Business Ownership Disputes Distract the Company and Consume Valuable Resources
What happens when there are disputes between members in an LLC? What is the best way to resolve business disputes, and are there effective strategies for preventing them in the first place? Disputes and disagreements between members or the owners of an LLC are quite common and in some cases actually quite healthy. The fastest way to resolve any business dispute is an effective negotiation based upon mutual business goals and objectives.
Business professionals can and do have principled disagreements when it comes to the operation of a company, the direction it is taking as well as the distribution of associated income and profits. The experienced business attorneys at the Watkins Firm have decades of service to San Diego area LLCs and corporations. We help business owners and members of an LLC to resolve differences and move forward. When founding members of an LLC get into a substantial disagreement, it will distract the company itself from the business at hand reducing productivity and profits.
Disagreements About Profit Distribution and Job Performance
Two of the most common areas of dispute surround the performance of job-related duties, and the distribution of profits or income. When the LLC is formed, each member usually has an area of responsibility associated with the business. It could be bringing in new business (sales), managing the delivery of products or services, coordinating employees and managing on-going business operations, or the creation of intellectual property. Many business owners feel they are contributing much more to the business than their partners, and disagreements develop over appropriate compensation and control over business decisions.
The establishment of an “operating agreement” should clearly identify the roles and responsibilities of each party, and the compensation they should expect from the business. The operating agreement should address the distribution of income or profits in the business. Many operating agreements (especially those downloaded from a forms site) do not clearly identify how the company will handle life challenges such as the divorce of one of the members, valuation of a business interest when one party wants to buy out another, or how new investors will be brought into the company. An effectively drafted operating agreement can enhance the productivity and profitability of a new business, and prevent disputes before they ever arise.
Contact Experienced Business Dispute Resolution Attorneys
The attorneys at the Watkins Firm have decades of experience helping to resolve disputes between members in an LLC. There are three primary methods for resolving business related disputes:
- Mediation or Arbitration
The fastest and least expensive method to resolve a dispute is negotiation. Our attorneys work to understand your goals and objectives for the resolution of any dispute. We can provide valuable insight into your situation, and help to develop a strategy to find common ground, and negotiate a resolution to underlying disagreements and position your company to move forward and prosper. Mediation and Arbitration are strong alternatives to business litigation, and each provides unique advantages and challenges in terms of dispute resolution, control over the process, time, and cost.
If you are an owner of an LLC and are in the midst of a dispute with another member or partner within your company we invite you to contact us to schedule a meeting, or call 858-535-1511 for a free and substantive consultation. We will discuss the specific circumstances surrounding the dispute, and work with you to establish a strategy to resolve the situation based upon your goals and objectives. We provide sound counsel, and the benefit of decades of experience and expertise to help your business to grow and thrive.