Business partnerships are built on trust, transparency, and a shared vision for the company. However, even strong partnerships can face disputes that potentially jeopardize a company’s stability, reputation, and bottom line. If you’re a business owner on Long Island who is in partnership with one or more people, it’s important to know how to address the various conflicts that can arise to ensure the long-term success of your company.
Here are five ways to address partnership disputes on Long Island:
1. Know the Common Causes of Partnership Disputes
The best way to address partnership disputes on Long Island is to tackle them before they arise. It’s crucial to understand the common causes of partnership disputes in order to implement strategies that will help mitigate risk in advance. Reasons conflicts can occur between business partners include the following:
- Breach of fiduciary duty
- Breach of partnership agreement
- Disputes concerning the direction of the company
- Workload imbalance
- Inequalities in partner contributions
- Financial disagreements
- Disputes concerning the division of profits
- Fraudulent activity
Importantly, the likelihood of these disputes and others can be reduced with a clear partnership agreement.
2. Review the Partnership Agreement
A solid and well-drafted partnership agreement can prevent disputes before they occur by addressing essential issues upfront. This document can clarify the roles, responsibilities, and expectations of each partner to ensure everyone is on the same page. It can also specify the distribution of profits and losses, identify the processes for decision-making, and outline dispute resolution mechanisms. Ultimately, a good partnership agreement should help preserve the business relationship between partners and ensure the company continues to run smoothly.
3. Document Everything
No matter how well you and your business partners get along, it’s important to document everything. In the event of a partnership dispute, contracts, emails, and invoices can serve as evidence. Document crucial conversations and business decisions in writing, so they can be referred to in the future — and make sure all partners have access to key documents, so they can reference them when necessary.
4. Keep the Lines of Communication Open
Many partnership disputes are caused by lack of communication. One of the most effective ways to address partnership disputes before they occur is by ensuring honest and transparent communication. Hold regular meetings to discuss new ideas, schedule check-ins, and create an environment that emphasizes open dialogue. Frequent communication is vital to prevent misunderstandings and quickly resolve issues.
5. Consider Alternative Dispute Resolution Before Resorting to Litigation
A partnership dispute doesn’t always have to mean the end of the partnership — or damage to the business. Alternative dispute resolution (ADR) methods, such as mediation or arbitration, can help preserve business relationships and resolve conflicts faster and more cost-effectively than litigation. They also allow the parties to preserve confidentiality, have control over the outcome of the legal process, and find creative solutions that meet their company’s needs that wouldn’t be available in the courtroom. While ADR typically has a high rate of success, litigation may be necessary in cases where the parties cannot reach a settlement outside of court.
Contact an Experienced Long Island Business Attorney
If you are facing a partnership dispute, it’s critical to have a knowledgeable business attorney who can best advise you how to address the conflict while preserving your business relationships and protecting your profit margin. Offering dependable legal services to business owners on Long Island and New York City, Barnes & Barnes, P.C. handles a wide range of partnership disputes. Contact us at (516) 673-0674 to schedule a consultation.
