By Phil Rarick, Esq.
Here is a simple fact: most small businesses cannot afford or even survive a major dispute between partners if the dispute ends up in court. Such disputes can doom the small business due to interruption of the company business, distract the principal partners from focusing on growth, and soak up all capital needed to sustain the company.
The following are 5 Take Away Points for avoiding court intervention in your business:
- Find a creative business attorney with a proven track record in resolving business disputes – outside of court. You often need a creative asset protection attorney with a good business and tax background. Typically, each side has to realize they will not get 100% of what they want – there will need to be compromise. But this compromise will be far less costly and destructive than having a bureaucratic court intervene.
- Do the economic analysis. In other words do the math. Compare the cost, time, business interruption, and uncertainty of going to court with the minimal costs and certainty of reaching an agreement outside of court. Even a simple dispute can cost $20,000 to resolve if each side has to file court pleadings.
- Do the litigation risk analysis. Litigation always involves risk. You risk getting a judge or jury who may not understand your case regardless of how strong it is. Every good litigator will emphasize this fact in their engagement letter with you: he or she cannot guarantee any results – there is no such thing as a “slam dunk” legal case.
- Find a friendly forum. A court venue is by definition a non-friendly forum, and is designed to encourage expensive discovery and expand the contentious issues. A mediation venue is designed to encourage compromise, narrow the issues, focus on the big ones, and reach settlement quickly.
- Preemptive Planning to avoid disputes. By far the best solution is to pre-empt disputes in the first place by having a clear agreement for resolving disputes, and a clear exit strategy if disputes cannot be resolved. This means that whenever you have one or more partners you should have an Operating Agreement, if you have an LLC, or a Shareholder Agreement, if you have a corporation. You may be best of friends with your partner now, but of course, just like you, your partner is going to put his or her interests, and the interests of his family first if disagreements arise.
Jay Beskin and I have over 50 years of combined experience helping business partners reach amicable agreements even though the differences between the partners first appeared to be insurmountable. Helping the small business owner grow and succeed while avoiding court intervention has been a major theme of Rarick & Beskin for many years. For more information about our Miami asset protection services, contact us as (305) 556-5209 or firstname.lastname@example.org
The information on this blog is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an experienced Miami asset protection attorney. Your receipt of information from this website or blog does not create an attorney-client relationship and the legal privileges inherent therein.