Understanding Partnership Disputes

Partnerships often arise when individuals or entities combine resources and efforts to pursue common business objectives. But all partnerships do not last. At the heart of these disputes could be a clash of visions, efforts, expectations, interpretations of agreements, or working styles, leading to conflicts that can severely impact the operations and future of the partnership. 

Examples of common causes of partnership disputes are summarized here.

  • Disagreements over financial contributions and profit distributions, where partners disagree about the value brought by each and how rewards should be shared.
  • Conflicts regarding business direction and management decisions, including, without limitation, disagreements on expansion, investment, and operational strategies.
  • Breaches of fiduciary duties, which include breaches of the duty of loyalty, duty of care, or duty of good faith.

Such disputes not only strain personal relationships, but they also jeopardize the stability and growth of the businesses. These ramifications underscore the necessity for clear communication, comprehensive agreements, and proactive dispute-resolution strategies. 

At Nematzadeh PLLC, we provide a powerful combination of legal and business acumen to guide partners through the resolution process. By focusing on the legal and relational aspects of partnership disputes, our team works to preserve the business’s integrity and partners’ interests, ensuring a path forward for all involved. But if the partnership is not salvageable, our litigation team stands ready to aggressively litigate matters through trial and appeals.

Types of Partnership Disputes

Partnership disputes encompass many conflicts arising from the intricacies of running a joint business venture. These disputes not only test the resilience of the partnership but also its future viability. Examples of types of disputes are summarized here.

  • Financial Disputes: These often stem from disagreements over the allocation of profits and losses and handling of financial responsibilities. Disputes may also arise from differing opinions on investment strategies or capital contributions.
  • Operational Disputes: Conflicts regarding the day-to-day management of the business, roles and responsibilities, and decision-making processes. Such disputes can escalate when partners have divergent visions for the partnership’s direction.
  • Dissolution Disputes: When a partnership is nearing its end, disputes may arise over how to divide assets, handle outstanding liabilities, and determine the continuation of the business under a new structure.
  • Breach of Fiduciary Duty: Accusations that a partner has breached their fiduciary duties of loyalty, care, or good faith, which could result in litigation or derivative actions.

Nematzadeh PLLC brings a wealth of experience in handling such disputes, employing a combination of negotiation and litigation to secure favorable outcomes for our clients.

The Legal Framework Governing Partnership Disputes

The legal framework governing partnership disputes is primarily derived from the Uniform Partnership Act (“UPA”) and the Revised Uniform Partnership Act (“RUPA”), which have been adopted in various forms by many states to regulate the formation, operation, and dissolution of partnerships. These outline the rights and obligations of partners among themselves and in relation to third parties, including the handling of disputes that arise from breaches of these duties or disagreements over partnership agreements.

In New York, the Revised Limited Partnership Act (NYRLPA) and case law supplement the UPA and RUPA guidelines. Key provisions include the fiduciary duties that partners owe to each other—such as the duty of loyalty, duty of care, and duty of good faith—and the mechanisms for dispute resolution, including, without limitation, arbitration and litigation. 

Crucially, the presence and terms of a written partnership agreement can significantly influence the resolution of disputes, highlighting the importance of comprehensive, clear agreements in preempting and managing potential conflicts. 

Nematzadeh PLLC’s Approach to Partnership Disputes

The Firm adopts a nuanced and multifaceted approach to resolving partnership disputes or otherwise litigating them. We recognize the unique dynamics and high stakes involved in each case. At the core of our strategy is a commitment to understanding the specific needs and objectives of our clients and their businesses, which enables us to tailor our legal representation to address the immediate dispute and also to safeguard the partnership’s future viability. If the partnership is not salvageable, we zealously advocate for our client’s interest in the dissolution of the partnership. 

Through a combination of legal analysis, strategic negotiation, and when necessary, aggressive litigation, we vigorously protect and advance our clients’ interests and business goals. This approach often preserves the business relationship between partners, allowing for continued collaboration. However, when litigation becomes the only viable option, our team is prepared to leverage its extensive trial and appellate experience to advocate for our clients in court, demonstrating our unwavering commitment to achieving the best possible outcomes.

Contact An Experienced Partnership Disputes Attorney

Our holistic approach—combining keen legal insight with a deep understanding of business dynamics—ensures that our clients receive strategic legal partners who are committed to their success. Contact Nematzadeh PLLC at (646) 799-6729 or emailing lawyer@nematlawyers.com for a confidential, free consultation.