Partnership Disputes
Partnership Disputes and Business Divorces
Partners in a business or shareholders in a closely held company often have significant disagreements. These conflicts can affect the business if not promptly and effectively addressed. Many disputes can be avoided through proper drafting of company documents such as shareholder, partnership, and operating agreements; by-laws; and other documents. When no company documents exist or the conflicts escalate, litigation may become necessary.
Our firm represents business owners and aggrieved shareholders, members, and partners in partnership disputes and other types of business divorces helping them resolve their matters favorably and protect their financial interests.
Avoiding Partnership Disputes
Partnership agreements must clearly set forth the pertinent terms of the partnership to minimize disputes later. The agreement should specify key terms such as the responsibilities and contributions of each partner, sharing of profits and losses, decision-making processes, and indemnification and advancement. If the partnership wishes to keep the conflict private, the partnership agreement should include a provision for mediation and/or arbitration of conflicts so most cases stay out of court. If the parties still cannot settle, the agreement can further reduce the risk of litigation by including buy-sell provisions, forum selection clauses, and guidance on which liabilities must be satisfied if the company is dissolved.
Types of Disputes
Conflicts can arise among partners for many reasons. The most common include breach of fiduciary duty, breach of the partnership agreement, fraud, embezzlement, financial mismanagement, conflicts over management of the company, and other conduct. Depending on the conduct and injury, the plaintiff’s legal remedies may include monetary damages, injunctive relief to stop the conduct harming the business, and/or dissolution of the business, also known as a business divorce.
Business Divorce
A business divorce describes ending the business relationship between two or more owners. Typically, this involves dissolving the business or the buy-out of the aggrieved party in a structured, negotiated manner. Company documents may set forth the terms and process for dissolution or the parties can negotiate a settlement. If no corporate document provides for dissolution and the parties cannot settle, the aggrieved party may need to sue for judicial dissolution or to enforce shareholder rights.
Considerations in Resolving Disputes
An out-of-court settlement is the best option when it can be achieved. Litigation is expensive and time-consuming and may result in more damage to the business. Parties usually want to get the maximum value out of the business but that must be weighed against the cost of litigating and additional losses that may result from delays in dissolving the company. With litigation, there are also risks of getting an adverse result when a judge decides how to value the company, divide assets, and pay liabilities.
Parties should involve attorneys early in a dispute. Many partners try to handle conflicts on their own, which can cause more harm than good.
A lawyer may avoid litigation and can better protect the party’s rights.
How We Help
Whenever possible, our goal is to prevent a messy business divorce with a well-drafted business agreement. If we only start working with a client after a dispute has arisen, we provide guidance on how to comply with any legal requirements in business documents and what legal options are available in their case. We look to use mediation or negotiation first, then turn to litigation if necessary. Our attorneys fight for our clients’ best interests both inside and outside the courtroom. We help clients achieve a positive, efficient, and cost-effective resolution of their matter.
If you have irreconcilable differences with your partner, contact us to learn how we can help protect your rights and financial interests.
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PRACTICE AREAS
Transactional and Corporate Law
Securities and Finance
Tax Planning and Tax Controversies
Commercial Litigation
Mergers and Acquisitions
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New York Commercial Litigators
Discourage litigation. Persuade your neighbors to compromise whenever you can. As a peacemaker, the lawyer has superior opportunity of being a good man. There will still be business enough.” — Abraham Lincoln
In business, it’s a given that things won’t always go as planned. No matter how well-drafted a document may be, disputes invariably arise. Those disputes need to be addressed and practically worked out. Our basic philosophy is inspired by Abraham Lincoln – before rushing to court our commercial litigation lawyers look for ways to help our clients compromise, resolve disputes to avoid going to court.
Our tempered approach minimizes the burden on our small-cap clients. Our clients have businesses to run and will often be unprepared for the distraction or expense of litigation. All too often the only winners in a court will be the lawyers who collect their fees, while plaintiffs and defendants both end up dissatisfied with the results.
Sometimes compromise does not work and there is no choice but to litigate.
When that happens, Brinen & Associates is always ready for the fight. Our New York-based commercial litigators regularly represent our clients in State and Federal courts nationwide.
We are staunch advocates and gladiators in suits. Each litigation is approached strategically. We first work with our clients to define their goals and objectives up front, and then develop a tactical plan to best achieve them.
We stay true to our firm philosophy by staffing leanly and avoiding unnecessary expenses so our clients are better positioned to endure the rigors of a long campaign.
Commercial Litigation Experience:
Over the years, our commercial litigation lawyers have successfully litigated many matters for our clients nationally and particularly in and around New York such as:
- Complex commercial litigation, involving disputes relating to corporate ownership and governance including defending against shareholder class actions and derivative actions;
- “Corporate divorces” with a particular emphasis on closely held or family-owned businesses, shareholder agreements, franchisee-franchiser agreements, joint ventures, and trademark and copyright;
- Securities and finance litigation involving federal and state actions and litigation of contested acquisitions and mergers, public offerings, takeovers, and general securities fraud;
- Employment disputes involving the prosecution or defense of wrongful termination, discrimination, and harassment claims, and unfair competition matters, such as the recruitment of a competitor’s employees, the protection of customer lists and trade secrets, the theft of corporate opportunities, and the enforcement of non-disclosure and restrictive covenants; and
- Other complex commercial litigation relating to tax, commercial real estate, and estates. We have regularly represented corporate clients who operated REITs and REOCs in the commercial real estate sector.