Here in San Diego and throughout Southern California a partnership dispute is disruptive and can have an impact both inside and outside of your business while distracting you from the primary focus of running your business. Partnership disputes can affect personal relationships outside of the workplace, affecting your quality of life and the life of significant others. Many partnerships are formed between family members, siblings, or life-long friends.
When a relationship between the business partners becomes strained, it can affect the people who surround them and the associated relationships between family and friends. Your children often know the family of your business partner, and in many cases they may even be related.
The Primary Source of Partnership Disputes: Money
After more than 40 years of experience in these cases I can tell you the number one issue in the majority of partnership disputes is money. Unfortunately, any partnership dispute is disruptive and the more successful a business partnership is the more likely it is that there will be a substantial dispute between business partners. Business issues associated with money, profit distributions, salaries for key people, capital contributions and other money-related issues should be clearly established, up front, in your corporate documents.
The best way to reduce or eliminate the likelihood of a partnership dispute: a solid operating agreement in an LLC or shareholders’ agreement in an S Corporation or C Corporation. The most important thing you can do at the outset of your business is to sit down with your attorney and go through the dozens of important clauses contained within the operating agreement or shareholders’ agreement. “What happens if…?”
What happens if a business partner gets a divorce, files for bankruptcy, is injured or becomes incapacitated, passes away or wants to sell their interest in the business? Who has first right of refusal to buy them out? How will their ownership interest be valued?
If issues concerning money and how it is to be handled and distributed are handled up front in the corporate documents, there is far less likelihood of a dispute down the road. “It says so, right here in the (corporate documents)…”
Any Partnership Dispute is Disruptive to a Business and it’s Profits
This is one of the reasons it is so important to work with experienced partnership dispute attorneys at the Watkins Firm who have more than 40 years of successful experience advising business owners and resolving business disputes. Your Watkins Firm attorney understands the importance of protecting not only the business itself, but often, the relationship between the partners. Partnership disputes can not only disrupt your business, they often echo out into the lives and relationships of the partners. It is therefore important to handle these matters with savvy and sophistication. The experienced attorneys at the Watkins Firm bring more than 40 years of experience to help you to get to the core of the business issues that have arisen and develop strategies to effectively resolve the dispute.
We also help to mend fences. While partnership disputes in San Diego can disrupt your business they can also help to surface other important underlying issues. As your company grows and prospers it may outgrow the capabilities of the original partners requiring additional investment or new employees to manage new opportunities.
We will work with you to develop or update corporate documents such as the partnership operating agreement or shareholders’ agreement to ensure that the company is protected in the event of future issues. A partnership dispute is disruptive to any business. If you are involved in a partnership or ownership dispute we invite you to review our podcast Episode 11 – Resolving Business Disputes as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
