Imagine building up a business with another person, only for that partner to suddenly want sweeping changes you don’t agree with. Such partnership disputes can start to become a tug-of-war and are a big reason why around 70% of business partnerships fail. So, if this happens to you, and your partnership shares are 50/50, how do you get past this hump and start making decisions?
Below, you will find details on not only how to learn why the dispute is occurring, but how to leverage that knowledge in resolving the problem.
Finding the Root Cause of the Partnership Dispute
Sometimes the latest issue is one in a long line of disputes. As such, you need to ensure you know why this keeps happening to see if you can prevent it from recurring moving forward.
This might be due to personal differences or ongoing misunderstandings. Sometimes it might even be due to a deeper, unresolved, disagreement in how a business should run. In some cases, it could even be due to external pressure from other business associates, friends, or family.
Whatever the reason, knowing the stance of one another is more likely to lead to a shared understanding you can base solutions on.
Open and Honest Communication
Tensions might be high after a 50/50 partnership business dispute. So, try to be a little careful about how you enter any conversation. For those who entered business as friends, this may be easier, but also may come with its own issues.
Make an active effort for all parties to feel safe airing concerns, and ensure you both know how to engage in active listening. This will allow you to understand the stance of the other person and help you both seek and offer feedback with more insight as to the issue at hand.
Partnership Dispute Solutions
Not all disputes must end the partnership. Many instead need a small change to how the business runs to ensure both partners are comfortable with a change in the situation. The following are some changes to investigate, though note this list is not exhaustive:
Revisiting Roles and Responsibility
It may be that one person in a partnership dispute is making decisions they neither want to nor are qualified to make. If you believe that to be the case, be diplomatic about the query as it can come off patronizingly if you do not.
When you know each person’s interests and abilities, try to re-allocate each of your responsibilities. If you can, try to document this change in any partnership agreement or work organization document. You should also check in now and then to see if this decision has had the desired effect.
Investigating a Business Buyout
Look into the organization’s current value and see if it would be worth one person or the other buying it out. This could be done in phases, or some other flexible arrangement. The terms of such an agreement should be very clear for all parties, and you may need to bring in a professional to ensure its legality.
Take a Sabbatical
While it might punt the problem down the road instead of resolving it, there are times when someone getting a break can help. They can come back with the benefit of distance and time, and sometimes a new perspective, before they start making decisions again.
Planning for Future Disputes
One of the best ways to resolve disputes is to stop them from happening in the first place.
As the partnership grows, make sure to check in at regular intervals, changing any agreement you have to match the evolution of the company. If disagreements occur, retrospect after each one and try to find what caused them. This can often prevent such issues, or allow you to understand how to resolve them, moving forward.
The Three Steps to Resolution of Partnership Disputes
If the above steps do not bear fruit, you might need to look into professional intervention. You would want to take this step when no other solutions have worked, and the business’ well-being is in danger due to this disagreement.
At each of these steps, both parties need to be actively seeking an agreement and acting in goodwill. If they do not, the issue is likely to escalate.
Step 1: Mediation for Businesses
This is when the business dispute reaches a level where you need to bring in a neutral third party to resolve it. Not only can they provide a level and uninvested insight, but they can also help to facilitate ongoing discussions.
A mediator will be able to ensure everyone is communicating what they intend to. This process can help prevent emotion from clouding either party’s understanding of the situation.
Mediation usually involves trying to get voluntary compliance with an issue. If the parties need a legal resolution, such as a change in contracts, it will usually go to the next step.
Step 2: Arbitration for Partnership Disputes
This involves bringing in a neutral individual to try to handle the issue in legal terms. Each person will present their case, and the intent is to reach a binding decision based on the arbitrator’s judgment.
This can sometimes lead to a change in the business shares of each partner in exchange for something else, although this is not always the case. While this process tends to be faster than a court case, ongoing disagreement may lead to the next step.
Step 3: Litigation
A business conflict that remains unresolved after arbitration will end up in court. In this situation, attorneys will represent each business partner and a judge will decide on a binding solution. This is often a lengthy process that can be costly and runs the risk of the judge making a decision neither partner likes.
Experienced Business Lawyers to Assist in Resolving Partnership Disputes
You should now have a better chance to ensure your partnership shares no longer lead to further problems. We cannot guarantee you can do this on your own, though. So, if you want to protect your business or even make sure nothing like this happens again, you might want some help.
Boyler Law Firm has experience in business law, litigation, and dispute resolution. We can work with you to get you a result that is as close to what you seek as possible. So, book a meeting with us to learn more about how we can help you.