Partnership Disputes

Shapiro Croland's New Jersey business lawyers have experience in representing business owners in matters involving partnership disputes, disputes between shareholders in closely held companies and members in limited liability companies (LLCs). These types of disputes are commonly referred to as a business divorce, and are typically as bitterly fought as a marital divorce.

Many small businesse owners enter a new start-up venture with a long-time friend, acquaintance or family member.  In these situations trust between new partners is typically not a concern at the beginning of the business relationship. This often results in business owners either failing to document their partnership with the proper corporate governance agreements or using inadequate boilerplate agreements purchased over the Internet.

When there is no corporate governance agreement, New Jersey statutes governing partnerships, corporations or LLCs will dictate the outcome of the dispute. These laws – which we label as a “one size fits all” approach – frequently lead to unforeseen and undesired consequences.  In some instances though, not even a well drafted corporate governance agreement will prevent partners from getting into disputes.

Our New Jersey business attorneys are experienced in representing owners, shareholders and members in business divorce cases.  Our lawyers are experienced litigators who know the landscape of the federal court system, as well as the particulars of New Jersey law governing corporate governance.

In circumstances where there is no shareholder, operating or partnership agreement, or the existing agreement does not contain an alternative dispute resolution provision such as arbitration, or out-of-court mediation is unsuccessful, our experienced NJ business lawyers are here to help.  Depending on where the partners reside or where the business is located, sometimes business divorce cases are brought in federal court.  

Partnership dispute litigation is a long and complicated process that requires a definitive game plan at the outset.  Quite often, it can be very difficult to review the company's books and records and figure out where the money went -- which is often at the center of partnership disputes.  As small business owners ourselves, our lawyers are goal oriented problem solvers.  We know how stressful and disruptive litigation can be to one’s life or business. By its nature litigation is unpredictable. Judges may have different interpretations of the same laws. The adversary and their lawyer may be uncooperative and complicate the litigation even further.  Also, civil litigation in federal court typically moves at a much slower pace that state court, so patience and perseverance are two traits that a successful business litigant and counsel must possess.  As experienced business litigators, it is our job to guide you through each step of the case with effective communication and a clear strategy to get to the finish line. 

In situations where there is partnership “deadlock”, a common exit strategy is for one business owner to purchase his or her partner’s share of the business – very similar to the equitable distribution of assets in a marital divorce.  In the absence of a corporate governance agreement providing a formula to establish the fair market value of a business owner’s shares, determining fair market value usually requires a forensic accounting analysis which can be complicated.  Our New Jersey business lawyers have significant experience in these complex financial issues. 

Some examples of the types of business and partnership disputes that our New Jersey business litigation attorneys handle include:

  • Breach of duty of loyalty by management level employees
  • Breach of fiduciary duties by directors and officers
  • Closely held business disputes
  • Corporate derivative lawsuits
  • Dissolution of corporations and LLCs
  • Embezzlement and fraud
  • Emergent relief - orders to show cause and injunctions
  • Family-held business disputes
  • Litigation concerning loans owed to or from departing owners
  • Litigation involving interpretation of shareholder and operating agreements
  • Oppression of minority shareholders and members of LLCs
  • Partnership disputes leading to buy-out of one or more of the owners
  • Violation of restrictive covenants and non-compete agreements

If you have been sued in federal court over a business dispute or need to commence a lawsuit in federal court to resolve a business matter, our experienced New Jersey business litigation lawyers are here to help.  Contact us today to discuss your case.


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