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Partnership Lawsuits in New York and New Jersey: Important Factors to Discuss with your Lawyer

Charles Internicola
National Business and Franchise Lawyer

A PARTNERSHIP DISPUTE THAT THREATENS YOUR BUSINESS AND YOUR INCOME

The unfortunate reality for far too many business owners in New York and New Jersey is that the greatest threat to your business may not be the actions of your competitors but rather a dispute with your business partners. After years of hard work and success, partnerships and shareholder relations are many times tested due to disputes over business decisions, cash flow shortages, economic pressures caused by a change in a partner's "personal life" and, even, the prospect of even greater business success that may be on the horizon. If you are experiencing a serious dispute with your partner that is escalating and affecting your business operations, you must implement immediate measures to secure your business and the equity interests that you have worked long and hard to create. 

CRITICAL FACTORS TO DISCUSS WITH YOUR PARTNERSHIP AND SHAREHOLDER LAWYER

When faced with a partnership dispute in New York or New Jersey, critical factors that you should discuss with your business lawyer include:

  • The Tactical Role of Litigation in Partnership Disputes.  Although it may sound counter-intuitive, when faced with a partner misappropriating funds, misappropriating business assets or diverting business, early and aggressive action (that is starting a lawsuit and seeking an injunction) will not only serve to protect your business interests but, long term, will reduce your overall litigation costs and increase the likelihood of reaching a negotiated settlement. When it comes to partnership disputes indecisive and half-hearted measures only lead to prolonged, non-productive litigation and unnecessary legal fees.  Decisive action will preserve your business and expedite the settlement process

  • Injunctions are Critical Remedies that Must be Evaluated.  Partnership disputes typically involve an imbalance of control.  That is even when dealing with equal partners, one partner typically has more "hand's on" control over the businesses day-to-day operations.  When a dispute arises the partner "in control" may misappropriate assets or attempt to exclude his or her other partners from business decisions.  When this occurs and you are the partner being "locked-out" it is critical that you discuss the role of "injunctive relief" and how a New York or New Jersey court imposed restraining order may get you back in the door and in a better negotiating position.
     
  • Ultimately a Negotiated Settlement (not an Expensive Trial) will Produce the Best Resolution.  Leverage is critical to the successful resolution of partnership disputes.  As indicated in the prior points this leverage and the "re-balancing of the playing field" can only be achieved through immediate action and, when appropriate, the commencement of litigation and the imposition of a court imposed injunction.  However, once the playing field is leveled and a position of strength is established, in most instances, it is far more beneficial reach an out-of -court negotiated settlement than proceed with a protracted, expensive and uncertain trial. 

 

If your business is stable and your dispute does not involve the misappropriation of assets, an emergency situation or a partner "lock-out", settlement discussions (not litigation) should be the preferred course of action. To be successful, negotiations should be based on a well defined strategy that your lawyer establishes after evaluating your partnership agreement / shareholder agreement, by-laws and corporate agreements.


LEARN MORE ABOUT PROTECTING YOURSELF AND YOUR BUSINESS WHEN FACED WITH A PARTNERSHIP DISPUTE

  1. Order a complimentary no obligation copy of Mr. Internicola's book  "The New York and New Jersey Partnership Dispute Guide". In the book you will learn about proven courses of action for dealing with partnership disputes.

  2. Contact Mr. Internicola's staff at 800. 976. 4904 or by email and learn more about how Mr. Internicola assists business owners, shareholders and members when faced with partnership disputes, business lock-outs and  protection of business and equity interests.

  3. Read the following New York and New Jersey articles about partnership disputes, shareholder disputes and minority shareholder rights: