How to Approach Partnership Disputes
Paul Jonson
15/07/2019

Disputes in partnerships are not uncommon and they can occur for many reasons. Often, disputes of a more serious nature can be as a result of rising tensions that have been building up for years suddenly coming to a head. This may cause one partner to want to end the partnership, or for the other partners to want to expel them. 

So, what can you do when sensitive, high-tension partnership disputes do arise? We set out below useful and practical points on some key issues within partnerships and steps that might help during the process.

Refer to Your Written Agreement

Before you enter into any kind of partnership in a business, you should prepare a written agreement. This is essential so that if any issues were to arise, such as a partner wanting to leave the partnership, there is a clear procedure describing how the exit or retirement should be handled. If you enter into a partnership without a written agreement, then you are putting yourself at risk. 

Your agreement should include, at a minimum, the following terms:

  • How much of the business each partner will own and how profit and capital are allocated and shared.
  • Each partner’s role, duties and obligations.
  • Provisions for partner exit and retirement.
  • Under what terms the partnership can be dissolved or varied.

In any instance that a problem does arise, the first step should always be to read over the written agreement. 

Discuss the Issues

If there is a dispute, partners should have an open and honest conversation about their concerns.  It is safe to do this during a without prejudice discussion or meeting. In some partnership disputes, the meeting is likely to be hostile and difficult; however, having a constructive discussion can usually narrow the issues. Focus on finding a solution to your issue rather than the entire problem itself, with both of you working towards a common goal, is more likely to achieve progress.

Discuss the outcome you want and how you believe it is best for the partnership. You should also consider how you might persuade your partner to agree to it. When presenting this outcome, remain calm and diplomatic.

Consider Mediation 

Occasionally, meeting and discussing your problems is not enough to resolve partnership disputes. This is when you may wish to consider appointing a mediator to help you resolve the dispute.

A mediator will act as an experienced neutral third party in your dispute and will help you work towards a negotiated outcome.  A mediator will ensure that emotions are kept out of the discussion. Often, when it comes to high-tension disputes, emotions run high, and can affect the quality of your discussion and the output.  Mediators’ experience with these types of disputes means that they can also draw upon other disputes they have previously helped resolve, where they may have gained helpful and effective strategies that can be used to help tackle your problems.

Consult Specialist Partnership Lawyer

In some cases, the dispute has gone too far to each an agreed solution. If you consider your dispute is escalating towards court proceedings, then it is time to contact a specialist partnership lawyer. At Pannone Corporate, we are experienced in resolving partnership conflicts.  We are nationally ranked by Chambers and Partners for our expertise in partnership disputes. Please contact us on 0800 131 3355

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