The kinds of claims partners bring
Partners generally owe one another duties of loyalty and good faith, and many partnership disputes are about whether those duties were breached through self-dealing, diverted opportunities, or hidden compensation. A formal accounting, in which a court oversees a full reckoning of what each partner contributed and received, is a remedy that appears often in these cases. Expulsion, withdrawal, and dissolution disputes turn largely on the partnership agreement, and where the agreement is silent, the default rules of the state's partnership statute fill the gap. Limited partners usually have a narrower role, and claims about how a general partner ran the business are sometimes brought on behalf of the partnership rather than individually. The type of partnership affects every one of these questions.
Records and the agreement come first
Gather the written partnership agreement and every amendment, any certificate filed with the state, tax returns and partner-level tax forms, capital account records, and bank statements. If there is no written agreement, the history of how profits were shared and decisions were made becomes the evidence of what the partners agreed. Partners usually have a right to inspect partnership books, and asking in writing can be a useful early step. Before you change passwords, move funds, or bar a partner from the office, talk with a lawyer, because self-help taken in anger often becomes a claim against the partner who took it. Keep your messages about the dispute measured, since a court or arbitrator may read them later.
Shaping the case
Many partnership agreements send disputes to arbitration, and some require a buyout process before any other remedy. Others are silent, leaving the case for court, where in New York larger business disputes are often heard in the Commercial Division. Early on we work out whether the goal is to keep the partnership running, to buy out or be bought out, or to wind it down, because each points to a different set of claims. Where the business itself is at risk, interim relief, such as an order preserving assets or the appointment of a receiver, may be worth considering. Our first discussion covers the agreement, the type of partnership, what has already happened, and what you want the business to look like a year from now.
