Legal Blogs

Why Do Partnership Disputes Happen

Partnership disputes are a common problem for companies when co-owners work together to manage operations. Partnership disputes can be damaging to ongoing business interests, as a disagreement between partners can lead to a delay in essential decisions and can hurt a company’s brand. If you are starting a partnership or if you are currently operating a business as a partnership, it is important that you understand some of the common reasons why partnership disputes happen and it is important that you take action to do everything you can to prevent a dispute from arising. partnership disputes

The Irvine partnership dispute lawyers at Brown & Charbonneau, LLP can provide you with invaluable assistance if you are starting a partnership and you want to avoid disputes by making smart choices from the start.

Our experienced legal team can also assist you if you are involved in operating a business and partnership disputes develop. We help you to work together to find effective solutions quickly to protect your company’s brand.

To learn more about how we can help and to get the assistance you need to protect your business from losses due to disagreements among co-owners, give us a call today.

Why Do Partnership Disputes Occur?

The Small Business Administration (SBA) cites the potential for disagreements among partners as one of the disadvantages of forming a partnership to do business. Partnership disputes can arise in many situations and for many different reasons, but some of the most common reasons why partnership disputes happen include:

  • Overlapping responsibilities. If you and your partner(s) are both vested with responsibility for making the same decisions and for doing the same tasks, this is going to inevitably create conflict.  Two people are always going to have different ways of looking at the world and different processes for completing tasks. While your differences may be small on some things, larger disagreements can also arise in areas of overlapping responsibility. Further, if you are constantly butting heads over small things, this can undermine your ongoing relationship and make it harder for you to compromise on bigger issues.
  • Lack of clear job definition. All partners who take an active role in operating the business should have a clearly defined role in their daily tasks. If one or more partners isn’t sure what duties are his, it is possible that he or the other co-owners could find themselves doing more than their fair share. This could lead to resentment among the partners who think that their co-owners are not pulling their own weight.
  • Lack of shared goals. If one partner has a very different vision for the business than the other partner does, this could create a situation where the two partners want to make very different choices about how the business will operate. All co-owners need to be generally on the same page as far as where they want to take the company so they can come to a consensus on important business decisions.
  • A change in ownership. In some situations, a partner will get divorced or will pass away and leave his shares in the business to someone else. This partner’s ex spouse or whomever he leaves his share of the business to may be someone that the other partners really do not have any interest in working with. This can create significant conflict if people who do not like each other end up being forced to work together day after day.

These are just a few of the many reasons why partnership disputes can arise. These common causes of conflict can be avoided if the right steps are taken from the start. For example, when you are forming a partnership, you should be sure to create a partnership agreement; a buy/sell agreement; and a business plan. You may also wish to create job descriptions and/or employment contracts for each of the co-owners. With these documents in place, you will know exactly what your shared goals are, what role you all have to play in running the business, and what the plan are for the company’s future.

How an Irvine Partnership Disputes Lawyer Can Help

An Irvine partnership disputes lawyer at Brown & Charbonneau, LLP can provide invaluable assistance to entrepreneurs who are starting their own business and forming a partnership.  We can also provide help to those who are already operating a partnership and who have fallen into conflict. We assist with both mediation and litigation, with the goal of finding effective solutions for your business as quickly as possible.

To learn more about the legal services that we can provide or the help that we can offer, give us a call today at (866)237-8129 or contact us online.