Are you involved in a member dispute in an LLC in San Diego or Southern California? What happens when there is a disputes between co-owners or members in an LLC? The experienced business dispute resolution attorneys at the Watkins Firm understand the costly interruption a partnership dispute can cause, and work to quickly and cost-effectively resolve it.
The Most Common Causes for a Member Dispute in an LLC
What are the most common causes for a member dispute in an LLC? The most common reasons for disputes between the owners of an LLC include disputes over money, management responsibilities and decision making, disagreements regarding the direction of the company or significant investments or a breach of fiduciary duty.
The owners or members of the LLC have a fiduciary duty of loyalty to provide accurate account, hold any profit or property of the LLC as a trustee would. One owes a duty to act in the best interests of the LLC including an obligation not to compete with the LLC itself. Commingling and using LLC monies for personal reasons are common issues regarding a breach of loyalty.
Decision making and risk-taking fall under the fiduciary duty of care. This requires the members of an LLC to make reasonable decisions based upon experience and investigation to ensure that the basis of information for any substantial decision is accurate.
Look to the Operating Agreement
The first place to look is the operating agreement, or corporate documents. A well-crafted operating agreement should clearly identify the steps to resolve disputes between members in an LLC and prescribe specific remedies.
Unfortunately, many partnerships and LLCs are formed with downloaded forms, or forms copied from the internet, and the operating agreement is not fully developed to efficiently guide a member dispute in an LLC through these issues.
Our attorneys quickly gain an understanding of our client’s goals for the situation and work to establish a productive and cooperative dialogue with other parties and their lawyers (if present). We help the parties to understand each other’s perspective and work to find common ground.
Fortunately, the Watkins Firm is able to resolve the vast majority of cases involving a member dispute in an LLC through leveraged negotiation. Negotiation is the fastest and least expensive method to resolve a business dispute.
In some cases business mediation or arbitration may be required to move the conversation toward resolution. When underlying documents are vague and the parties are on opposite ends of several issues, litigation may be required to resolve the dispute and move the parties forward.
The attorneys at the Watkins firm take a unique approach to litigation. We strive to resolve the dispute at each step of the process in the fastest and least expensive manner possible, while achieving our client’s goals and objectives. We are uniquely positioned to represent a client as needed at every step of the process: negotiation, mediation, arbitration, or litigation. Our successful track record in Court verdicts communicates the strength of your position to the other parties and opposing counsel. It’s good to have the experience and proven success across decades of service in your corner.
If you are involved in a member dispute in an LLC 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.
