Partnership Dispute.

[mjn349]

I have been in a successful business partnership for 10 years. The business is specialist equipment supply and training services. There is no partnership agreement. Partners live 200 miles apart. I started business and invited partner to join at no cost. First 6 years of business , no problems. At 2 year mark, Partner felt not contributing as much as myself. Resolved at my suggestion by him taking over administritive duties of orders and invoicing. Last 4 years business better year on year. Two verbal arguments over division of work load as a complaint by partner. I offered to take back admin duties twice, both times offer declined. We are now both in dispute over same issue, I have repeated the offer which was declined. During last 4 years other partner has been , secretive, non communicative & offensive. I have tried to resolve by discussion but refuses to join in. Other partner has now stated he wants to seperate and go different ways. Whilst I believe we can divide all assets and profit amicably to both satisfaction. I am concerned about future business with existing customers that is already pre arranged. Over the next 3 years it is potentially worth 500K.
My partner has stated that he is not prepared to work with me in the future. The future business needs the input of two persons qualified in our specialism. There are about 5 persons that we can employ on a sub contract basis but availability is difficult and costly.
I have suggested splitting assets and profits but just continue with commitments and he has refused. I suggested proffesional conflict resolution, he has refused. ( this is an individual who has previously walked out of court during another dispute that he was involved in)
Where do I stand legally over the area of future business.
What is my entitlement to company data base.
What is the best way to resolve this.

Sorry for the lengthy post, would appreciate all and any input.
MJN

 

[i.m.]

Your suggestion of professional conflict resolution/mediation is the way to go. When you have a successful business that will be torn apart by a hotly contested and difficult personal fight, it must be the better way for both sides to try and mediate. I appreciate that he may not see the sense in it now, but your first issue is to explain - probably in writing so others can see it too - why it is essential.

The fact that there is no written partnership agreement does not mean there is no agreement and indeed the Partnership Act 1890 will regulate your relationship. All sorts of obligations are triggered if the partnership is dissolved - as it can be by notice - and the obligations are likely to bring the business down if it is not done sensibly.

You will be able to secure access to the firm's (when you say company, I wasn't sure whether you meant ltd company in which case everything I have said about the PA is inaccurate) database - and you could get a Court order to that effect if necessary. Your partner needs to be told that unreasonable refusal to cooperate would not be in his best interests - or his financial ones.

Have you heard on online dispute resolution (mediation via the internet). It is something our firm is getting into. The 200 mile issue is not an issue on the net. Feel free to get in touch if you want.

Best

BR

 

[mjn349]

Many thanks for the reply, we are not a ltd company, I truly believe that mediation could resolve the issues and provide the way to amicable seperation. I have not heard of internet mediation, I would prefer personal but this may well suit my partner. I will make the suggestion and keep you informed. In brief how does it work?
Regards
mjn

 

[i.m.]

Online mediation trys to follow the same patten as a face to face. It works by way of setting up various chat rooms - - both public and private. Of course, unlike face to face, the mediation does not necessarily have to be done within a set time frame, although it helps. The public room has the mediator and both parties present (+ advisers if necessary); the private room is a room with you and the mediator alone - so you can talk to the mediator and not have the other side present. It is like the caucus session of the conventional mediation.

You start off by making your opening remarks by way of email and the whole process goes from there - it can bit a bit slower but it is surprising how much the same kind of dialogue does actually occur. If you have been in mediations, you know that there is a point in time when the penny drops and the dialogue becomes more focussed. It is at that stage where the momentum kicks in which does, in my view, still favour the conventional process, but ODR is better than no DR!

Do keep me posted. I came out of a hostile mediation last week, but it will end in a settlement. They do work.

 

[mjn349]

Many thanks, I have made the approach and am awaiting a response
mjn

 

[WalktheWeb]

Mediation can be very effective, and is hugely preferable to a contested dispute. I have never tried ODR, but it sounds interesting and, as BR say, better than nothing.

Try to get into your partner's mindset and think through what is his agenda. What are his goals? What does he need? Is there a win win solution which works for both of you? Is there some stumbling block which makes your proposal unattractive to him? Can you overcome it? If you look at things from his perspective, and try to put together a solution which meets his needs (as well as yours obviously), your prospects of getting a satisfactory deal are greatly improved.

So far this deals with the position in which the other person is acting in good faith with a genuine grievance and a desire to reach a reasonable solution. But sometimes it is not like that. Is there a danger your partner is trying to walk off with the whole business and the whole customer base? Is it possible that running the admin side has put him in a strong position to do that? Do make sure you protect your position in case his motives are dishonourable. Fight to get hold of that database. Be prepared to go to court on that discrete issue if necessary.

From your description, it sounds as if the value of your business is such that you should instruct solicitors for detailed advice to protect your position. You can find a guide to solicitors specialising in partnership on this page: http://www.chambersandpartners.co.uk/uk/search32.aspx?pid=67&parentkey=67&solbar=1. Amongst the firms recommended, Fox Williams stands out as a medium sized firm with a glowing write-up. And judging by the quality of their posts here, BR are worth speaking to as well.

David

 

[mjn349]

David, thanks for the input. Part of my problem is my partners character. I would say we are similar to a point stubborn, bloody minded etc and as such we clash. I have seen how this has affected him in disputes with other people over the years, its either black or white, right or wrong. This is a major problem, he has contempt for the legal process and I believe is fearful of mediation as he knows he will be found wanting. I don't think he is trying to steal the business as such, I think he wants to leave and set up in competition on his own. Whilst I don't think this is the right way forward I can live with this providing it is done fairly. I have looked at the partnership act and laid out the options for him as everything from leaving, mediation and selling the business. I am waiting for a response. I think I have realised that the partnership act protects both of us and I feel like I am in a strong position with its backing.
Regards
mjn