In most cases, partners go into business together with the intention of building a thriving enterprise by combining their skills and hard work. However, partnerships that begin with the best intentions can sour over time. Eventually, your business partner’s behavior might become so egregious that you begin considering taking legal action against them. At the same time, you might worry about the consequences that a lawsuit could have on the health of your business.
While a lawsuit against your business partner might necessitate the dissolution of the business, the consequences depend on your specific situation. Consulting with an experienced commercial litigation attorney can help you understand your rights and options.
When Do I Have Grounds to Sue My Partner?
You might have grounds for suing your business partner if they have breached the partnership agreement, violated their fiduciary duties, or engaged in illegal conduct. Examples include:
- Misappropriation of company funds
- Unauthorized usage of company resources for personal gain
- Failure to disclose conflicts of interest
- Engagement in activities that harm the business
If your partner’s actions have caused significant financial losses or damaged the company’s reputation, you may have a valid reason to pursue legal action against them. However, it is essential to review your partnership agreement and consult with a legal professional to determine whether you have a strong case and if litigation is the best course of action.
What Are the Business Consequences of a Lawsuit Against My Partner?
Filing a lawsuit against your business partner can have significant consequences for your company. Depending on the nature of the dispute and the structure of your partnership, the litigation process may lead to the dissolution of the business. Even if the company survives, the legal battle can be time-consuming, expensive, and emotionally draining, diverting resources and attention away from running the business effectively.
Additionally, a public lawsuit can damage the company’s reputation, making it harder to attract customers, investors, and employees. Before proceeding with litigation, it is crucial to weigh the potential risks and benefits and to consider the long-term impact on your business.
Are There Alternatives to Suing My Business Partner?
Before resorting to litigation, there are some alternative dispute resolution methods to consider first. Mediation and arbitration are two common avenues that can help resolve conflicts without the need for a lengthy and costly court battle. In mediation, a neutral third party facilitates a discussion between you and your partner to reach a mutually agreeable solution. While the decision is not binding, the collaborative nature of mediation often means that the involved parties are happy to follow it.
Arbitration is another popular form of alternative dispute resolution involving a third party, in this case an arbiter. However, unlike mediation, the arbiter’s decision is binding and must be followed on threat of penalty.
These alternative dispute resolution methods can be faster, less expensive, and more private than a lawsuit.
Additionally, you may consider negotiating a buyout or a restructuring of the partnership to address the underlying issues. Consulting with a knowledgeable legal professional can help you identify the most appropriate course of action for your specific situation.
Contact an Experienced Commercial Litigation Attorney
If you are considering filing a lawsuit against your business partner, consult with a skilled and knowledgeable commercial litigation attorney immediately. Levy Goldenberg LLP is a New York commercial litigation practice that’s proud to serve the needs of businesses of all sizes. We can help you protect your rights, understand your options, develop an effective strategy, and maximize your chances of success in your legal pursuits. We offer free initial consultations without any sales pitches or pressure to litigate. We want to help you do what is best for your business. Contact us today to learn more about how our team can assist you.