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Common Causes of Business Partnership Disputes

Updated: May 21, 2022

Est. Reading: 4 minutes

When you spend a large amount of time with someone, arguments and disagreements are to be expected, no matter if your relationship is a personal or professional one. In professional relationships, however, such as business partnerships, there is normally a lot of money, hard work, and the future of employees at risk when disagreements happen.

These disputes can be naturally aggravated by a lack of time away from each other, as growing businesses normally need constant hands-on attention so taking time away from each other may not ever be an option.

This is why it's extremely important that all business disagreements and disputes are handled in a quick and professional manner, with the business, profits, and the well-being of employees as the first priorities. Hiring a business attorney to help mediate all disputes between you and your business partner can be the difference between a good or tragic future for your business.

At Monahan Law Firm, we know that you're willing to do whatever it takes to make your business successful, and through our mediation services, we help business partners fix disputes and make the right decisions every single day. 

Most Common Causes of Business Partnership Disputes

The number one reason why business partners begin having a breakdown in communication and disputes with their partners is not surprising: Money is the root of all evil, after all. Financial disputes can mean arguments about what profits or excess funds should be used for, such as one partner believing the money should be reinvested while the other partner might wish to keep some of the profits.

Neither business partner would be inherently wrong in this case, they each simply have a different opinion, but a partnership dispute can quickly ruin an otherwise healthy business relationship. 

One partner may also feel that the other partner is not acting in the best interest of the business or company, and is costing the business profits in some way. This is called a Breach of Fiduciary Duty. This can range from misusing profit money, not keeping up with the business's financial obligations, and doing anything that might cause financial difficulty for the business. 

More common business disputes can come from a difference in management styles, i.e micromanaging vs "not managing" managing, personal issues of one business partner causing legal issues for the business, such as personal lawsuits, one partner breaking the operating agreement, etc. 

Large Scale Business Dispute: Cellino & Barnes

How to Maintain a Strong Business Partnership

Like a marriage, bad communication can end a previously strong business partnership. Partnership disagreements may seem small, such as paint color or the font on the business cards, but they can easily build up over time and become something much larger. If you and your business partner can not or are not willing to communicate properly with each other about small issues, you have no hope of avoiding much larger future disputes. 

Business Partnership Disputes

Being honest is also a huge need when dealing with a business partner. Lying to your business partner, or yourself, will only create animosity, regret, and resentment. While being honest might be scary, it is the only way to fully and truly communicate. Asking for, listening to, and learning and growing from criticism and advice from your business partner is also a good way to keep your relationship strong and thriving. 

The best way to keep your relationship with your business partner strong, however, is extremely simple. Always remember that your business partner, in all but extreme circumstances, is normally acting under the same thoughts that you are: they are trying to do what they believe is best for the business. If you can remember that your partner is not out to do anything other than exactly what you're trying to do, just in different ways, and that their intentions are good. If you can remember this, then it makes coming to an agreement and compromise on most situations much easier. 

10 Largest Business Partnership Disputes

How an Attorney Can Help Settle Business Partnership Disputes

In any relationship, whether it be platonic, romantic, or business, having an outside perspective can make all the difference when it comes to settling disputes. When you are angry, it can be extremely difficult to want to listen to the person you are upset with, especially if they are telling you that you're wrong. But getting a third person's unbiased and honest view of what's going on can help cool heads and make it easier for you and your business partner to walk in each other's shoes, and understand each other better. 

Another way that attorneys can help is that, with an outside perspective, it is easier for an attorney to assist their clients in coming up with things such as a separation of duties for company operations and profit distribution to help avoid issues in the future. This helps ensure that the delegation of the workload is fair to both partners. 

Having an attorney on your side can also help with any business opportunities that you and your partner are unable to agree on. Experienced business attorneys can be extremely vital in spotting issues with potential deals or opportunities, and can offer legal advice on the pros and cons of any decisions that could be made. This can help you and your business partner look more at the cold hard facts rather than going head first with emotion. 

Don't Wait Until It's Too Late

Built-up resentment and anger can quickly lead to the downfall of a business. With an experienced business attorney on your side, solving disputes and making business decisions doesn't have to be difficult and wearying. At Monahan Law Firm, we know our clients' number one goal is always the betterment of their business, and that it is our job to help them along the way. Call us today to set up a consultation, and let's work together every day to keep your business growing and thriving. 

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Attorney Patrick Monahan

Patrick Monahan

Patrick Monahan is the managing partner of Monahan Law Firm, PLC. Patrick began his legal career practicing real estate, construction, and general business litigation.
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