Starting a new business partnership, corporation or Limited Liability Company (LLC) is an exciting endeavor; however, it is important to be prepared for all situations, including a potential business dispute. Here, the business law Attorneys at Snee, Lutche, Helmlinger & Spielberger discuss how to resolve and prevent conflicts between business partners.
There are not only best practices for settling disputes retroactively, but also ways that can help prevent them in the first place.
Have a Written Agreement in Place
The best thing you and your business partner(s) can do is to consider potential disputes before they occur. Discuss important subjects that are likely to prompt a disagreement in the future. Once you have discussed these issues, draft a written partnership agreement, stockholder’s agreement or operating agreement that specifies expectations for all business partners involved in the venture, and be sure to review and potentially modify it during important milestones or growth periods of the business, or at a minimum, every two years.
The most common business disagreements involve financial and operational responsibilities, so your agreement should clearly define the roles, responsibilities, fiscal stake and amount of decision-making authority for you and your partner. In addition, hiring an attorney to assist you in preparing your partnership, stockholder’s agreement or operating agreements—amongst other business documents—is essential to ensuring that the documents clearly address all material aspects of the business relationship. Having these documents well thought out and professionally drafted will help to reduce the frequency and severity of future disputes.
Don’t Let Your Dispute Interrupt Business Operation
Having a dispute with your business partner does not affect just the two of you. A dispute can jeopardize customer relationships, employee morale and business efficiency if not handled correctly. If necessary, consider hiring a mediator or arbitrator to help resolve the issue. Mediators and arbitrators are trained to handle disputes of all kinds, and using one could lead to more productive discussions, a faster resolution and an outcome that is more favorable to both parties, as well as the business.
Make Time to Discuss Your Dispute
Addressing your issues may be uncomfortable at first, but it is imperative that you take the time to discuss them with your business partner. Over time, expectations and pressures on businesses and business owners will change, thus altering responsibilities and potentially causing disagreements. Having reoccurring monthly meetings with your business partner to discuss changes and any possible disagreements will help you both to stay on top of things and prevent resentment from growing. At a minimum, an annual meeting should be held.
If there is a dispute that is causing a lot of issues, having a conversation or a negotiation in the middle of your work day can be difficult and unproductive. Instead, find the time to sit down after business hours and discuss the issue without any distractions. This can be effectively done during a lunch break, over coffee or during any time that you both have agreed to put other work aside and focus on the dispute.
Focus on the Solution, Not the Problem
When discussing a dispute with your business partner, try to focus on the solution to your dilemma, rather than the problem. Your goal should not be to win the argument, but instead to emerge from the dispute with an appropriate solution in the best interest of the business. Be sure to actively listen to their side of the argument and grant your partner the respect that you would want as well when providing feedback.
Retain a Business Law Attorney to Draft Partnership Documents and Mediate Disputes
Hiring an experienced attorney to assist in preparing business documents is crucial to ensuring that the documents address all aspects of the business relationship, thereby working to prevent and minimize future business disputes.
Further, if it appears that a dispute between you and your partner can not be resolved effectively, a neutral third party, mediator or arbitrator, is often what is needed for the best interest of your business. The business law attorneys at Snee, Lutche, Helmlinger & Spielberger have experience representing and advising individual and corporate clients, in connection with a wide range of business transactions, including formation, organization maintenance, disputes, merger, acquisition, sale, and dissolution documents. To see how we can help your business needs, contact us today.