Going To Court After Firing a Business Partner

Answer:

As a skilled Delaware County Business Attorney, I get questions all the time from clients about going to court to break up with a business partner.

If you wish to break up with your partner and your question is, “Do I need to go to court?” The simple answer is, “No, you do not.” There are alternative methods by which you can resolve differences between you and your partner.

Before you approach your partner to break up the partnership and say, “I would like to break up and here’s the reason why,” we recommend you get advice from an attorney or at the very least, your accountant. This is recommended because you’ll need two things to officially break up the partnership:
1. An agreement that sets forth in writing how the breakup is going to take place
2. The value of the company

This process can be pursued in a few ways. You can sit down at a face-to-face and knock it out and negotiate the value just between partners, each saying, “This is how I want to do it.”

A second approach is to seek out an attorney to serve as a trusted advisor to the partners. The success of this approach will depend on the personality and skill set of the attorney: is the attorney a litigator or a resolver, an arbitrator or a middleman?

If, however, you think the face-to-face approach and the trusted advisor approach are not going to work to resolve things, you can hire a third-party as mediator, somebody who has experience specific to mediation.

A fourth option is to go to an arbitration, in which you pick someone to decide the disputes between you. The arbitrator is going to decide the company’s value, whether the termination the other partner wants is reasonable, whether there was a breach of any fiduciary duty or loyalty to the other partners.

After listening to all the testimony, the arbitrator decides what the value of the company is and what’s best relative to the interests of the individual partners. It’s not exactly court, but it’s closer to court than the mediator, the trusted advisor, or the face-to-face negotiation.

This educational blog was brought to you by experienced Business Lawyer Walter J. Timby. Our law firm proudly represents clients throughout Delaware County, as well as Pennsylvania, the greater Philadelphia area, Delaware and New Jersey.

If you have any questions about going to court to break up with a business partner, please contact our Delaware County Business Attorneys for a free case evaluation. Let our experience work for you.