Partnership Dispute Solicitors

These partnerships 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 in an agreement, and there may be a reference to professional standards. Management structures and profit-sharing arrangements may also be specified.

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

It is often necessary to include a clause stating the Partnership is not dissolved when a partner serves a dissolution notice, which is a crucial factor.

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. The processes are likely to refer to dispute resolution mechanisms, including mediation.

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.

At Davisons, our specialist solicitors can view your situation objectively and advise you on the processes to follow. In addition, they are also able to draft Partnership Agreements tailored to the Business and advise on what should be included to protect the Partnership.

A partnership without a written agreement is often called a ‘partnership at will’ and is governed by the terms of the Partnership Act 1890. 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 are entitled to participate in the management of the Business, share profits equally and not be expelled by the other partners. They are also entitled to an indemnity in respect of business liabilities.

Critically, under the Act, a partner is entitled to dissolve a partnership even if the other partners do not agree. This can result in serious financial, legal and practical consequences for the other partners. There is nothing under the Act to protect a business by preventing a leaving partner from taking clients with them. There is also no provision to expel a partner or add a new partner to the Business.

With this type of partnership, there is no set dispute resolution process. This means resolving business partnership disputes is more likely to lead to a costly, drawn-out process through the Courts.

If you have a partnership at will, it is recommended to seek legal advice as soon as possible to prevent a dispute from escalating.