Professional Partnership Problems – Leaving a Partnership
1st October, 2014
When you start up a new business, whether it’s with a family member, your spouse, a friend or colleague, the one thing that’s certain is that at some point someone will want to leave, or will be in a position where they have to leave (death, illness, dispute, change of personal circumstances all affect partnership businesses).
Exiting a partnership is often compared to divorce. However with expert help it should not be that painful!
Every partnership is different but we can see common themes including:
• Family disputes adversely affecting the business;
• The ending of a marriage or relationship leading to problems regarding the running the business;
• Loss of trust between the partners for some reason (money, lack of equal effort, changes in their personal lives);
• The evolution of the business changing the skills and personnel required to succeed. Start up skills, for example, are distinct from long term operational skills;
• Financial disputes – money is at the root of many of the problems we help resolve;
• “Partners” in companies – a partner is a specific legal term and does not apply in a company but we talk every day to those who think they are partners but are not. Do not panic – we guide companies, shareholders and directors on implementing exits as well.
All of these common issues can be resolved in a variety of ways. We usually advise our clients to consider:
• Negotiated retirement of an individual partner from the partnership (retirement being the legal term for leaving the business rather than becoming a pensioner);
• Force retirement (if the Partnership Agreement permits this);
• Mediation – an agreed outcome and departure terms reached by negation using the help of a independent third party;
• Arbitration – a decision imposed by an independent person charged with settling the dispute privately under the rules of arbitration;
• Litigation – using the Courts to achieve legal redress.
Employment and Professional Practice Partner Paul Bennett acts as a mediator and arbitrator when instructed by the parties or their legal teams. If your partnership needs an independent person to help then you could agree with Paul his appointment in either capacity.
If not instructed as a mediator or arbitrator Paul can provide guidance as solicitor on the options for firms and partnerships and can help develop an exit strategy that is effective and avoids litigated disputes. Paul also acts as a mediation advocate using his mediation skills just for the benefit of one party when a mediator is already appointed.
If you would like advice, as a firm or an individual, contact Paul Bennett on 01743 453 685 or by email on [email protected].
At Aaron & Partners LLP we have a niche team of solicitors advising solicitors, doctors, dentists, accountants and general partnerships (typically, transport, trading or farming businesses). Our specialist website can be found here: www.aaronspartnershiplaw.co.uk
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