Partnership and Joint Venture Disputes

Joint venture disputes and how to avoid them.

It seems like a great idea to set up a business with a partner in order to share in the development of a commercial venture, to share in the risk of a business and to work together to bring a successful idea or business to fruition. This of course is looking at a business through rose tinted glasses. You could have set up a business by yourself, but hey, where is the fun in that? There would be nobody there to bounce ideas off. However, despite the benefits of going into business with a partner, it is critically important to make sure that you have written agreement to deal with disputes. It is equally important to be aware of what your options are if you were to ever have a major falling out or dispute with your partner. Here are some of the issues that keep cropping up in the disputes that we resolve on a regular basis.

1. Keep emotions out of it

Joint venture disputes will invariably bring out the worst in people’s behaviour – even the most innocuous of comments can lead to significant personal offence and even differences of opinion become personal and emotive and are seen as personal jibes. Sometimes they are, but more often than not it is the other party expressing their opinion because the dispute has become so intense and personal it is difficult to see the wood from the trees. As solicitors it is our job to support our clients and at the same time we are obliged to be as objective as possible. It is important to try and separate the emotional aspect of the dispute from issue at hand.

You will agree that you and your partner did have a common goal which was more than likely that you wanted the business to succeed and you both wanted to make a profit. Just because you are now involved in a dispute does not mean that you do not appreciate your partner’s opinions or views.

It is really important to keep level headed in all disputes. Point scoring will never provide you with a solution; it will only serve to antagonise the other party. Stick to the facts and above all be prepared.

2. Make time for a proper discussion

It is difficult to focus in on any dispute if you are really busy. You need to be able to step back from a business and find time to sit down and discuss the issues. Don’t forget that listening is as equally as important as talking. It may be difficult to listen to a partner that has constantly criticised your behaviour, who is a bully or who for all intents or purposes insufferable; however, unless you engage by listening it is difficult to find common ground for the parties.

If you are going to spend some time sitting down and discussing matters, you need to get rid of all distractions, it is best to do this out of your office and to turn off your mobile phone so that you are not distracted.

If you are sitting down with your partner to have a discussion, try and set out some simple rules for the conversation and try and set an achievable target or goal.

3. Agreements should be in writing

We have heard the phrase “we were such great friends; I didn’t think we would have to set anything down in writing.” If there is one lesson to be learnt from a business perspective, it is to write your agreement down and get all parties to sign the agreement. Very often your understanding of an agreement may be completely different to your partners.

Also, rather than having to go to Court straight away, your agreement might include a resolution process that might be a lot more cost effective and may, for instance, provide for alternative dispute resolution mechanisms such as mediation. If you can refer to a written agreement, there is less of a chance of a dispute in relation to interpretation and it makes it a lot harder to deny or rebut the provisions of an express agreement.

4. Focusing in on the solution not the problem

Very often when a dispute arises and one party set outs in writing numerous issues both of a business nature and a personal nature in respect of their partner. The smallest issues are often the most hurtful or cause the most upset. Allegations are often made against a partner that they are lazy or that they are rude and abusive to staff or similar personal jibes that move away from the issues at hand, notwithstanding that they are important to the parties in dispute. It is important to try and avoid getting consumed by these personal jibes and attacks and to focus in the main issue which is solving the problem.

The biggest step to resolving matters, is to focus in on the solution by setting down in writing what you want to achieve and what outcome you want. It is important to be objective and not to have unrealistic goals. There are many people such as accountants and solicitors that can assist you in putting together a plan and a solution. Sometimes people have an inflated view of the value of their interest in the business. It significantly helps to get an objective view from a professional which will assist you significantly in formulating a solution.

5. Mediation

It is important for you to look at alternative ways of solving your problems. Mediation is a non-binding approach to problem solving, which may eventually lead to the parties coming to a binding agreement. A mediator is there to assist the parties find a solution in a non-confrontational environment, they do not form an opinion on the dispute but try and draw the parties together based upon the more positive aspects of their business relationship.

A mediator can help you focus in on the solution, allowing both parties to set out their views and opinions, and also help to deflect the emotive element of the dispute.

6. Radical solutions

Sometimes radical solutions are required where the parties are so entrenched in their views. There are other approaches or solutions not only as to how your dispute is resolved but also in relation to the final outcome. It may not be the resolution that you had planned, but it may provide the same financial outcome or practical result.

There are many partnerships and joint ventures which exist where the partners do not speak or communicate face to face. It is possible to run a business on that basis but it is certainly not ideal. You also need to consider what the personal impact is on your life and your working environment, it may be the case that it is not worth salvaging the business as it is impossible to work with you partner or it may be the your working environment is extremely unpleasant. So you need to bear in mind that acting fast and taking immediate action might help your position significantly. Of course, it is important that you act within the law but hanging on for a dispute to resolve itself is definitely not good for the business and may only result in the dispute becoming bigger or even harder to resolve.

7. Get good legal advice

If, at the end of the day, you fail to reach an amicable solution to your dispute, and matters seem to be heading towards the Courts, you need to get urgent legal advice. The biggest mistake that business people make is that they leave matters for too long. Knowing your rights and being clear about what you want to achieve at the early stages of a dispute empowers you to resolve it in the best manner possible. If it is the case that a partner is not contributing to the business or is taking products or customers or excluding you from the decision making process or is damaging the business in some other way, it may be necessary to seek an order of the Court such as injunction in order to protect your assets.

Conclusion

Those are the 7 most important tips in resolving partnership and joint venture disputes. If you have spent significant time and effort in building up your business, it may be very emotive and difficult to either depart or to sell the business. There is, of course, a solution to all of these problems, but it may not be the solution that you thought might ensure, such as reconciliation. The personal aspect of a dispute is extremely difficult to deal with on top of having to deal with the commercial realities of a business dispute. The most critical bit of advice is to act fast and act early, very often it is too late to rectify issues by the time you get to speak to your solicitor. You also need to have a clear strategy as to how you want to resolve the dispute and what you are prepared to accept or not to accept.

Contact Milan Schuster of Adams Law if, unfortunately, some of these issues resonate with you and you need some advice in relation to your partnership or joint venture disputes.

Article by: Milan Schuster

mschuster@adamslaw.ie