It is important that they are resolved quickly for the sake of you, your partner, your clients and your business.
Ideally, your partnership agreement should determine what happens in certain situations. However, often it doesn’t and even when it does, it is wise to seek legal support to help you through this period.
Typically, partnership disputes fall into the below categories:
1. Misconduct
Misconduct can range from:
- Being rude or aggressive to other partners or clients.
- Substance-abuse or unhealthy addictions.
- One partner stealing business opportunities. Sometimes one partner will take business that belongs to the partnership into his own independent business.
- Breaches of the partnership agreement.
- Fraud– which could be as straightforward as one partner drawing money more than he should or fabricating expenses or as complex as creating false clients and accounts.
It is important that these are addressed and dealt with as quickly as possible before they can escalate further and cause more damage.
2. A Partner Doing Less than their Fair Share
This is a common cause of partnership disputes. This situation can come about for several reasons:
- Most of the business coming in is for one type of work which cannot be done by that partner.
- The market has evolved and it is now only profitable to do the type of work done by you.
- Your partner spends most of his time on holiday or the golf course, arrives late or leaves early.
- Chronic poor health issues. These issues need to be managed sympathetically but someone’s health can deteriorate to the point where they can no longer properly perform their role.
It can also happen that your partner tells you that they want a better work life balance and want to work less hours, or they may even want to work from abroad.
Again, it is important that you look to resolve these issues early on before they get worse.
3. General Partnership Disputes
Disagreements are usual in a partnership but what happens if they escalate and become disputes which are tearing the business apart. These could be issues around:
- Authority and responsibility– who does what and what is the chain of command?
- How to use the partnerships income– this could be a disagreement over promoting the business, new offices or the the lease of vehicles.
- Choice of supplier– the choice of who to source needed products and services from can cause partnership disputes.
- The company objectives– it can happen that one partner wants to aggressively grow the business and make lots of money while the other values his time more and would prefer to stick to his current pay, workload and risk levels.
Most of these types of disputes can be amicably resolved through negotiation and mediation.
4. A Breakdown in Your Professional Relationship
Over time respect and trust can decline to a level where the relationship is no longer tenable. This can happen for various reasons and you may decide that it is time to go your separate ways.
