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Partnership disputes

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Our experienced partnership dispute solicitors advise businesses, partners and LLP members on resolving disagreements that can disrupt day-to-day operations and long-term stability. Partnership disputes can be complex and sensitive, involving financial arrangements, legal duties and personal relationships.

We aim to resolve disputes quickly and effectively, helping you protect your investment, safeguard relationships and keep your business on track.

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Common causes of partnership disputes >

How we resolve partnership disputes >

Funding a dispute >

Why choose Wright Hassall? >

Common causes of partnership disputes

Partnership and LLP disputes arise for a variety of reasons. We regularly act for clients facing:

Disagreements over profit-sharing and financial arrangements
Disputes about business management and decision-making
Breaches of partnership or LLP agreements
Allegations of misconduct, negligence or breach of duty
Exit, retirement or dissolution disputes

How we resolve partnership disputes

Our first approach is to explore early resolution through negotiation and mediation. These methods can reduce costs, save time and help preserve valuable business relationships.

If court proceedings become unavoidable, our solicitors have extensive experience representing clients in litigation. We can advise on applications to dissolve partnerships, enforce rights under an agreement or defend against claims made by other partners.

Examples of our experience in resolving partnership disputes:

Some of our recent partnership dispute cases include:

Acting for the partners in a solicitors' practice in dispute concerning dissolution;
Advising the partners in a doctors practice regarding liability disputes and capital contributions;
Acting for partners in one of the UK's largest firm of accountants regarding the removal of some partners; disputes over capital and future income and the status of the partnership
A dispute over whether a partnership did exist with what was growing into a large waste recycling business; and if so the terms upon which that business was carried out.

Funding a dispute

There are various ways that litigation may be funded. At relevant times in our management of your dispute we will advise you which funding options may apply and which we would be prepared to offer you.

Why choose Wright Hassall?

We bring together expertise in both corporate law and dispute resolution, giving us a unique perspective on partnership disputes.

We take the time to understand your business, your role and your objectives before tailoring our advice to your situation. Our approach is pragmatic and commercially focused, aiming to deliver practical solutions that minimise disruption and protect your long-term interests.

FAQs

What is an unintentional partnership?

Individuals cannot enter into a business through a company without deliberately intending to. Equally, they cannot trade on their own as a sole trader without meaning to.

However, individuals may, unwittingly enter into a partnership without having anticipated its consequences. Where there is a relationship between people carrying on a business in common with a view to profit, there may be a partnership.

Thist lack of formality and the absence of a written agreement can often lead to disputes. Although there isa fallback in legislation in the Partnership Act of 1890, this is a very brief piece of statute that leaves many matters to be determined between the parties. This, in turn, may lead to further disputes. Expertise in this area is, therefore, critical.
How is a partnership affected by changes?

The changes to partnerships over time may also lead to disputes. Even where partnership agreements have been entered into, and a written contract exists, if formalities and agreements are not followed, the departure of one partner or the joining of a new partner may lead to partnership disputes. Individuals believe they have a partnership governed by a written contract; when in fact they have only what is an unplanned partnership at will and a worthless piece of paper.

A "partnership at will" is a partnership that can be terminated by any partner outside of the terms of the agreement. This means that the survival of the partnership and its ongoing work could be at risk.

Disputes between the partners can, therefore, arise commonly when new partners have joined, and formalities have been overlooked. Still, the consequences of those potentially small disputes can be enormous for the future of the partnership.
How does a changes in scope affect a partnership?

The scope of a partnership may also broaden and change over time across a range of businesses far beyond what was intended when they were initially set up. The development of limited liability partnerships has also led to a new range of partnership disputes.

That, in turn, can often lead to disputes between partners when individuals wish to take businesses in different directions; or when, for example, succession planning becomes a significant issue. Our expertise covers dealing with a wide variety of partnerships across a wide range of sectors and a wide variety of industries.
Must partnerships be for profit?

While a partnership business must be carried out to make a profit, profit does not necessarily have to be made. Charitable and not-for-profit concerns cannot constitute partnerships as they cannot have the intention to make a profit. However, there are few restrictions on the scope of businesses, industries and sectors that a partnership may cover.
How do partners share in a business?

Owning property in common or sharing a gross return does not of itself create a partnership, but sharing net profits is evidence of a partnership existing. How the capital of the partnership; such as the property owned by the partnership, and its profits and losses are dealt with are unsurprisingly common causes of dispute.

In the absence of a written agreement, all partners are entitled to share equally in the profits of the business and must contribute equally towards the losses, whether in capital or income. In practice, that does not cover the myriad situations that arise in partnerships. Where, for example, new partners have joined or various capital contributions have been put in place, partnership disputes may often occur.
What are the consequences of partners leaving or joining?

The desired retirement of a partner and/or succession planning is a common cause of disputes. A partner can retire by their own volition; however, the consequence of this upon a partnership, either under a written agreement or in the absence of a written agreement, may be drastic.

New partners do not usually take on the liability for anything done before their admission to the partnership. But a partnership may have existing liabilities, and there may be significant disputes over the scope of liabilities taken on and the liability of the new partner for these.
What are the main causes of partnership disputes?

The scope of a partnership; its unplanned or undocumented effects; the objective of the partnership; or how it will distribute profits; may all be the cause of disputes. A partnership dispute may also often arise because partners have a general breakdown over the running of the business and how to go forward. The unique characteristics of partnerships may lead to drastic consequences for partners once a dispute takes hold.