A dispute between owners in a small company can be quite expensive in terms of money, time, and loss of business focus and opportunity.  When members in an LLC or shareholders in a small corporation are involved in a dispute the corporate documents should provide an outline for approaching the issues in dispute.  The corporate documents include:

• Operating Agreement (LLC)
• Shareholders Agreement (C-Corporation or S-Corporation)
• Corporate By-laws

Unfortunately, a lot of small businesses attempt to download these forms and fill in the blanks.  These forms are not well customized for California (where the minority interest has stronger rights than most states), and do not provide for a dispute between owners in a small company or corporation.  Are there options to resolve the dispute without expensive and time consuming business litigation?

The experienced business attorneys at the Watkins Firm have 40+ years of experience serving the business, science and tech, real estate and medical / healthcare communities here in San Diego and across California.  We can represent your interests in the issue, and protect your position while working to achieve your objectives and a positive outcome.  We help to establish a more productive atmosphere and to find common ground.  This provides the greatest opportunity for a negotiated solution that resolves the genuine issues at hand and allows the parties to return their focus to the business matters that are most profitable.  You might be surprised to the learn the Watkins Firm is able to resolve the vast majority of our cases involving a dispute between owners of a small company through effective, leveraged negotiation.  This is the fastest, and least expensive way to resolve these challenges and move forward.

The parties may also wish to consider business mediation.  Mediation is a private, structured process which is designed to allow an experienced third party to mediate the issue(s) at hand and help the parties to reach a settlement agreement.  Corporate documents may also specify arbitration as an alternative to pursuing the case before a Court.

Pro-Tip: “Negotiations between two people like small business owners are difficult because there’s not only business issues, there are most often personal matters as well. And when you talk with somebody like your wife, like anyone you’ve had any kind of relationship with, just because you believe what you’re saying is correct. doesn’t mean that there’s not emotion involved there. And you have to understand that.

So, we often coach our clients to help prepare them to have these types of internal discussions to work things out.  However, person to person negotiations can only go so far. And then when you have somebody speaking representative to representative, well, the two representatives aren’t going to have hurt feelings. We’re going to be able to work past hurt feelings and look at the bottom dollar line. And also look at the bottom line with business going forward, seeing if there’s a way to heal it, or if there’s nothing to heal, giving our client good advice.

Negotiations and in fact, resolving small business disputes is all about a mastery of the facts. Knowing the facts, the chronology of events, as well as a mastery of any potential damages is key, because that gives your lawyer to predict what would happen if you went to trial tomorrow and you won, what would you win? That’s it, that’s the number. Because in civil court, we’re only looking at settlements involving dollar amounts, updated agreements, contract modifications and understanding human nature.

Preparation for my clients has to do with the law, and damages, and getting all the facts down so that we have valuable things to say, to contribute. We cannot just go in there, and here’s the saddest part, and just declare ‘here’s the right number. Here’s what I’ll settle for. I’m done talking that doesn’t work.’

It should. We believe we’re all intelligent people. And if we all are intelligent people, we should be able to look at the facts. If we agree on the facts, apply law and come up with the exact same number, like it’s an accounting problem.  But it doesn’t work that way. People are not wired that way.” – Dan Watkins, Founding Partner

If you are involved in a dispute between owners in a small company, LLC or corporation, a shareholder dispute or other form of business litigation 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.