Taylor Legal Blog

What to Do if You Have a Dispute with Your Business Partner

Posted by Katherine L. Taylor, Attorney and CPA, Chief Problem SolverFeb 23, 20210 Comments

Hi, I'm Katherine Taylor, the lawyer for business owners. Are you a business owner with one or more partners? And have you ever been in a dispute with one or more of your business partners?

If so, you know how emotionally exhausting and expensive it can be. So I'm going to give you a few tips as to how you can resolve disputes with business partners. If you find yourself in a dispute with one or more of your business partners (and when I say business partner I mean LLC members or shareholder or other members of the business in which you own your interest), the first thing you need to do is try to work it out. I can't emphasize that enough.

If you can't work it out among or between yourselves, find somebody who you trust—it could be the company's accountant, a friend or another adviser that you respect because working it out is going to save a whole lot of money and effort. If you can't work out the dispute, the next thing you should do is go to your operating agreement or your shareholder agreement to determine whether there is a provision within that agreement that states how disputes are to be resolved. If you are realizing you don't have an operating agreement or a shareholder agreement, put that on your list of things to do. If you have an agreement that provides a dispute mechanism, follow the agreement. If you don't have an agreement, or if the agreement doesn't explain how to handle this particular dispute that you're in and you cannot get beyond an impasse, you may be forced to go to the state statutes that govern your entity and find out within the state statutes how a dispute is resolved.

Unfortunately, in most states, the way that impasses or disputes are resolved is for one or the other owners of the business to file a lawsuit to have a court either dissolve the entity or resolve the dispute. That is the last thing you want to do. It is extremely expensive. It's extremely emotionally draining and it takes time away from the business that you, both, or all of you should be running.

So if you're not currently in a dispute with your business partner, give me a call because, if you don't have an operating agreement or a shareholder agreement that can address these kinds of situations, you should. If you are in a dispute or you get into a dispute with another business partner, give me a call because I can at least let you know what your options are and assist you with resolving that dispute.

My contact information is on our website, www.taylorlegal.com. I'm Katherine Taylor, the lawyer for business owners. Thank you.


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