7 Practical Considerations for Resolving Disputes Between Business Partners

Disputes between business partners are common. In fact, if you ask many co-business owners, they will tell you that these disputes are inevitable. Disputes reflect the fact that each partner is passionate about the business’ success—and that when it comes to what it takes to achieve success, business partners don’t always see eye-to-eye. Not only is this to be expected, but in many cases, it produces better results than if business partners choose not to think critically about why their opinions differ.

When these disputes arise, it is critical to focus on achieving a constructive resolution. If a dispute devolves into petty differences and personal attacks, this is when it can become harmful to the business and its owners. By engaging a Miami business dispute attorney early in the process, business partners can ensure that they are making informed, rational and strategic decisions with their business’s best interests (and their own best interests) in mind.

Resolving Internal Business Disputes Constructively and Without Unnecessary Costs

Here are seven practical considerations for resolving disputes between business partners:

1. Make Sure All Business Partners Have an Accurate Understanding of Their Respective Control Rights

When facing an internal dispute, a key first step is to make sure all of the business’s owners have an accurate understanding of their respective control rights. If one or more partners have a controlling say in high-level decisions, this could effectively resolve the issue at hand.

The owners’ control rights should be clearly outlined in the business’s governing agreement (i.e., a shareholder agreement in the case of a corporation or an operating agreement in the case of a limited liability company (LLC)). If the business’s governing agreement is not clear, this may be a threshold issue that needs to be addressed before the partners can focus on resolving their underlying dispute.

2. Identify and Prioritize Any Immediate Risks to the Business

Business partners who are facing an internal dispute should identify and prioritize any immediate risks to the business. For example, if the dispute has the potential to negatively impact the business’s clients or customers, avoiding this negative impact should generally be the top priority. While any internal damage may be relatively easy to repair once the dispute is over, damage to the business’s external relationships, public reputation and goodwill could prove to be a much more costly and long-term problem.

3. Start the Dispute Resolution Process By Identifying Common Ground

As with any type of dispute, it is generally best to start the dispute resolution process by identifying common ground. If all partners recognize that they have the same end goal (whether this is to continue growing the business together or go their separate ways), this can help set the stage for productive and good-faith negotiations. Conversely, if any of the partners involved in a dispute are focused solely on the animosity at hand, this can make it much more difficult to get to the stage of negotiating constructively and with a focus on conflict resolution.

4. Keep This Common Ground in Mind Throughout the Dispute Resolution Process

Having identified the partners’ common ground, it is important to keep this common ground in mind throughout the dispute resolution process. Losing sight of the partners’ shared end goal can lead to additional animosity and challenges that could—and perhaps should—have been avoided.

5. Consider Whether Mediation or Arbitration May Be Warranted (or Required)

In many cases, business partners will be able to work with a Miami business dispute attorney to negotiate a resolution that allows them to move forward. After all, negotiating and resolving conflicts are a big part of what it takes to operate a successful business.

But, sometimes, negotiating won’t be enough. This is where alternative dispute resolution (ADR)—either mediation or arbitration—comes into play. When facing a dispute, business partners can agree to use mediation or arbitration to resolve their differences instead of going to court, and frequently, businesses’ governing agreements will include mandatory ADR provisions that apply in this scenario as well.

6. Be Careful Not to Overlook Potential Solutions (and Revisit Potential Solutions as Warranted)

When facing a dispute, it is easy to focus on two potential solutions—the ideal solution sought by each side. However, there may be numerous other solutions that are satisfactory to both parties. When going through the dispute resolution process, it is important not to overlook potential solutions. As the process progresses, business partners may also want to revisit potential solutions that they have set aside previously. This is one area in particular in which a Miami business dispute attorney who is experienced in helping partners avoid litigation should be able to help.

7. Maintain a Long-Term Perspective

Finally, when working to resolve a dispute between business partners, it is important to maintain a long-term perspective. Depending on the circumstances, this may involve thinking critically about questions such as:

• Does the dispute threaten to jeopardize the business’s reputation or key external relationships?
• What is best for the business’s future growth?
• How can the dispute be resolved in a way that mitigates the risk of similar disputes in the future?
• Is it time for the business’s owners to go their separate ways?
• If a business separation makes sense, what mechanisms are already in place, and what is the best path forward?

Answering these questions (among others) will help inform everyone’s decision-making—and this will ultimately help to facilitate an efficient resolution that makes sense for all parties involved. Here too, an experienced Miami business dispute attorney will be able to provide critical advice and insights that are custom-tailored to the specific circumstances at hand.

Speak with a Miami Business Dispute Attorney at Gonzalez Law Offices, P.A.

Are you facing a dispute with your business partner (or partners)? If so, we invite you to contact us for more information. To speak with a Miami business dispute attorney at Gonzalez Law Offices, P.C. in confidence, call 305-676-6677 or tell us how we can help online today.