When your business is booming, the chances are that the relationship between you and your partner would be great. However, as time gets tough, the relationship usually gets sour, increasing the chances of a dispute.
That’s where a partnership dispute lawyer comes into the picture. They can help you solve the problems that arise at the start of the problem.
In this article, we will discuss various steps to resolve a legal dispute with your business partner in Los Angeles. Let’s get started!
1- Understand the Legal Agreement
Most probably, you will have a formal legal agreement when starting the business. It could be a partnership agreement, shareholder’s agreement, or others. Therefore, the first place to look for dispute resolution is on those agreements. Check if there are any terms or clauses to deal with the current situation. If you are not sure how to do that, a good Los Angeles business lawyer can do that for you.
However, if you do not have a formal agreement or contract, you can look for other communication proof that highlights these things. It could be an email, text message, or any other form of communication between you two.
2- Identify the Issues
More often than not, most business partners come with the same set of legal issues irrespective of how small or big their company is. The most common issues include
- One person is illegally holding company profits or salary
- One person is not issuing distributions to cover tax liabilities that are caused by reporting profits
- Terminating or restricting another owner’s employment
- Paying an excessive salary to control shareholders
- Hiding company funds or underreporting it
- Not holding general meetings for their own benefit
- Not including shareholders in the decision-making process
While your issue might differ, these are the very common reasons for a legal dispute between business partners.
And if you find any of these issues, the first thing would be to talk it out. Going on a legal dispute is costly and time taking. See if you can resolve the matter by talking.
If not, you have the lawyers to go ahead.
3- Seek Outside Assistance
Since you are unable to solve the dispute outside the court, you can seek legal assistance to make things easier. But before we move to the lawyer part, here are the most common legal claims that business partners make:
- Breach of contract. It could be anything like the shareholders’ agreement to confidentiality agreements.
- Breach of duties (care, loyalty, etc.).
- Legal case over access to company information.
- Unauthorized use of business trade secrets.
- Breach of confidentiality.
Depending on your exact situation, your lawyer will advise you on the next steps. Your lawyer will explain to you all your rights and obligations to help you avoid taking the matter to the court. Your lawyer can also help you with out of court settlement, if that’s what you want.
4- Dissolve the Partnership
If you have tried to solve the dispute in every way possible but still couldn’t reach a solution, consider dissolving the partnership. However, again, you will need to reach an agreement with your business partner to dissolve it.
You can also consider selling your shares and exiting the business if you are okay with it.
If you believe taking legal action is the only option you have, talk to your lawyer to understand the long-term implications of it. You will also need to consider the overall costs involved in the whole process.
At the same time, do not be overconfident that only you will win against your partner. Anything can happen in the court.
A legal dispute between business partners is common, especially when the business is falling apart. If you are also facing a legal dispute with your business partner in Los Angeles, it’s time to find a lawyer for you.
Are you looking for a business lawyer to resolve your legal dispute? Let us know in the comment section!
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