Partnership Disputes
Forming a partnership can be a great way to pursue a business venture, in terms of both collaboration and capitalization. It is common, however, for disputes to arise among business partners. These disputes can arise in a variety of ways, including but not limited to:
- Capitalization and contributions to the partnership;
- Allocation of partnership resources and assets;
- Workload imbalance between/among the partners;
- Misconduct by one or more partners, such as misappropriation of funds; and
- Liability for claims asserted against the partnership.
How is a partnership formed?
Ideally, the first step in forming a partnership is preparing and signing a written partnership agreement, memorializing the partners’ contributions, duties, decision-making procedure, compensation, and distributions. The agreement should also address procedures in the event of disputes between the partners and dissolution of the partnership. Depending on their needs, partners should also consider forming and registering as a limited partnership, limited liability partnership, or limited liability company. If you need assistance with drafting a comprehensive partnership agreement, please contact our office.
In order for a partnership to exist, however, a written agreement is not required. Under Mass. Gen. Laws, chapter 108A, §6, a partnership is broadly defined as “an association of two or more persons to carry on as co-owners a business for profit.” A partnership can therefore arise by operation of law, based on the parties’ prior conduct in operating the business venture.
How can a partnership dispute be resolved?
As with many other civil disputes, litigation is very rarely our first step in handling a partnership dispute. Typically, partners who are involved in a dispute have invested a great deal of time and money into the venture. Drawn-out, expensive, and bitter litigation may not serve anyone’s interest. We pride ourselves in understanding the needs and goals of all parties involved and proposing creative solutions that can either save the partnership or wind it down in an orderly fashion. We also find that mediation involving a professional neutral can assist the parties with reaching a settlement agreement. When these options have failed or are not possible, our experienced attorneys seek to achieve our clients’ goals through court-ordered injunctions, restraining orders, and awards of money damages.
