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Common Questions About Disputes Between Partners Or Shareholders

Keeping a business running smoothly takes effort on everyone’s part. Different stakeholders may have different ideas on how best to accomplish business goals, however. The following are some common questions we receive at Valenti Hanley PLLC regarding partnership or shareholder disputes.

What are some of the most common causes of partnership disputes?

Just like any relationship, business partners are bound to disagree about things from time to time. Some disagreements are minor and can be resolved with a quick discussion. Others could include serious allegations of mishandling the business, resulting in a lawsuit. Common disputes stem from:

  • Financial disagreements, regarding how to invest or spend money.
  • Authority disagreements, regarding who oversees what in running the business.
  • Vision and mission disagreements, regarding your goals for the future.
  • Workload disagreements, regarding how much time and effort each partner is expected to contribute.
  • Breach of fiduciary duty, regarding violations to a partner’s duty of care toward the company.

What are some ways that, right from the start, business partners can try to avoid costly disputes?

A strong partnership agreement is key to success. The same goes for a strong shareholder agreement. Having detailed conversations about management and expectations at the outset can help prevent misunderstandings and disputes down the road. Work with an experienced business lawyer to create your governing documents and be sure to include a method for resolving disagreements so they do not balloon into a serious issue.

When should a shareholder bring a lawsuit and when is it preferable to work it out?

If you simply disagree with a legitimate business decision, negotiation or mediation could help you resolve the issue. On the other hand, if an officer or director has breached their duty of care to the company in a way that is damaging to the company, it may be time to seek legal advice about bringing either a shareholder derivative suit or a direct lawsuit.

What is the best way to handle a dispute that concerns a family-owned business?

Of course, every situation is different, and you may find that a lawsuit is the only option. When possible, however, mediation can be especially effective for members of a family-owned business. Mediation uses a third-party neutral to help the parties resolve their differences outside of the courtroom. This process can help protect important personal relationships while resolving the business disagreement.

Do You Have More Questions?

Please bring them to one of our experienced business lawyers. To schedule an appointment, you may call 866-617-6209 or toll-free at 866-617-6209, or reach us using our online contact form. We have offices in Boulder, Colorado, Louisville, Kentucky, and Treasure Island, Florida.