I’m Jerry Carter with the Sierra Crest Business Law Group. And today, I’m talking about legal disputes between business partners. Some business partners ask the question of how they can anticipate and resolve legal disputes with a business partner before they ever happen? That’s a great question because it shows that you’re taking control.

The first thing I want to say about that is that as you embark upon a business partnership, you’re getting to know your business partner better and better. One thing that you want to do while everybody’s on good terms and cooperating is to set your deal in writing so that everybody understands going forward what the rights and responsibilities of each partner are and also what the duties of each partner are. If you lay a good foundation, then you can build a great business on top of that foundation.

So, sooner is better. Another reason that taking action sooner is better is that with legal issues as well as in life, you always have more options at the beginning of the relationship than you do if the relationship deteriorates in the future. Dealing with things sooner gives you a lot more control over your circumstances, a lot more ability to negotiate and come up with a fair agreement with your partner at the outset than at the end of that relationship. Plus, if you use an attorney to help you put your deal in writing, the costs that you spend to put your agreement in writing using a competent business attorney will be a lot less than what you would pay with an attorney two years down the road.

And so the cost of doing it right from the beginning is substantially less expensive than the price of solving a dispute once it has come up. If you decide to protect yourself and your business and protect your partner at the outset, one of the best things that you’ll be able to do with your partner is put in writing your business agreement. The kinds of issues that we can address in your contract are, for example, what would happen if there was a deadlock in the voting? If, for example, you and your partner are 50, 50, how would you deal with a situation where you’re both well-intentioned, but you can’t agree on an important issue? We would discuss beforehand and put in your agreement the way you both want to go about resolving a deadlock. We can also address a situation with what happens if a partner wants to bring somebody else into the business.

You may know, like, and trust your partner, but not be as comfortable with a stranger that your partner wants to bring in the business. And that’s something that you can address head-on and resolve in, in your agreement. Another thing that your arrangement will discuss is the extent to which one partner in the business is allowed to engage in other activities on the side. Will the partner be allowed to engage in businesses that compete with your company or merely businesses that are non-competitive with your business. You can also discuss the amount of effort and time and commitment that each partner is expected to contribute to the company. Along with that, you can resolve what each partner is going to add to the business. So these, this is just a small list of the many things that you can consider, uh, sitting down with your partner and put in writing.

And I recommend that if you, once you’ve stepped into the business world that you do it right and do it with the assistance of an experienced business attorney. The experienced business attorney is going to have, uh, an outside perspective and also a knowledgeable perspective based on, uh, seeing these types of patterns and situations happen over and over again. Uh, the experienced business attorney will help you crystallize what your goals and priorities are, as well as the goals and priorities of your partner. And then, together, we can come up with a solution that best meets those goals and priorities. So if you’re a business owner who’s being proactive and resolving to build your business on a great foundation, please give me a call. We can discuss any questions that you may have and, and I’ll be happy to discuss those with you and strategize with you on how we can keep that foundation with your partnership stable.