to address them promptly and constructively. The partnership agreement should be the first point of reference to determine any agreed-upon mechanisms for dispute resolution.

Any discussions about the disagreement should be handled privately, away from the employees. Employees who discover disputes between owners may believe the business has become unstable. This perceived instability could permeate the business and eventually be communicated to the business’ customers and vendors.

If informal efforts to resolve a partnership dispute prove unsuccessful, it may be necessary to seek legal assistance.  At DLM LAW, we are skilled at counseling clients in effectively resolving partnership disputes through negotiation or, where necessary, arbitration and litigation.  If you are facing partnership issues you cannot handle on your own, put our knowledge and experience to work for you.