Posted by: May 20, 2024

Partnerships are the foundation of most businesses and companies. However, business partnerships are relationships at their core, and conflict can easily arise. No one agrees all the time, and personalities or interests may clash. A partnership dispute in the business context can cost the company money, damage its reputation, and strain the interpersonal relationships of partners. 

The terms of a partnership agreement can often help you resolve your disputes, but without one, the issues get even more complicated. Regardless of whether you have a partnership agreement, there are still ways to seek compromise and resolve disputes amicably without going to court. We provide five tips on resolving business disputes from a Houston partnership dispute lawyer.

1. Create a Partnership Agreement

Every partnership can benefit from a well-written partnership agreement. When disputes arise, people tend to get emotional and think less clearly, making it more challenging to reach an amicable resolution. Drafting a partnership agreement while the parties are level-headed and calm can set the parties up for a smoother resolution process when a partnership dispute comes up.

A partnership agreement should specify the roles and responsibilities of each partner, as well as who has decision-making authority, how to divide profits, how to resolve individual disagreements, and how to dissolve the company. The agreement should also address worst-case scenarios. For example, what happens if one of the partners dies or becomes incapacitated? What if one partner wants to buy another partner out? What if the partners disagree about the company’s direction? While you can’t foresee every situation that might arise, you can try to put processes in place to resolve many potential problems. 

The partnership agreement and its terms will have legal implications. The partners must comply with the terms of the agreement and follow the required dispute resolution steps before going to court. For this reason, you want to be sure it is well-drafted and unambiguous. The judge will examine the agreement’s language if the matter goes to court. If there is nothing about dispute resolution or it is ambiguous, they may need to look to external evidence to resolve the conflict. Seek legal assistance from an experienced partnership dispute attorney to ensure your partnership agreement has all the necessary components and language. 

2. Address the Issue Early

Address disputes as soon as they happen. It can be tempting to simply brush the issue under the rug or hope it passes with time. The longer you wait to resolve a business partnership dispute, the worse it can be for you, your partners, your company, and your employees. If you need help addressing the issue, speak with other partners or consult a partnership dispute lawyer.

3. Communicate

A partnership dispute often arises because of a breakdown in communication or miscommunication between partners. Respectfully and openly speaking with your partners about the issue can help reestablish productive communication and avoid litigation. Clear and open communication can lay the foundation for renewed compromise, trust, collaboration, and shared success. This does not mean you shouldn’t simultaneously prepare to protect your interests if needed. 

4. Try Alternative Dispute Resolution Models

If the partners cannot speak with one another or refuse to do so, an alternative dispute resolution process might prove effective. Alternative dispute resolution models involve impartial third parties to assist with reaching an agreement. Two types of third-party partnership resolution processes are:

  • Mediation. A neutral third party facilitates communication to promote compromise, collaboration, and settlement. The mediator doesn’t make decisions for the parties, and the process is confidential but not legally binding.
  • Arbitration. Each party or their attorney presents their case to a neutral third-party arbitrator. The arbitrator decides your case using their judgment based on the evidence presented to come to a decision; the decision can be legally binding.

Using these dispute resolution channels can lead to a more productive outcome than litigation or partnership dissolution. They remove emotions from the discussion and keep the parties focused on addressing important business issues.

5. Hire a Partnership Dispute Lawyer

Don’t attempt to navigate business partnership disputes on your own. Taking matters into your own hands or waiting too long to speak with an attorney can harm your business. A skilled partnership dispute attorney can help you draft an effective partnership agreement, advise you on your rights and obligations, represent you in mediation or arbitration, and advocate on your behalf if the matter goes to litigation.

Contact The Curley Law Firm Today

If you are starting a partnership in Texas or are in a partnership dispute, contact The Curley Law Firm to help you protect your rights. Adam Curley is an experienced Houston partnership dispute lawyer who has assisted hundreds of clients over the past 16 years. He has worked with large and small business clients, allowing him to resolve nearly any business-related legal issue effectively. As a solo practitioner, Adam can provide individualized advice and support to each client. He prides himself on being responsive and attentive to client needs. Contact Adam today for more tips on resolving your partnership dispute.