Taylor Legal Blog

What to Do When You Have a Dispute With a Business Partner [VIDEO]

Posted by Katherine L. Taylor, Attorney and CPA, Chief Problem SolverJun 17, 20210 Comments

Are you a business owner with one or more partners, and have you ever been in a dispute with them? (By business partner, I mean LLC members or other shareholders of the business and in which you own your interest.)

If you have, you know how emotionally exhausting and expensive it can be.

If you find yourself in a dispute with one or more of your business partners, the first thing you need to try to do is 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 advisor that all of you respect because working it out is going to save a whole lot of money and effort. 

If you simply can't work out the dispute, the next thing you should do is go to your operating agreement or your shareholders' agreement to determine whether there is a provision that states how disputes are to be resolved. If you don't have an operating agreement or a shareholders' agreement already, put that on your list of things to do.

If you have an agreement that provides a dispute mechanism, follow it. If you don't have an agreement, or if the agreement doesn't explain how to handle this particular dispute and you cannot get beyond an impasse, you may have to go to the state statutes that govern your entity and find out how a dispute is resolved. Unfortunately, in most states, this is done by having one of the owners 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 should be running.

If you're not currently in a dispute with your business partner, but you don't have an operating agreement or shareholder agreement that can address these kinds of situations, give me a call.

If you are in a dispute or you get into a dispute with another business partner, give me a call as well because I can at least let you know what your options are and assist you with resolving that dispute.


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