Partner Disputes – Houston Law Firm
The starting phase of a business is one of the most exciting times for partners. They will always agree and try solve any challenges on their way to ensure that they establish the business successfully. But just like in any marriage, the end of the honeymoon period usually increases the chances of disputes occurring among the partners. While these disputes are normal, if they are not resolved quickly they can end up hurting the business. This post by RunRex is meant to bring an understanding to partner disputes and how to solve them.
Common Partner Disputes
Monetary Disputes
Business partners will often disagree about money. One of the most common money problems in business is the embezzlement of funds. If one partner is put in charge of operations and another in charge of handling the business money, disputes may arise if the one in charge of operations starts noticing inflating business expenses and unexplainable changes in the business accounts.
Operational Disputes
These disputes are related to the delegation of duties and making of business decisions. If the consensus was that they would be making the decisions together and that they would follow co-equal management to handle their business, a disagreement might arise if one of the partners begins to make important business decisions without consulting others. Also, if one often fails to perform their duties, that could spark disputes among the business partners.
Intellectual property
A company that is formed on the basis of intellectual property has to have documentation that specifies the owner of the intellectual property and a document indicating that the intellectual property has been licensed to the company. If intellectual property is assumed to be the company property, then that would result in a dispute, and the owner of the intellectual property can decide to revoke the license from the company.
Disputes are common and occur in almost all businesses. The most important thing is that swift steps have to be taken to resolve these partner disputes when they occur. Disputes that are left unattended end up hurting the business operations and performance. Here are some steps to follow to help resolve partner disputes in businesses.
1. Look at the bigger picture
While this might be hard, particularly if you are the aggrieved party, you should take a step back and think of the consequences your actions may have before doing anything. Highlight all the options available, investigate each of these options and pick the best course of action that would benefit you, the other business partners and the business in general.
2. Review your business arrangement and seek advice from a neutral party
In case a dispute arises, review the shareholder agreement and other covenants that you may have entered into when starting the partnership. Check the provisions of these agreements and contracts and find a way of moving forward. Seeking the advice of a neutral party will help you avoid looking at matters and making decisions in a biased way. Their honest opinion can go a long way resolving any differences that may exist between partners.
3. Test your options
Having all the possible course of actions in mind, evaluate all of them and determine what the consequences of the actions would be to you and the business in terms of risks, tax, and cost. While the disputes will be among the partners, it is important that you be in constant communication with them and inform them of what is going on and the steps you are taking to resolve the issue. After all, communication is one of the most important ingredients in the dispute resolution process.
4. Decide on the game plan
If you opt for negotiation with the other partners, consider getting a mediator to be in charge of the negotiations. Negotiations are a great option as the chances of settling partner disputes are considerably high. The negotiation process will reveal whether the situation at hand can be resolved or not. If there are no chances of solving the disputes, then the mediator will handle the process of ensuring that you separate peacefully without causing any major harm to the business partners and the business in general.
If you want to litigate, know what the effects would be on you and the business. Would you be able to get what you want without harming the business? Knowing all the details that would be as a result of litigation can help you separate with less drama.
5. Tackle the dispute head on
Immediately a dispute arises, get a neutral and secure location where the partners involved in the dispute can meet and discuss on ways to resolve the issue. This meeting should only include parties involved in the dispute and persons who will facilitate resolving it.
Partner disputes are common and can occur in any organization. The important thing is to ensure that these disputes are resolved as early as possible to avoid serious consequence being encountered.