How to Handle Partner Disputes within a Business

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Partnerships work well most of the time. However, with every type of human interaction, there’s the possibility for disagreements and disputes to arise. What once made sense for the parties involved can change or evolve over time to the point where deal points within a partnership agreement are deemed no longer satisfactory.

In another situation, perhaps one partner doesn’t seem to be ‘pulling their weight’ much to the chagrin of the other partner(s) who seek to adjust the partnership agreement to divide up any profits less evenly. This would create resentment and a conflict between the partners that’s tough to resolve even if their point is well made.

There are different ways to handle disputes inside a business. We’ll now discuss a few of them below in the hopes that it will be beneficial for you.

Partnership or Board Meeting

While private, separate discussions between partners on either side of the argument or dispute can be helpful, sitting down together to try to hash things out is often the best initial approach to take. This can be at a board meeting or a partnership meeting, as appropriate.

It may be useful to create a formal meeting structure to keep things orderly. Sometimes it’s even useful to have an agreed mutual third-party to come into the meeting to adjudicate and prevent things from become rancorous. However, not everyone will be happy to do so.

The best way to resolve business difficulties with a partnership is to ask for the person to explain their grievance and to explore it until all the central points are understood. The other partners can then respond with how they see the situation. Then all partners work to find a suitable resolution to the issue that hopefully does not see one of them leave the partnership altogether.


Mediation is a process used in business and personal lives. A trained mediator meets with the parties involved to understand and seek to resolve the issue(s). They control the meeting and help guide the discussion in a more helpful direction.

Using a mediator is sometimes beneficial when partners are finding it difficult to communicate together yet don’t seem to be that far apart on the central points of contention. At that point, it’s more of a communication breakdown than a fundamental, insurmountable obstacle to continuing the partnership. Unlike with bringing in a suitable third-party to an in-office meeting, mediators are truly independent of all partners in order to remain impartial and unbiased. This way, the partners won’t likely feel that the mediator is taking sides against them.

Help from a Law Firm

When you’re dealing with a national commercial law firm, you’re accessing significant legal minds who not only have dealt with partnership disputes before but also understand the legal angles too. The implication of changing a partnership agreement or dissolving a partnership is fully understood by a firm of solicitors like that can help advise you from the get go to ensure the process is as smooth as possible.

A law firm can explain the reality for the partners who, despite the current disagreement, may all strongly agree that they do not wish to disband the partnership because of the current dispute. As such, all partners then work harder to find some middle ground they can agree on. In the absence of the legal angle, the impetus to compromise and see the other point of view isn’t always part of the equation and as a result, it can exacerbate and extend disagreements.

The Need for Partnership Agreements

Having a partnership agreement even for ordinary partnerships helps avoid disputes over misunderstandings about whom was responsible for different parts of the business or what the profit share would be. Sometimes, one partner can even deny there was a partnership in the first place because it’s beneficial for them to take this position. Even loose partnerships initially made on a handshake should be formalised because it helps prevent problems later regardless of any benefit legally from having one.

Without a partnership agreement, it falls to the older Partnership Act of 1890 which in law doesn’t provide for the needs or wants of the parties involved. It’s always better to have a partnership agreement in place. It can also lay out what’s been agreed for the steps to take to resolve disputes, so there’s a plan in place for that too. This avoids a new argument over how to resolve the dispute!

Handling partner disputes inside a business is not always easy. Sometimes there is something going on in the disputing partner’s personal life that’s affecting their thoughts and behaviour. Even seemingly minor things like a lack of quality sleep could be affecting their ability to see reason and increase their level of irritation over seemingly minor things. It’s helpful to try to see every side and cause of an issue to find a resolution to disputes. This is almost always preferable over dissolving a profitable partnership due to a short-term concern.

July 30, 2018 · Tim Kevan · Comments Closed
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