What to Do if You’re in Dispute With Your Partner in Business
When you establish a partnership, you do so because you believe you and your partners see eye-to-eye. You have complementary areas of expertise, individual contributions to add to the enterprise, and a shared vision for the future. Your business partner is, nevertheless, another human being. Humans disagree, even with the best of intentions. What should you do if you and your business partner disagree about an expense, a market, a product, whether to acquire or sell a business, or other important matters? Below, we discuss the steps involved in a partnership dispute and how to avoid escalation for the betterment of your business and your relationship. If you are anticipating a significant partnership dispute, call a savvy Chicago partnership dispute and business law firm for advice and assistance.
The best way to resolve any partnership dispute is to do so as amicably and informally as possible. If you have a dispute that can be resolved with some time and understanding, you’ll save significant time, money, and energy down the line. Work with your partner to find a resolution with which both of you can be satisfied. You might each need to make concessions, or you may decide that you’re simply willing to concede the point for now. If you can come to an agreement without formal legal intervention, you might be able to keep the business running much more smoothly.
If you cannot come to agreement simply by talking through the matter, you might want to enter into structured mediation. Mediation is not court, nor is it arbitration; you’re not arguing your case to a third party by way of formal rules. Rather, you and your business partner will work with a third-party mediator whose goal is to find common ground between you in order to reach a resolution that works for all parties.
Mediators are trained in dispute resolution techniques and know how to get to the heart of a dispute. They know how to help the parties manage their emotions and work toward a solution. You do not necessarily need a lawyer to represent each party for mediation, but your business law attorney may be able to help you find a qualified mediator. In many cases, having each party bring their own counsel can help keep things professional and amicable. Discuss your options with your business dispute lawyer to ensure you keep things running as smoothly as possible.
Rely on the Partnership Agreement
Your partnership agreement, shareholders’ agreement, buy-sell agreement, bylaws, operating agreement, management agreement, or other governing document can and should specify what should happen in the event of a partnership dispute. The management agreement may specify that the partners must, for example, submit to mediation prior to taking matters to court.
The agreement might also provide for other processes and options for dispute resolution. The agreement might dictate that certain types of decisions ultimately go to one partner or the other. If the partners are unable to resolve their dispute, the agreement could provide for an exit strategy whereby one partner agrees to buy out the other for a specified price. The more thorough and forward-looking the partnership documents are from the start, the less likely a dispute will significantly disrupt the business down the line.
If the partners simply cannot agree on a resolution, and neither party is willing to exit the partnership or there’s no management agreement or buy-sell agreement facilitating which party has the right to buy out the other, then you might find yourself in court. Talk to a seasoned business law attorney early in the process to mitigate the risk of winding up in court and to represent your interests should you end up in a lawsuit. If you do need to resolve your differences via lawsuit, the court may decide whether and how a buyout will occur, or whether some other solution can be found.
Dedicated Chicago Business Lawyers for Resolving Partnership Disputes
For legal help you can trust with your Illinois partnership dispute, contact the experienced, diligent, and professional Chicago area business litigators at MacDonald, Lee & Senechalle for a consultation on your case, in Hoffman Estates at 847-310-0025, or in Des Plaines at 847-298-5030.