3 Strategies to Minimize And Resolve Business Partnership Disputes

Business partnerships are often stronger than sole proprietorships because two or more partners can bring diverse strengths to the table and achieve more through collaborative decision making. However, partnerships also increase the possibility of serious disagreements and disputes between partners on various aspects of the business. Here are a few proven strategies that can help minimize and resolve business partnership disputes.

Formulate a Partnership Agreement with Help from a Business Mediator

Depending on the nature and type of business, you may need a partnership agreement or an operating agreement in place. It is best to hire the services of a skilled partnership mediator to assist you with this important task. Business partners sometimes try to avoid the hassle of having a formal agreement or simply try to prepare it on their own.

Working with a knowledgeable mediator to create a consummate partnership agreement will lay the foundation for a healthy and thriving business partnership. Each business is unique, so you cannot just use a pre-existing template to form an agreement. A business partnership mediation expert can help you and your partners tailor the agreement to your specific business needs.

A well-crafted agreement will protect all partners from exposing themselves to certain obligations, conditions or procedures which they do not want. A seasoned business partnership mediator will help clearly define:

• Each partner’s role, responsibility, and obligations
• Which partner controls what aspects of the business
• What are the capital contributions of each partner, and how future/additional capital contributions would be handled
• What will be the compensation & distribution for each partner
• What will be the decision-making processes and procedures for the business partners
• What will be the procedure for conflict or dispute resolution
• When and how the partners may exit or end their relationship

Set Aside Time to Discuss Conflicts and Focus on Problem-Solving

When the partners have a dispute, they should be prepared to dedicate sufficient time to have a detailed conversation or an objective negotiation to try and resolve it. Trying to address the issues while you are buried in work can be distracting, unproductive and create more confusion. On the other hand, when all the partners are willing to set aside time for a composed and reasoned conversation, and maintain a focus on the possible solutions rather than the problem, it gets easier to achieve a positive outcome or an outcome at all.

Hire a Business Partnership Mediator to Resolve the Dispute

A business partnership mediator is a non-partisan professional who will be able to assist and facilitate the partners to find constructive ways to resolve the dispute. These include:

• The mediator will enable all partners to present their positions and viewpoints in a non-confrontational manner.
• The mediator will help ensure that the discussions focus on facts and evidence, while emotions are left out of the equation.
• The mediator will help the partners see reason that preserving the business will benefit everyone, while merely winning a one-sided argument or sticking to the blame game will only feed the ego and result in a lose-lose situation for all.
• The mediator will draw upon their experience from the past business partnership disputes they have handled to help the partners avoid committing the same mistakes.
• If no resolution is possible, the partnership mediator will still be able to encourage the involved parties to terminate the partnership in a non-adversarial or amicable manner in order to avoid bitter litigation in the best interests of all.

Carmela DeNicola

Carmela DeNicola, the Co Owner at Advanced Mediation Solutions, is a business and workplace mediator with over three decades of executive experience in the corporate world. Carmela handles all types of business and workplace mediation. She works with municipalities, schools, private companies, partnerships, non-profits, and any other type of entity. MORE