What Are My Options if My Business Partner Is Suing Me?
As a business owner in Annapolis, you may face many challenges. One of them could be a business dispute with your partner. This can be stressful and complicated, but options are available to you.
At the heart of many business disputes are disagreements over the company’s direction, financial issues, or perceived breaches of fiduciary duty. Common causes of disputes include:
- Disagreements over company direction: If one partner wants to take the business in a different direction than the other, conflict can arise. For example, one partner may want to expand the business while the other prefers to maintain the current size.
- Financial issues: Disputes often occur when one partner believes the other is mismanaging funds or not contributing their fair share to the business expenses.
- Breach of fiduciary duty: A business partner is legally obligated to act in the company’s best interests. If one partner believes the other is not fulfilling this duty, they may decide to sue.
Facing a lawsuit from a business partner can have several outcomes:
- Settlement: Many business disputes are settled out of court. In a settlement, both parties agree on a resolution, which could involve monetary compensation, changes to business operations, or even dissolving the partnership.
- Court verdict: If the dispute cannot be resolved through negotiation or mediation, the case may go to trial. The court then decides the outcome.
- Dissolution of the partnership: In some cases, a lawsuit may result in the dissolution of the business partnership. This can happen if the partners cannot resolve their differences or the court deems it necessary.
When you find yourself at the receiving end of a lawsuit from a business partner, it may feel like you are navigating uncharted waters. However, there are steps you can take to protect your interests and potentially resolve the dispute:
- Seek legal counsel: This is often your first step. Legal professionals have the knowledge and experience to guide you through the process and help you understand your options. They can provide advice tailored to your situation, ensuring your rights and interests are adequately protected.
- Review your partnership agreement: This document is typically the cornerstone of any business partnership. It outlines the responsibilities of each partner and the procedures for resolving disputes. Understanding this agreement is crucial, as it can influence the lawsuit’s course. Maryland law will govern your partnership if you do not have a partnership agreement or if it does not cover dispute resolution.
- Explore mediation or arbitration: These are forms of alternative dispute resolution (ADR). ADR can be a less adversarial and more cost-effective way to resolve disputes than going to court. In mediation, a neutral third party helps the disputing parties reach a mutually agreeable solution. Arbitration, however, involves a neutral third party making a binding decision after hearing both sides.
- Prepare for various outcomes: The result of a lawsuit can range from a simple settlement to the dissolution of the partnership. Discussing these potential outcomes with your attorney and preparing accordingly is important. This might involve creating a plan for managing the business if the partnership dissolves or you need to buy out your partner’s share.
- Protect your personal and business interests: Regardless of the lawsuit’s outcome, protecting your personal and business interests is vital. This could mean setting up safeguards to protect personal assets, restructuring the business for better management, or even starting a new venture if the current one becomes untenable.
- Stay focused on your business goals: Amid the stress of a lawsuit, it is easy to lose sight of your business goals. However, it is important to keep these in mind and make decisions that align with them. Whether your goal is growth, stability, or something else entirely, ensuring that your actions support this aim can help steer your business through troubled waters.
Our Annapolis Business Attorneys at Oliveri & Larsen Can Defend You in a Business Dispute
Navigating a business dispute can be complex and stressful. Speak with our Annapolis business attorneys at Oliveri & Larsen. Complete our online form or call us at 410-295-3000 to schedule a consultation. Located in Annapolis, we serve clients in Ocean City, Anne Arundel County, Baltimore County, Baltimore City, Calvert County, Harford County, Howard County, Queen Anne’s County, St. Mary’s County, Worcester County, Kent County, and the upper and lower Eastern Shores of Maryland.