Tips on Handling Business Partnership Disputes

Disagreements can be a healthy part of any business partnership, but when those disagreements escalate into full-out disputes, the very existence of the partnership can begin to feel threatened.

Partnership disputes can arise out of any point of tension including disagreements over how the business is managed, how resources are (or aren’t) allocated, and more. While you may not be able to foresee all disputes, developing a strong partnership agreement at the outset of your business relationship can help you navigate the murky waters of handling a dispute if and when it does arise.

First, Look to Your Partnership Agreement

Partnership agreements are essential to the success of your business and business relationship because it offers you a clear path forward for addressing business change, growth, and conflict. Importantly, it’s also developed when you and your business partner are clear-headed and have a business attorney at your side. To learn more about five things every partnership agreement needs to include, read our blog post on what to consider when starting a small business.

Many disputes can be avoided by returning to the original partnership agreement and reviewing their partnership expectations, obligations, and agreements. The partnership agreement should also spell out policies and procedures for handling disputes. If it doesn’t, you should talk to your legal counsel and amend the document to include a dispute resolution provision.

How to Resolve Disputes After They Arise

Once an argument flares into a full-out dispute, you and your partner should look to your partnership agreement for how to resolve it. A good first step is to engage directly with your partner in negotiation and try to privately resolve the matter. Consider the circumstances to determine if other partners or staff need to be involved.

If you can’t work out the issue informally or through direct negotiation with your partner, it may be time to participate in mediation with a neutral third party or follow the dispute resolution procedures you’ve outlined in your partnership documents. Alternative dispute resolution, such as that via mediation services, is usually much less expensive than the cost of litigation.

Business disputes can be a stressful point of contention between you and your business partner, but there are effective ways to handle disputes. Ensure that your documents contain clauses pertaining to disputes, and when you are in a disagreement, stay open-minded and try not to take the issue personally.

At Silverberg|Brito, PLLC, our commercial law team can help you navigate partnership disputes and ensure that your partnership agreement contains the necessary clauses for your business. Contact us today to schedule a consultation to discuss your needs.

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