Partnership Dispute Solicitors

Partnerships with written agreements operate under a written agreement that has normally been drawn up by a solicitor and is regularly reviewed and kept up to date.

Partners’ duties and rights will be set out clearly in the agreement, and there may be a reference to professional standards, management structures and profit-sharing arrangements.

Partner exits

Partnership agreements often lay out the processes for partner exits and the calculation of payouts. Most partnership agreements include restrictive covenants to prevent or limit exiting business partners from taking clients or employees with them.

Managing disputes

A formal partnership agreement will normally set out the procedure for managing disputes, from the steps to take when minor issues occur to the processes to follow for the expulsion of a partner.

Most business partnership disputes can be resolved by following the procedures set out in a partnership agreement. However, disagreements can arise over the interpretation or application of an agreement, so it is essential that legal advice is sought.

When a provision in an agreement is not followed correctly, it can be expensive and damaging to the partners and the business.

It is best to seek legal advice as soon as a partnership relationship begins to deteriorate to prevent matters from escalating.

A partnership without a written agreement is often called a ‘partnership at will’ and is governed by the terms of the Partnership Act 1890.

It’s important to note that this is a very old piece of legislation, so it is not advisable to rely on it to protect your partnership rights.

Under the Partnership Act 1890, partners have the right to take part in managing the business and to share profits equally. A partner also cannot be expelled by the others and is entitled to be indemnified for liabilities incurred in the course of the partnership’s business.

However, the act also gives each partner the right to dissolve the partnership at any time, even if the other partners do not agree. This is crucial because it means a single partner can bring the partnership to an end without approval, potentially creating significant financial, legal and practical consequences for everyone involved.

The act also provides very little protection for the business itself. For example, it does not prevent a departing partner from taking clients with them. It also contains no clear provisions allowing partners to expel an existing partner or introduce a new one.

There is also no built-in dispute resolution process. As a result, disagreements between partners are more likely to escalate into lengthy and costly court proceedings.

If you are operating a partnership at will, we advise seeking legal advice as early as possible to reduce the risk of disputes and protect the future of the business.