Partnership Disputes

The typical structure of a business partnership and a limited liability partnership (LLP) gives all partners equal rights and authority within the organisation. When a dispute occurs between partners, therefore, it can be difficult for them to resolve the conflict between themselves.

Such disagreements can be legally complex and have serious repercussions for everyone involved and the business as a whole. If left to degenerate into a damaging prolonged feud, disputes within partnerships and LLPs can cost a great deal of time and money and put those involved under a great deal of stress.

Expert legal advice is vital if you want to secure the most satisfactory conclusion without delay.

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What problems can a dispute between business partners cause? 

In the worst case scenario where partners have not agreed in advance how the departure of one or more of them will be dealt with, a dispute between partners can bring the partnership to an end an potentially lead to the business having to cease to trade, which is not in anyone’s interests.  

Even if this worst case scenario is avoided disputes between partners will still be disruptive for the business and can cause financial challenges for the remaining partners. Many of these challenges can be mitigated or avoided altogether with appropriate thought being given to the rights and liabilities of the partners at the start of the partnership. 

How can a solicitor help resolve partnership disputes? 

Partnership disputes require not only an understanding of partnership law but also a clear understanding of how partnership accounts operate. Our years of experience of handling partnership disputes means we can offer both.  

We will consider any agreement in pace between the parties and consider the partnership accounts including whether they reflect what the position should be between the partners. Often there are issues in relation to whether certain assets used by eth partnership are actually assets of the partnership that the partners are therefore entitled to shares of; or whether those assets are correctly valued in the accounts or should be revalued; there will be work to do establishing the liabilities of the partnership; and if some partners have continued the business after others have left, continuing to use the partnership assets, there will need to be an account in respect of that use so that the outgoing partner gets their share of profits generate dafter they left using assets that they are entitled to a share of. 

What is conflict resolution? 

This is simply another name for dispute resolution. Where partners fall out our understanding of how partnerships work enables us to provide real insight in relation to the likely outcome and in turn that gives a clearer picture of the appropriate resolution. 

Can you help me solve a partnership dispute without needing to go to court? 

Yes, many disputes settle without the need for court proceeding to be issued. Getting a clear understanding of the issues and of what the parties’ entitlements are at an early stage allows the parties to engage in meaningful settlement discussions before proceedings become necessary. If there is the will on both sides of the dispute to reach agreement, early settlement is certainly realistic.  

What is arbitration?  

This is a form of dispute resolution where an independent third party is appointed to resolve the dispute, known as the Arbitrator, rather than asking the court to resolve it. The advantage of arbitration is that it can be quicker than using the courts because arbitrators are more in control of their work loads than the courts, who have to deal with what is presented to them. Overall there is usually not much difference in the costs of an arbitration compared to the cost of taking a case through the courts. Arbitrators’ fees tend to be more than the relevant court fees would be. 

What is mediation? 

Mediation is a way of trying to settle disputes. The parties appoint an independent third party whose job it is to facilitate the parties reaching agreement. The mediator is not a substitute for a judge and will not make any decisions about the case. It will only settle by mediation if the parties reach an agreement. However, a good mediator can really assist in getting the parties to a settlement because they will encourage the parties to look at the dispute and potential resolutions in a different way.