Orange County Business Attorneys Explain Partnership Disputes

As experienced Orange County business attorneys, we have advised all sorts of partnerships through all types of legal problems. Whether your partnership is a medical practice, real estate firm, manufacturing company, retail store, family business, or other type of business, a wide range of factors can prompt partnership disputes.

Preventative Measures
Disputes can arise when partnership agreements are not well drafted and leave out important elements that should have been discussed, agreed upon, and stated clearly in the agreement. For instance, a common dispute occurs when a partnership agreement does not clearly spell out what is to occur in the event that one partner wants to leave the partnership, dies, or becomes incapable of performing his or her duties.

First and foremost, you should seek an experienced Orange County business attorney when forming a partnership to create a solid partnership agreement in the hopes of avoiding conflict down the road. However, even with well-crafted partnership agreements, unforeseen circumstances can arise that cause partnership problems.

Mediation and Arbitration
In addition to poorly drafted partnership agreements, other common issues that cause partnership disputes include personality clashes, declining profits, asset mismanagement, and dishonest acts by partners. Partners should always try to work out disputes before litigation. Hopefully, your partnership agreement contains mediation and arbitration clauses. If it does, then these non-litigious alternatives should be attempted in good faith first.

Mediation involves the parties sitting down with a neutral experienced mediator, whose role is to help the parties resolve whatever issues need to be addressed. An arbitrator (or arbitration panel), on the other hand, acts like a judge. Your case will be presented to the arbitrator, and the arbitrator will make a decision. The process is much less formal and quicker than a regular trial. The parties may still agree to try mediation and arbitration even if their partnership agreement does not reference either option.

Dissolving a Partnership
One of two types of methods can be used to end a partnership: a voluntary dissolution or an involuntary dissolution. If the parties decide that they want to terminate the partnership and are in agreement to do so, they may do so via the voluntary dissolution process. With a voluntary dissolution, the parties will decide a variety of issues, such as how assets and liabilities are to be divided, and how any ongoing responsibilities will be carried out.

If the parties cannot agree how to resolve their disputes, then a legal action gets filed, and a judge normally orders an involuntary dissolution of the partnership. Your lawyer can advise you what will be involved in the process specific to your case, but generally speaking, a detailed accounting and review of the business takes place, and then a division of the assets and debts is ordered. Also, an independent receiver might be appointed to manage the business while the case is pending if wrongdoing by a partner took place.

Contact us, experienced Orange County business attorneys, today at (949) 861-2524 for a free initial consultation regarding your partnership matter.