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Common Partner Disputes and How to Resolve Them

August 3, 2020

Going into business with a partner is one of the best ways to operate. Many companies have flourished because the old adage that two heads are better than one often turns out to be true. Unfortunately, even in the strongest partnerships, disputes are known to occur. With the COVID-19 pandemic and the many challenges facing daily business operations as a result, some experts have begun to refer to today’s world as an “anger incubator,” in which people must confront a variety of potentially infuriating factors in business and in daily life.

While there are several common ways that partnership disputes arise, there are several strategies that can be used to resolve them. 

Disagreements Among Partners

Some of the most common types of disputes that partners encounter include:

 

  • Intellectual property disputes. If a company is based on one partners’ intellectual property, it is possible to take steps against this asset being classified as company property. This is why there should always be clear documentation about who retains the asset and how it is handled during and after the life of the business.
  • Monetary disputes. Business partners often disagree about how money should be spent. In many partnerships, one individual manages operations while the other decides how money is handled. To avoid disagreements over finances, it is a good idea to make clear ownership rules up front. In terms of compensation, both partners should be honest about how much time they put into the company and take the corresponding amount in salary.
  • Operational disputes. Many partnerships begin with co-equal management and the partners intending to make decisions mutually. Disagreements, however, can still arise because one partner might feel that the other partner is not performing his or her job. One of the best ways to avoid escalating conflict is to clearly outline the process for dispute resolution in your partnership contract. 

 

Tips in Resolving Partnership Disputes

Some strategies that can be utilized to reduce partnership disagreements include:

  • Actively listen. Practice “active listening” in which each partner agrees to compassionately listen to the other’s position without interjecting. 
  • Avoid rush judgments. For small companies, even small decisions can be critical. If partners disagree about an issue, it can be easy to end up in an argument. Rather than rush into a decision, relax and consider your partner’s position.
  • Plan in advance. If you anticipate that certain topics will result in disputes, attempt to plan how to handle these disputes ahead of time. 
  • Seek outside help. Realize that outside help can be useful. Mediation can be a great choice in these situations. Mediation is focused on reaching a fast and effective resolution that benefits both parties in a dispute. If mediation is undesirable for some reason, it might be time to consider retaining the assistance of a knowledgeable corporate lawyer. 

Speak With an Experienced Business Law Attorney

At Resnick Law PC, our attorneys have helped business owners resolve disputes. Contact us today by calling (248) 642-5400 today to schedule a free case evaluatio

Filed Under: Business Law Tagged With: business attorney, business partners, partnership disputes

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Our firm’s practice areas include:

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