Chenoweth Law Group

Tips for dealing with a bad business partner

In the formation and launching days of a business, owners spend a significant amount of time and thought strategically selecting business partners who will contribute to the growth of the business. If, as time progresses, that partner ends up doing more harm than good and is no longer acting in the best interests of the business, you may become interested in removing that individual from the partnership.

That can be much more difficult than it seems. You may think that you are locked into the partnership because of agreements and corporate documents structuring the entity. While you may not be able to simply uproot the partner, there are practical steps and legal strategies available to creawte options for yourself. 

Here are a few steps to deal with a troublesome partner:

Resolve the issue - The most cost effective and least disruptive option, by far, is to resolve the dispute or conflict as soon as possible, if at all possible. This may not be an available option, but a last-ditch effort to do so could save you extensive time and resources.

Study the bylaws of your partnership or corporation - If your entity was established via best practice and with the guiding hand of a knowledgeable lawyer, you likely have a contingency plan in place for disputes and how they are to be handled. Do your homework and become well-versed in the specific terms of your agreement.

Get an experienced business attorney involved as soon as possible - This might be the most important step. Relying on your own understanding of your options can lead to significant mistakes that could end up costing you your share in the company. Trust the acumen of a business law attorney who has the experience and guidance you need. He or she will be able to review your position and provide a clear understanding of definitive steps you should take.

Frame the conversation as an attempt to part ways for the good of both, rather than a play to kick the other partner out of the partnership - If you do end up with a plan to part ways with your partner, whether by leaving the partnership yourself or having your partner removed, be mindful of your approach. No matter how much damage you believe your partner has done to the business, it behooves you to take a diplomatic approach and tactfully frame the conversation as an amicable parting of ways, in as much as possible.

Seek another business opportunity - In some cases, there are no options for removing the partner. You could stay and suffer in the partnership - or you could separate yourself from the business and move on to greater investment and business opportunities of your own.

Most importantly, discuss your situation with a business law attorney who has a deep understanding of resolving partnership disputes and building exit and removal strategies. 

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