Resolving partnership or shareholder disputes in these challenging times

21st February 2022

The Covid-19 pandemic has created unprecedented challenges for everyone. When times get tough, we know that business relationships are not immune, and when business partners and shareholders fall out the control, ownership, direction and sometimes the very survival of your business can be at risk. But knowing your rights and getting expert legal help can navigate you through difficult times and allow you to get on with business.

Partnership disputes, and disputes among shareholders/directors, are unfortunate but not uncommon and how you approach them can make all the difference to whether you resolve them or are able to negotiate an amicable split. We regularly help repair business relationships and resolve business disputes, enabling clients to focus on what’s important to them, whether that’s keeping the business running and preserving its value, agreeing the terms of any split or even winding down the business.

Watch our recent webinar replay: Minimising the fall out from your fall-out! below, with our partnership disputes experts, Lynsey Oakdene and Louise Norbury-Robinson.

Click here to view our post partnership disputes webinar key tips and follow-up checklist.

Why do disputes happen?

Experience tells us that each dispute is different, but that there are often common themes. These include:

• Breakdown in relationships
• Disagreements about the direction of the business (including where different generations are involved)
• Misconduct/mismanagement
• Partners/directors/shareholders not doing their fair share
• Use (or misuse) of business monies
• Departure of partners/shareholders/directors and competition issues

The pandemic has placed added pressures on decision-makers as they try to navigate a safe course through the upheaval. Hugely significant decisions – on issues such as applying for emergency financial support, staffing, diversifying, restructuring and perhaps ultimately winding down the business – have been made in a fast-moving and reactive environment. As we all start to look forward to a post-Covid world, and businesses start to look back on the decisions that were made, the prospect of disputes arising in one form or another is likely to increase. Disagreements may also arise when thought is given to the future direction of the business, as lessons are learned from the pandemic and times change.

What can you do?

Forward thinking at the outset of your partnership/business venture can prove invaluable should things go wrong later on. Agreeing and documenting what will happen if, for example, there is a disagreement as to the direction of the business, with an ‘escape route’ in the event that the working relationships become untenable, can save time, cost (and more disagreement). Discussing and defining your respective roles at the start can be key to avoiding disputes.

But what if you are already in a business relationship in crisis and there is no written agreement between the partners and shareholders and/or the agreement you have doesn’t provide the answers? This is not unusual, particularly if it is a family business or joint venture between friends or business associates. Where there was an initial shared enthusiasm and ambition at the outset of a new business, it is very common for the ‘what if things go wrong’ question to be ignored or inadequately addressed at the start, often fuelling and escalating future disagreements among business partners. The answer is, that all is not lost. It is rarely ‘too late’ to deal with problems: you have legal rights, even if you never agreed specific terms or put any agreement in writing.

How can we help?

We know disputes can quickly absorb your time and stop you spending that time on more productive, beneficial business: we know time is more valuable than ever in these challenging times.

Walker Morris’ commercial dispute resolution specialists can help you find a way through the issues you are facing, leaving you to focus on your business and how to navigate the ‘new normal’ we are all learning about and adjusting to. There are often steps we can take for you which will protect the business, its value, assets and land, and your interest in it. Sometimes that might mean taking steps to put in place decisions or resolutions within the business, or it might mean taking legal action to preserve assets, prevent competition or recover monies. More often it involves setting out your position clearly and moving towards a negotiated outcome that suits you and allows you to move forward positively and productively.

Most disputes resolve out of court/arbitration, via settlement discussions or mediation, and we provide a distinctive, commercially-focussed way of guiding you and your business to a workable solution. We also recognise that sometimes tough measures are needed to protect your position and/or your business, and we are highly experienced in working with you to achieve the right outcome.

Please do not hesitate to get in touch if you have any queries or concerns and we will be very happy to help.