Business Ownership Disagreements Can Distract the Company and Use Up the Company’s Resources
When there are disputes between individual members of an LLC without a properly drafted Operating Agreement, the Company is the one that loses. Like marriages, disputes and disagreements between members/owners of a company are extremely common and can actually be healthy for the company. The best way to resolve a business dispute is to have a carefully crafted operating agreement and by-laws. But what happens if you do not have either? Sometimes, the fastest way to resolve a business dispute is a discussion between the members/owners based upon mutual business goals and objectives.
Business owners can and do have disagreements when it comes to the operation of the company, the direction it is taking, as well as the financials of the company. An experienced business attorney, like Leon Roy IV of Roy Law, has proven experience in this arena. Leon strives to help business owners resolve differences and move forward so that they can focus on what matters most, Running The Business. When founding members of an LLC get into a substantial disagreement, it will distract the company itself from the business at hand reducing productivity and profits.
Disagreements About Financials of the Company and Job Performance
Two of the most common areas of dispute arise from the performance of job-related duties, and the financials of the company. When an LLC is formed, each member usually has an area of responsibility with the business. It can range from bringing in new business or sales, how owners are paid, managing products or services, managing employees, and management of day-to-day operations. At times, business owners feel they are contributing more to the business than their business partners, and disagreements can develop over suitable compensation and control over business operations.
By drafting a clear and concise operating agreement, business owners can clearly distinguish the roles and responsibilities of each party, and the compensation they should expect from the business from the start. The operating agreement should address any distribution of income or profits in the business. Many operating agreements (especially forms found online) do not clearly identify how the company will handle challenges of any business, such as what happens when owners disagree over how to run the business, valuation of a business interest when one party wants to buy out another, or how new investors will be brought into the company. A well-constructed operating agreement can prevent disputes before they arise, which in turn, leads to productivity and profitability of a new business.
Contact Experienced Business Dispute Resolution Attorneys
Leon Roy of Roy Law, LLC, has proven experience helping to resolve disputes between members in an LLC. There are three primary methods for resolving business related disputes: Negotiation, Mediation or Arbitration, and Litigation.
The most efficient way to prevent a dispute is to have a well-crafted operating agreement and by-laws. In the event a business does not have a properly construct operating agreement and by-laws, the fastest and least expensive method to resolve a dispute would likely be negotiations. Leon works to understand your goals and objectives for the resolution of any dispute. Mr. Roy can provide valuable insight into your situation, and help to develop a strategy to find common ground, and negotiate a resolution to underlying disagreements and position your company to move forward and prosper. Mediation and Arbitration are also beneficial alternatives to litigation, and each has unique advantages (and challenges) in terms of dispute resolution, time, and fees.
If you are an owner of a company, and in the middle of a dispute with another member or partner within your company contact us to discuss at 504-521-4814 for a free and substantive consultation to discuss the circumstances surrounding your dispute, and work with you to establish a strategy to resolve the situation based on your goals and objectives so that you can focus on your business.