When a business partnership breaks up

At St James’ Square Law Firm, the Dispute Resolution team are well versed to talk about what steps to take when a business partnership goes wrong.

A lawyer from our Dispute Resolution team may not always be the first person that you want to see. Seeking advice from our Dispute Resolution department will normally mean that you have some sort of dispute with another party, most often a disagreement about money or property. 

While there are many advantages of entering into a business partnership with another person – more security, more help, more ideas and perhaps more capital to invest in your business - what happens when the good relationship you once had turns sour?

Partnership disputes can be about anything and everything and can arise at any time, usually because the partnership or business hasn’t anticipated for that particular issue. For example, how do you agree the terms or a financial settlement for a partner wanting to leave the business? Or how do you even begin to address the issue of a partner who is not acting in the best interests of the business?

“In the first instance we would always recommend that you come in and see us as soon as possible,” says Scott Cable, Partner and Head of the Dispute Resolution team at St James’ Square. “This is so we can fully understand your circumstances and ask the right questions. We’ll then be in a position to advise you on the most sensible course of action.”

Whenever there is a commercial dispute, all parties are encouraged to use alternative dispute resolution before embarking on Court proceedings. This mainly focuses on negotiation and mediation, although other processes such as arbitration and adjudication can sometimes be used.

But what do these terms mean and how can they help resolve business partnership disputes?

Negotiation - This is when the parties attempt to reach an agreement or settlement, either directly or through their lawyers. There is no use of third parties to help mediate. Each party consults their lawyers before the process begins so that they know what is expected of them, as well as being aware of their rights. It is worth noting that the law requires parties to continue using this process even where proceedings have been commenced.

Mediation - This is when an independent and neutral person assists each party involved in the dispute with the opportunity to try and reach an agreement. The mediator helps each party communicate with each other – sometimes this can be in the same room or more often the mediator will go between separate locations. Their main objective is to help both parties reach a solution, however they will never impose a solution and they will always be without prejudice.

Arbitration - This is when an independent arbitrator listens to both sides of the dispute and then makes a decision based on evidence and information that has been provided. This can be chosen as a way of dealing with disputes as it is completely private, very cost effective and can be quite flexible in terms of location and timing.

Most parties do agree eventually so settling through an alternative dispute resolution is always the best option. Court must always be treated as the last resort, especially due to the high costs and risk involved.

The team at St James’ Square prefer to be proactive, rather than reactive and will always provide the right advice for you and your situation.

“Many people come to us prepared to go to Court. However, when we have explained what other alternatives are available and the significant cost saving in using those, they realise that Court is not always the best option for them,” explains Scott

If you are facing an issue or dispute within your business, get in touch with the Dispute Resolution team at St James’ Square. They will be happy to help resolve your issue.

Our team can be contacted on 0191 466 1000.